The 2020 Q2 and Q3 Miami Real Estate Report. Industry Experts Discuss the South Florida Real Estate Market in 2020
Part 4. Top Producing Realtors and Industry Experts Discuss the Miami and South Florida Real Estate Market in 2020
In this fourth part of our 2020 Q2 and Q3 Miami Real Estate Report, I discuss the Miami and Miami Beach real estate market with Mick Duchon and Bill Hernandez, two top producing realtors and true industry experts. We analyze the Miami real estate market with a focus on Miami Beach and ask them about their opinion on how the market is doing, which trends they are seeing, where they see opportunities and what they think the future will hold. In this chapter we also discuss the South Florida Real Estate Market in 2020 interviewing colleagues who specialize in Palm Beach (scroll down to the last section). We will discuss what you can expect to pay in the different communities, where you can find the best beachfront homes, where you can find the best ultra-luxury condos, the different lifestyles, the best schools, the inventory of new construction homes & condos and much more.
This complete Miami market report consists of 4 parts of which this is the last one. In part 1 of this report myself and another market analyst discuss the market before and during Covid, which provides you with really good insights. In parts 2 and 3 of this report we will deep dive into the Miami condo market and the Miami single-family home market and we will provide you with the key statistics and narrative on the different sub-markets. It will show a clear difference in performance between condos and homes and identify the strongest and weakest sub-markets.
What have we experienced in the Single-Family Home Market in Miami Beach?
The Miami Beach real estate market is experiencing the same as other Miami areas; there is a massive influx of buyers from the Tri-state area (New York, New Jersey and Connecticut), Chicago and California. Most of these buyers are trying to escape the high-tax states, dense city cores, social tension and of course in some cases the cold weather. The majority of these buyers had been playing with the idea of moving to Miami for quite a while and then Covid-19 fast-tracked their plans. As mentioned in previous parts of this report, Covid-19 has brought along a shift in lifestyle and mentality and people’s short and long term plans have changed. This pandemic made people realize they need space (both indoor as well as outdoor), they want to avoid density and the home office has become more important than ever. So while many wanted to move because of the taxes, this pandemic provided them with much more reasons to make that move and to make that move faster than previously anticipated. Some buyers already had a second residence here to spend the weekends or the cold winter months and decided to make a more permanent residence of Miami. We have also experienced a shift of local buyers who are currently living in condos and decided to switch to a single-family home.
What Miami Beach Product Performed Best?
The waterfront single-family home market has really taken off and is by far one of the strongest markets right now. As long as a property is well priced, it won’t be on the market for a very long time. Good quality product moves super fast and we are seeing a very fast absorption rate of these homes. We also see many off-market deals happen with properties that are sold before they even hit the market. The low inventory levels indicate that an increase in prices is on the horizon and many buyers are now forced into areas they wouldn’t necessarily have chosen before. They are looking at new waterfront areas to find good quality and brand new construction homes, which leads to increasing prices in these areas. Others decide to wait for new product to finish and to enter the market. As many brand new waterfront homes sell before even hitting the market, these buyers need to find a well connected agent to be made aware of brand new homes before they are sold. In this sellers market, relationships are everything and it is essential to work with an established agent.
What does the future hold and where are the dry areas with slim pickings in the next 6 months?
Miami’s ultra-luxury market is limited and buyers need to be aware of this. Sellers know they are holding on to a premium product and waterfront sellers are now starting to ask for a higher price per SF. The Miami Beach market has reshaped itself; what used to be expensive is now the norm; before $2,000 per SF was seen as expensive, now this price level is the norm. Buyers need to make quick decisions and they need to realize that there is not a lot of room for negotiation. The Miami luxury market is very limited, especially when it comes to homes and land. While before one could expect to negotiate 5%-10% off the listing price, these days you will lose out if you wait too long or do not come in with a strong offer. Prices in South Florida are still much lower than those in NYC, the Hamptons, Boston, Chicago or LA and therefore properties selling at a premium are still expected to move fast. Additionally, the rental market is seeing premium prices as well. As renting is relatively much more expensive than buying, many skip the initial rental period and decide to buy right away.
What have we experienced in the Miami Beach Condo Market?
Like in the rest of Miami, the condo market is performing in a different manner than the single family home market. This bearish market can be explained in different ways according to our panel. First of all, people that buy condos (specially from the northeast) are looking for services; a pool, concierge, spa & wellness, gyms etc. As condos are currently not able to provide for these services, some buyers started looking at homes. They figured they could set up a home office and have several of the most desired amenities included into the home. This is something that we would not have experienced before Covid and the Single-family home market is really taking advantage of that at the expense of the condo market. Secondly, The Miami Beach condo market is much more of a seasonal market with slow summer months and a very active winter season. The pandemic came up right at the end of the high-season and at the start of the low season. Furthermore, buyers of Miami Beach condos are often looking for a 2nd, 3rd or even a 4th home, they are not looking for a primary residence near the best private schools. Therefore there was less interest in the Miami Beach condo market during this pandemic, which as a consequence suffered even more during the already slow summer months. Additionally, the experience on the beach is that many sales are happening when buyers are actually present and visiting town. Lots of product moves during Art Basel as potential buyers are in town and decide they want to move or spend more time in Miami. At this moment buyers from Latin America or Europe can’t even travel to the US, which has a negative effect on the sales numbers.
The depreciation in the condo market is not all caused by Covid-19. A lot of brand new luxury condos were erected and we see a lot of sales happening in the same condos. Many of the sales happen in desired and newer condos such as Palazzo della Luna, Eighty Seven Park, the Surf Club Four Seasons Residences and the Regis Bal Harbour. Many of these new condos are selling for similar prices per SF as the older buildings, meaning the older buildings had to adapt their prices in order to compete with these brand new constructions. This is one of the reasons prices have decreased in the last few years as well.
