The Miami Beach Condo Market Report 2019
The Miami Beach Condo Market Report 2019 – The Last 6 Months (April till October 2019)
David Siddons and our Miami Beach real estate expert and resident Stefania Cambarau spent the week analyzing the Miami Beach condo market to provide our readers with a clear overview of what has happened in the last 6 months, what trends we are seeing and what we expect from this market in the months to come.
With Miami Beach we refer to 5th street till 87th street (South of Fifth is analyzed independently)
Observations in the Miami Beach Condo Market of $500k – $2M
- 657 Listings
- 159 Sales*
- 24 Months of inventory
The months of inventory (24 months) tells us that the Miami Beach condo market is stagnating. When we go more in-depth, we see that the buildings that are witnessing a higher number of closed sales are the ones that allow short term rentals such as The Carriage house, Roney Palace, Seacost, Blue and Green Diamond, Carillon and Decoplage
Miami Beach is still a very investor-driven market. These investors still look at the possibility to use their Miami Beach condo as a secondary residence while at the same time have the option to rent that out for a certain time of the year and cover some expenses (possibly even gaining some income).
With increasing maintenance fees and oftentimes heavy special assessments (levied by the condos in order to upkeep the structure and common areas), the relatively low return on investment is eaten up by the expenses. Miami Beach condo units are still attractive for partial end-users, but are no longer super attractive as pure investments, especially considering that short term rentals are no longer allowed as per the Miami Beach municipality.
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The Rental Market
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We are currently experiencing a high level of inventory in the rental market; almost 500 units for rent in Miami Beach between $3k and $8k.
However we expect this inventory to be absorbed faster during the next few months.
Renters are more and more demanding when it comes to finishes and condos with old outdated finishes are much harder to rent.
Regarding price levels we saw that:
- Only 10% sold over $1,000 per SF
- Over 50% of the closed sales are between $500 and $900 per SF
- 40% of the closed sales happened below the $500 per SF marker
- The highest price per SF achieved was an exceptional $1,678 at W hotel, which can also be rented short term
The higher-end condos are seeing significant price reductions and sales prices much lower than original asking prices (ranging between 15% and 22%).
The average difference between sale price and original listing price is still below 10%, which represents a relatively healthy gap.
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* The sales data shown in the description is taken over a slightly different time frame than the sales data in the table, therefore discrepancies between data might occur
Working Examples
The first two examples are sales in buildings that do not allow for short term rentals, while the last 2 examples do allow for monthly rentals
This well-finished unit at MEi Miami Beach was sold by the David Siddons Group (Stefania Cambarau). The 2 bedroom unit that offers direct ocean views sold for $1,1M or $832 per SF.
Unit 2201 at La Gorce Palace sold for $825 per SF or $1,393,500. This 3 bedroom condo unit was very well finished and offered direct ocean views
This Southeast facing studio can be placed in Hotel Program of the W hotel in South Beach and rented when you’re not in Miami. The unit sold for $950,000 or $1,687 per SF
This upgraded unit at Roney Palace/1 Hotel combines units 1414 & 1415. The 2 bedroom offers a flexible rental program and sold for $1,875,000 or $1,143 per SF
Observations in the Miami Beach Condo Market of $2M – $5M
This table is created over a slightly different time frame than the data collection below, therefore discrepancies between data might occur
- 113 Listings
- 16 Sales*
- 43 Months of inventory
More than half the current listings have been on the market for over 1 year. About 25% have been on the market for over 2 years and many have been listed for 2 to 3 years. This means that the market is definitely back end heavy; i.e units are sitting a long time on the market.
When we look at the listing price of those units that simply don’t move we see the reason why it doesn’t move. Owners are asking prices per SF of $2,000+, in a market where nothing sold over $2,000 per SF. In this market $1,700 per SF is achieved for a very well finished product with direct ocean views. With other words, in order to move product, sellers need to become more realistic. We expect that to happen more frequently during this upcoming high season. Prices will drop even more in the high-end condos on the beach.
We see 16 closed sales in the whole of Miami Beach, which is relatively low if you look at the small area of South of fifth which sold that amount of condos as well. The market is clearly stagnating and surprisingly the price per SF is quite low.
Only one exception with a sale of $2k+per SF and many sales below $1,500 per SF
Units are sold on average 13% below the original asking price. We expect this gap to be higher in 2020, as some product will be staying on the market for a long period of time and prices need to be adjusted.
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The Rental Market
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The ratio of 20 signed leases (between $8k and $40K)- vs 16 sales in the last 6 months clearly shows that the condo market in Miami Beach is still dominated by investors renting out their units
* The sales data shown in the description is taken over a slightly different time frame than the sales data in the table, therefore discrepancies between data might occur
Working Example
4 Of the 16 sales happened at Il Villagio on 1455 Ocean Dr.The sale prices were on average around $1,500 per SF for 3 bedroom units with ocean views, while its 2018 sale prices were above $2,000 per SF. Unit #1509 (shown here) sold for $3,550,000 or $1,578 per SF
Observations in the Miami Beach Condo Market of $5M+
This table is created over a slightly different time frame than the data collection below, therefore discrepancies between data might occur
- 28 Active listings
- 1 Closed sale*
- 175 Months of inventory (this means 4 years to sell the current inventory, shall nothing else hit the market)
It is clear that the market must see tremendous reduction in order to move forward. The market is simply paralyzed! The previous 6 months (high-season months) had seen 6 closed sales instead.
The 2 most expensive sales in the last year are the two new construction penthouse units at One Hotel and Homes and the Ritz Carlton residences, sold respectively for $5.7 Mil and $5.6Mil.
Among the units currently for sale one third is listed over $10 Mil. The meat of inventory here is made of new construction units never lived in before. We expect buyers for this type of massive units to show up and pull the trigger in the first 6 months of 2020. We will witness quite a few discounted deals in the months to come.
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* The sales data shown in the description is taken over a slightly different time frame than the sales data in the table, therefore discrepancies between data might occur
Working Example
PH 1612 at 1 Hotel and Homes , a 3 bedroom, 2,548 SF unit sold for$5,600,000 or $1,459 per SF after being listed for 262 days. The unit’s original listing price was $5,795,000
