A Look Back at the Key Biscayne Condo Market in 2020 and What To Expect in 2021?

2021 Key Biscayne Condo Market Perspectives and 2020 Market Report

What a year!! By now you’re probably aware the Miami Real Estate Market was on fire during 2020. Tom Brady, Paypal/Facebook Peter Thiel and Citadel’s Ken Griffin are just some of the headline-grabbing buyers of Single Family Homes in Miami-Dade in 2020. Key Biscayne Single Family Homes experienced more than twice the amount of sales of 2019. Homes were sold in record time and at record prices with our $13M 460 Mashta Dr sale breaking several records in September and our 159 Buttonwood in December.

Condos had a positive year, but not quite as hot as Single Family Homes. After a slow Covid-driven Q2 and a hesitant Q3 recovery, 2020 ended as a positive year for the Key Biscayne condo market. Key Biscayne condo sales kept pace during Q1 and once Covid hit, Q2 cratered with a 68% unit sale decrease vis-à-vis Q2 2019. Thankfully, things picked-up quickly in July, leading to 212 condo unit sales in 2020, the largest number of units sold since 2015 and a 15% increase from 2019. As a result, inventory was down 16% to close 2020 at the lowest level since 2015. The Key Biscayne average price per SF was $704 in Q4 of 2020, a 17% increase over Q4 2019. Given the monthly variations experienced throughout 2020 and the small size of the Key Biscayne market, we’d consider full 2020 numbers, which ended with an average price of $665 per SF, a 7% increase over 2019. The Key Biscayne market, not unlike other markets in Miami-Dade, behaved differently across price segments.

Key Biscayne 2020 Condo Market Report above $3M

This segment of the market was the hottest performer in Key Biscayne. Granted, a very small slice of the Key Biscayne condo market, its condo unit volume doubled in 2020 with 14 registered sales, compared to 7 in 2019. Pricing was also outstanding as prices per square feet jumped 35% from $925 in 2019 to $1,246 in 2020. This was heavily influenced by 5 Oceana sales with prices ranging from $1,270/sqft to almost $2,000/sqft, benchmarks for the key. Grand Bay units traded at $900/sqft and Ocean Club residences in the $1,000-$1,300/sqft range.

The market registered 14 units sold in 2018 and even higher unit sales a couple years back, so unit sales are not quite in record territory. Average sales price was $4.2M, lower than 9 of 10 preceding years where average sale prices hit over $6M. This reflects the fact that only 3 of the 14 sales in 2020 were above $4.1M with the highest sale closing at $7.9M.

At a time when demand for premium ocean-front properties across Miami-Dade is through the roof, Oceana sales confirms it’s all about the product. As the building and condo upgrade process continues throughout the key, this is a good sign for times to come. After all, demand for premium ocean-front properties across Miami-Dade is soaring and new condos now exceed $4,000/sqft in new buildings like Arte Surfside.

Key Biscayne 2020 Condo Market Report between $1M and $3M

Condos between $1M and $3M made up 30% of total Key Biscayne Condo unit sales in 2020. There were 64 sales in this segment during 2020, compared to 54 in 2019, showing a strong 18% increase in unit sales, likely boosted by a 2020 price per square feet of $738, 3% less than $758/sqft in 2019.

Given buyers budget and expectations in this price segment, this is where the bulk of condo transformation across the key is taking place and thus pricing is mixed. This segment includes units with the best views and roomy floorplans. However, given the newest Key Biscayne building -except for Oceana- is now 25 years old, most condos face the need for some type of upgrade. As owners and buyers -particularly domestic ones- realize it may require similar effort to redo a 25-year-old unit than a 50 year old unit, we are seeing buyers consider older buildings closer to the ocean where an owner can spend upwards of $500k just in renovations. Of course, if you need more than 2,500 square feet, options will likely point you to The Ocean Club and Grand Bay exclusively.

These sample 2020 transactions, ordered by price/sqft, illustrate the dispersion and diversity across this price segment:

These examples show it’s no longer as simple as paying close to average price/sqft for units in the same condominium and adjusting for view. In addition to individual condo renovation, building renovation is also taking place; examples include exterior and common areas at The Sands and Key Colony, the $12M Ocean Club gym and facilities renovation as well as upcoming Towers OF Key Biscayne corridors and exterior renovation

All these factors may be resetting expectations and I expect this trend only to strengthen in the upcoming months and years. My advice is to be thoughtful about decisions in this price segment and challenge your own through process to consider factors outside the traditional valuation methods and decision-making process for Key Biscayne real estate.