According to the Miami Beach industry experts, the condo market will bounce back when the pandemic fades away. Once Europe and Latin America open up, traveling becomes easier and condos can offer services again we expect to see increased confidence and the condo market will see normal seasonal activity again (High season is still to come!). Not everyone likes the single-family home experience and many buyers like the “Lock-up-and-leave” concept of a condo. Homes might offer more space, but they are also more labor intensive and less handy for those who travel a lot and require 5 star services on demand.
The Strong Miami Condo Rental Market
The luxury condo rental market is seeing a lot of movement although it’s not something a lot of people talk about. We see many requests for large and luxurious 3+ bedroom rentals and units are rented above asking price. We are experiencing a very active market in which good quality units are receiving multiple offers above asking price and units are paid up front to secure the deal. Tenants coming from the Tri-state area or high tax states are looking for more space and they do not mind paying a premium for that privilege.
Opportunities in the Condo Market
While the single-family home market is now experiencing a surge in buyers with increased price levels, the condo market is seeing elevated inventory levels and lower prices. Although there is movement in the market (specially in the larger ultra-luxury condos such at the Surf Club, Eighty Seven Park and Palazzo della Luna), condos that sell often sell with a considerable discount. Sellers are realizing they need to reduce their prices in order to offload their investments. This awakening of sellers is a good sign that great deals can be made.
Several of these great deals happened in the last months. We have seen renters ending up buying the unit they were living in, as they liked the unit and bought it for the right price. Savvy investors realize that we are close to the bottom of the cycle and now is a good moment to buy. In part 2 of this report I discuss the Miami condo market in greater detail and I explain at what price point it is advised to buy.
The Palm Beach Real Estate Market
Palm Beach* is known for its grandeur. It offers some of the world’s most exclusive oceanfront lots with magnificent mansions overlooking the water. The Palm Beach market is a big numbers market with prices that are hardly ever seen in the Miami market. This is really the best South Florida real estate market if you are looking for luxurious oceanfront homes on large lots.
Palm Beach homes start selling at $3.5M. It is a very upscale market, but contrary to popular belief it offers a variety of lifestyles depending on which part of town you choose as your home. In the north-end you can live casually with your golf cart or surf board to enjoy more of an island lifestyle, while in the estate section we experience more of a formal and lavish lifestyle. Finally there is the condo market, which allows you to pop into town when you want to.
*We are talking about the small town of Palm Beach Island in east-central Palm Beach County, not about the entire Palm Beach County.
The Palm Beach Single-Family Home Market Before and During Covid-19
The Palm Beach market functions very differently than other South Florida real estate markets. This is a market in which many deals happen off-market and therefore sales prices are not always public. Most of the listings are not listed on the MLS for privacy reasons, while on the other hand buyers want to remain private and do not want people to know they are looking. For this reason many deals happen off-market and relationships are essential. When you have a buyer you don’t just limit yourself to the MLS, you pick up the phone and you call owners, agents or attorneys. The buyers for this market want ultra-exclusive beachfront homes while price tags are less important. It is all about getting the home you want and keeping it private.
Today’s Palm Beach market is seeing the same trends as the luxury markets in Miami; a large influx of families from the high-tax states (mostly from the Tri-state area) and a shortage of inventory. Just like Miami, Palm Beach is welcoming many “tax migrants” who sped up there plans to move to Florida when the pandemic broke out. Palm Beach Day Academy received 75/80 new applicants from NYC, that’s how many new people come and intend to stay all year round. People have shifted their priorities and a spacious large oceanfront home in the South of Florida seems to be more on everyone’s mind than ever before. The market caters to many northeast buyers for whom this isn’t an expensive real estate market at all. These buyers are used to $4,000/$5,000 per SF in NYC, while Palm Beach offers them an oceanfront parcel with a massive home for $3,000 per SF. The South Florida real estate market is still a bargain today for many buyers across the US. According to our Palm Beach business partners Chris Leavitt and Ashley McIntosh, the town is also experiencing a shift of businesses (Hedge funds mostly) from NYC to Palm Beach. As businesses move down here, so do their executives.
The Palm Beach market, which was already one of limited supply, is now seeing an increased demand while most of the great properties have already traded on or off the market. There is nothing for sale, yet there are 20 billionaires waiting to get the best properties before the season starts. Now more than ever relationships come into play and it’s essential to access off-market listings before others do. These owners are at the top of the food chain and people go straight to them to find off-market product.
The rental market is not very different; good quality rental homes are hard to come by and in this market it is also a matter of leveraging your relationships to get good off-market product. There is simply too much demand and only the best of the best agents get deals done!
Call me at 305.508.0899 if you are looking for a Palm Beach Property or an Agent that can add value!
The Palm Beach Condo Market Before and During Covid-19
The condo market in Palm Beach is very limited. Compared to Miami, the Broward and Palm Beach condo markets are almost non-existent. Palm Beach island is a very small area of land without much space to build condos. More importantly, Palm beach Island only allows condos that are maximum 8 stories high. To find a really high-end condo project you will have to go to West Palm Beach where Chris sold the Bristol, a 25 story, 69 unit ultra luxury tower that sold out in a year. Palm Beach offers a small condo market with mostly older condos that do not have truly outstanding services and amenities. When this brand new tower started selling it closed the gap in the market. It was what people wanted and were waiting for and therefore it sold out in a heartbeat. Contact me at 305.508.0899 to receive more information about the Bristol in Palm Beach.