Miami Beach Real Estate Report for Surfside and Bal Harbour | Q2 2022

Miami Beach Real Estate Report: Surfside and Bal Harbour Real Estate Trends

With this market update we will focus on the Bal Harbour and Surfside areas. These are two adjacent neighborhoods which are home to some of the newest and most regarded condos in the whole Miami Dade area.

On a few occasions we will compare the findings with the Miami Beach data for the same period. We do this cross analysis with the intent to help the reader with cross references among the Beach condos, also considered that the relocating buyers looking for the beachfront lifestyle often consider more than one area in their search for the right condo.

However, it is important to point out that, while Miami Beach extends for 7 miles along the coast, from the southernmost tip of South Pointe Park to 87^th Street, just north of the North Beach Oceanside Park, Bal Harbour and Surfside only count a couple of miles from 88^th street to 102^nd street, just South of the inlet from the ocean to the intracoastal by the Haulover Park.

Miami Beach Real Estate Report for Surfside and Bal Harbour: Latest Market Trends

The average price per sq ft in up a further 20% from the record numbers of 2021 ($1,384 in 2022 against $1,118 in 2021).  A closer look at the last 90 days closed sales, supposedly representing the slow season for the beach markets, shows an even bigger increase with an average price per sq ft of $1,438 – based on 43 closed sales in the last 3 months (see bottom left graph below)

Furthermore, the recent sales closed consistently less than 10% below the asking price (see bottom right graph below). These are short term indications that this condo market is still very bullish and is riding the slow season at the best. When we look at the current inventory as of today only 137 units are for sale across all the price points.

Miami Beach Real Estate Report for Surfside and Bal Harbour: Rate of absorption in the last 30 days

This is a ratio between the number of the new active properties listed for sale in the past 30 days and the number of closed sales, but also pending sales/properties under contract from the last 30 days – we can assume that those properties will progress as recorded sales in the next 40 to 60 days. As we collect the data from the last 30 days, please note that this is a very short-term indication as to how the market will adjust in the foreseeable future.

While the calculation for the months of inventory is based on recorded closed sales, the rate of absorption is based on the closed sales as well as the number of pending sales. The rate of absorption is an extremely useful indicator, as it will help forecast the supply and demand curve that will ultimately create upward and downward pressures on the market.

Please see the rate of absorption for the following market segments below:

• $500K to $3M: 1:0.8 ratio – 18 units listed in the last 30 days and 15 sold (under contract and closed)
• $3M to $5M: 3:0 ratio – 3 units listed in the last 30 days, and none sold (under contract and closed)
• $5M+: 1:0.7 ratio – 6 units listed in the last 30 days and 4 sold (under contract and closed)

These ratios were calculated based on the number of new listings relative to the amount of pending sale and closed sales. We can gather from the ratios above that the inventory in the $3M and up segments are experiencing some buildup. This is another indication that the higher end of the market is currently growing at a slower pace compared to the other market segments. Interestingly, the ultra-luxury market is currently more dynamic than the $3M to $5M. These are the same dynamics we are observing in the Miami beach area ass well, where the supply and demand curves are going different ways in a certain segment of the market.

Miami Beach Real Estate Report for Surfside and Bal Harbour: Months of Inventory

By looking at the current rate of absorption, we forecast that while the first segment of the market ($500k to $3M) will have the same current months of supply (7 months) which corresponds to a balanced market, the $3M to $5M segment is expected to experience some stagnation – 37 months of inventory forecasted by the end of the year, assuming the same number of transactions.  The forecasted months of supply can go up to from the current 5 months to 9 months by the end of 2022 for the $5M market segment.

The above is assuming there won’t be a big increase in closed sales before December. However, we expect more inventory to hit the resale market in the high season (starting November) and therefore impacting the current ratio.

High demand for Three bedroom + condo units

The strongest demand for Bal Harbour and Surfside seems to be the one for large condo units, especially if remodeled, 3+ bedrooms. Larger units are sought after by the buyers from the Northeast and Canada looking to accommodate large families while spending time in their second home on the sand, without giving up the space many buyers are used to in their primary homes.

Many buyers relocating with their family are also actively looking for the same type of properties and this adds to the upward pressure on this niche. The supply for those units is, in fact, extremely limited – only 12 below the $3M mark and many of those in need of full remodeling, which makes them less appealing due to the lengthy and more than ever costly renovation process that can take up a year between planning and execution.

Older VS Newer Condos

As established luxury markets, Bal Harbour and Surfside small neighborhoods are very much real communities, where residents meet at the same synagogue or at the same local restaurants, or see each other walking, jogging or biking by the boardwalk along the ocean. This is part of what makes these communities extremely desirable both for primary and second homes.

St Regis Residences, located opposite to the exclusive Bal Harbour shops ( see link to a 2 bedroom unit in St Regis, Bal Harbour and Oceana, located just a few blocks to the North are the newest and most desirable condos in Bal Harbour.

The small village of Surfside is home to several new condos such as Arte, Fendi Chateau and Surf Club/Four Seasons Residences currently developing a second tower next to the existing one. The empty lot where the Champlain Tower used to sit, will also be developed relatively soon.

These newer luxury condos offer the best amenities and services, with newer and appealing floor plans, expansive balconies and top of the line finishes and trade on average North of $5M already for 2-bedroom units – and 3+ bedroom units trading between $6 and $25M.

The pre-existing condos in the area compete with the same beachfront location, established financials and sometimes even larger floor plans – The Palace, Bellini, Majestic and Bal Harbour 101 are just some of the established condos taken in great consideration from the current buyers. Large 3+ bedroom units here trade between the $3M-$5M with the highest numbers achieved by the direct Oceanview units remodeled. See link to a 4-bedroom unit with direct Ocean View in Bellini, Bal Harbour.

The rental market

The rental market on the beach is closely linked to the resale market, since the shortage of good units for rent creates further upward pressure and contributes to keep the bar high when it comes to demand and therefore on prices.

This market is still extremely tight in the Surfside and Bal Harbour area, with only 33 3+ bedroom units currently on the market for rent ranging between $8,000 and $80,000 per month – about the same number of units were rented in the last 6 months, and the demand for rental units increases tremendously before the high season.

Our Recommendations for Buyers

Overall, we are still seeing a strong demand for Bal Harbour and Surfside condos. While the seasonal slowdown that we are used to seeing in the summer is showing an impact on the supply, it has not impacted the prices yet.

Due to the seasonal nature of the beaches, the number of transactions has gone slightly down in the past three months, which is why we recommend any serious buyer to actively engage in buying a condo in the upcoming hot months (from a pure temperature standpoint) , when fewer buyers are willing to pull the trigger and negotiation is again a possibility.

Our Recommendations for Sellers

Depending on the shift in the level of inventory that your specific condo unit is experiencing, your property value might be at the peak or have peaked already. We recommend that you give us a call to get guidance on when it will be the best time to sell your condo and whether a side move is recommended in your case.

Overall, we can conclude that the Bal Harbour and Surfside small condo market is still showing to be quite dynamic in certain segments, even through the summer slowdown, which puts the area in an excellent position for the upcoming busy season in November when the higher end properties receive more attention in general.

* This market update data is based on active listings for sale and closed sales above $500,000