Key Biscayne 2020 Condo Market Report <$1M

2020 brought good news. Key Biscayne condos for sale under $1M made up 66% of total Key Biscayne condo sales in 2020, selling at a faster pace than the rest of the Key Biscayne condo market. There were 132 units available by December 31, 2020, decreasing further to 128 by the end of January 2021. Given we had 154 condos available by the end of 2019, this segment of the market is starting to show a shift from a strong buyers market into a more neutral territory, if we can sustain the 15 average sales per month registered during the second half of 2020. In fact, the average price per square foot for Key Biscayne condos <$1M was $454, flat compared to $455 in 2019, stopping a downward trend since 2016.

To put this in context, this has been a soft market segment for several years. This segment averaged almost 200 sales per year at the beginning of the decade with annual volumes coming down to 100-130 annual unit sales since 2014. As more inventory came into the market in 2016-2018 it became a strong buyers market.

This price segment includes smaller units with good views and/or quality upgrades, as well as most of the one and two bedroom original or slightly renovated units common across the key. The market paid low dollars for non-differentiated units, which is to be expected in a high inventory environment, regardless of location. As inventory decreases, prices of these units will likely go up. Prettying-up a unit always pays off but with the influx of high-end tear-down renovations across the key, it is unlikely low dollar sprucing-up may yield substantial price increases as many buyers now favor redoing wiring, plumbing and even condo layouts. But, if any price segment is susceptible to impact selling price through “sprucing-up”, it is this segment.

This segment of the market is where you will find the bulk of buying opportunities as the key modernizes its buildings and individual condos and, along with increased village marketing, attracts the prices that other premium waterfront Miami-Dade communities are commanding. You don’t have to go very far to confirm this, as a quick comparison of pricing per square foot across same building listings will show differences of up to 300% – which cannot be explained just by views and opens the door for good investment returns. Lower prices, declining inventory and buildings and condos undergoing renovation point to the perfect scenario for good buys.

The David Siddons Group sold unit B405 at the Towers of Key Biscayne within 22 days. This property sold for $820,000, just $15K below its asking price.

Is this a good moment to buy a Condo in Key Biscayne?

Miami has experienced a high condo inventory in the last several years and prices have come down considerably. If you ask me we are about 6 months away from a shift in the condo market. We are currently nearing the bottom of the market and this is another reason why we have seen increased interest in the luxury condo market. Prices have adjusted and buyers feel confident again that they are paying fair prices. Although we have always been sceptics of the Miami condo market, there is a right price for everything. We believe the 2012 price levels represent the bottom of the next economic cycle. If you buy at the price levels of 2012/2013 it is safe to say you are paying prices that are close to the bottom of the market and there is room for your asset to appreciate. At this very moment the market is close enough to the numbers of the 2012 market. I believe this is the bottom of the market right now and from here onwards we can only go up. Prices have corrected and the demand is high. Furthermore this cycle is not dominated by investors, the buyers are primary residents who will not put these units up for rent, flip them or sell them at the first signs of economic struggle. Below we have shown a graph from ‘Smart Geeks’, our Condo Analytics tool.

The Key Biscayne Condo Market < $1M

The Key Biscayne Condo Market of $1M – $3M

The Key Biscayne Condo Market of $3M+

Key Biscayne 2021 Market Advice

I remain bullish on the Key Biscayne condo market. Looking at the mass influx of relocation buyers and recent trends including decreased inventory and moderate price hikes we see there is potential for this market to appreciate. As Key Biscayne awareness increases among relocation buyers, the future will be even brighter. Key Biscayne offers condo units with amazing ocean views, but they are often dated. As the condo market has seen price corrections over the last few years, prices are more attractive at this moment and there are great opportunities to buy an older unit with great ocean views to make it your own.  Properties on the key are a good buy across the board, but caution buyers to be savvy in terms of picking properties at the right price points. I am happy to have a call to discuss how to navigate our shifting reality.

For sellers, I would say updated and ready-to-move in units with direct ocean-views will sell quickly regardless of the building. For those with less differentiated or non-upgraded units, the good news is inventory, pricing and sales trends point in the right direction and I am happy to discuss the type of strategy that will get the best financial return for your unit.