It was not that long ago when buyers could have their pick of the condo litter. There were a healthy number of foreclosed properties on the market as well as motivated owners fearing a downward spiral in prices.
We have practically reversed position from just two years ago. In spite of the constant fear and threat of the banks “shadow inventory”, there is no longer a decent supply of foreclosures on the market. Additionally, in less than 3 years the overall supply of properties available for sale has drastically shrunk from over 100,000 to just over 40,000 units in South Florida.
Banks are raising prices and REO (or foreclosure) properties are now seldom priced at 10 to 15 percent below market. This year, the median sales price of Miami Beach condos in high demand locations and popular condo projects has increased.
Consider the Mirador 1000 Condo, located at 1000 West Avenue in Miami Beach that has seen 32 REO sales since 2009. In 2009, the 15 REO sales realized a median sales price of $169 per square foot. In 2010, the 8 REO sales realized a median sales price of $168 per square foot. This year, the 9 REO sales have jumped to a median sales price of $194 per square foot, which is a 15 percent increase over 2010.
Similarly in the Waverly Condo, located at 1330 West Avenue in Miami Beach, we have seen a dramatic increase from a median sales price of $231 per square foot in 2009, to a median sales price of $292 per square foot in 2011, a 26.4 percent increase in just 24 months.
In many ways, the state of today’s market reminds me of 2009.
In 2009, buyers were nervous to catch a falling knife and the general economic environment was negative. The perceived threat of banks dumping REO properties on the Miami real estate market was hanging over our heads.
Today, some buyers are nervous that there will be another leg down and a possible double dip recession. The U.S. dollar has strengthened versus many emerging market currencies. There are further indications of an overheating Chinese real estate market and possible credit bubble. The European Union is dealing with massive sovereign debts that may result in a banking crisis and stagnant growth for a decade or more.
The pipeline of REO properties in South Florida is going to take years to clear the market, and not because demand has dried up, but the banks are ratcheting down their disposition strategies. Homeowners are nervous to sell and are holding off from listing their properties. So now we face a similar scenario to 2009, albeit the reverse.
Although there may be less Brazilians and Argentines coming to Miami, we are fortunate that the wave is still strong. Due to the flight capital and new money from Latin America, Miami’s real estate market will continue to recover.
Ross Milroy is the owner and broker of Miami Angel Properties, LLC, areal estate company that focuses on buying, selling, renting and managing luxury condo and waterfront properties in the Miami Beach, downtown Miami, and coastal communities of the Miami area.Ross has over twenty years of real estate experience and holds a Masters Degree in Real Estate from the Chapman School of Business at Florida International University. He may be reached at 305-788-1220 or email@example.com.
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