The Miami Beach Condo Market Report for Q4 2020 | What to Expect Going into 2021?
Miami Beach Condos for Sale | What to Expect Going into 2021?
If you read part 2 of our Q2 and Q3 Miami real estate report (The Miami Condo Market before and during Covid-19) you already know that the Miami condo market has experienced high inventory levels for several years. Even before Corona we saw declined transaction volumes and an abundance of overpriced condo units sitting on the market without movement. As always there are better performing sub-markets or price levels, but across the board the condo market was not a very strong market. Covid-19 accelerated the patterns we were already seeing in the market, which created a bearish outlook.
If you want to know how Miami Beach condos performed before and during the initial months of Covid-19 we suggest you read part 2 of our report. This Miami Beach condo market report discusses the performance of Miami Beach condos in the last 6 months and what we expect going into 2021!
Should you stay away from this market? No, even in a weak market there are good opportunities and there is “the right price”. I rather warn my readers and clients about what is really happening in the market than to pretend all Miami investments are safe. I highlight markets with high inventory and downward prices, but that doesn’t mean one should not buy. There is actually a lot of opportunity out there and the time to make great deals is now! Key in this process is to get the right guidance and to know at what price point to buy.
This beautiful unit at Faena House sold for 25% less than its original listing price of $15.5M
Miami Beach Condo Market Report for Q4 2020
Miami is seeing a high influx of new residents (and thus buyers) mostly for its favorable tax climate. Although many of these relocation buyers are looking for single-family homes, we have also experienced a healthy demand for Miami Beach condos. Compared to our previous study that looked mostly into Q2 and Q3 of this year (more focusing on the market at the start/peak of the pandemic) we see that in Q3 and Q4 the Miami Beach Condo Market is catching up again. In the below table we show the amount of closed sales in the last half a year and compare that to 2019 and it does not show the same gap as we saw comparing Q2/Q3 with the previous year. Of course buyers are able to fly into Miami again and the condos have opened up again. The fact that nobody was allowed into condos was the condo market’s achilles heel.
We see a very strong luxury market, which is nothing new at this point in 2020. Most tax refugees flocking into Miami are power players that are looking for the best of the best and therefore luxury sales have gained in strength. We saw 3 sales in the $10M+ market with very high sales prices per SF averaging at $3,455 per SF. Prices remained relatively stable compared to the same period a year earlier, with the exception of prices in the $2M-$3M range. The $1M-$2M range seems to be gaining in strength as well, as sales are up and inventory is down.
Maybe the most important table here is the one with the months of inventory. The months of inventory provide you with information about the supply and demand relationship or the absorption rate of a market. The months indicated here are the months it will take to sell all available product if no new product were to enter the market. Between 6 and 9 months is generally considered a neutral or balanced market while less than 6 is a sellers market and more than 9 a buyers market. The Miami Beach condo market is experiencing a high inventory, mostly in the range between $2M and $10M. The more affordable sub-markets as well as the ultra-luxury market is experiencing a healthier inventory.
The Miami Beach Condo Market Report; Transaction volumes in Q3 and Q4 of 2019 compared to 2020
The Miami Beach Condo Market Report; Prices per SF in Q3 and Q4 of 2019 compared to 2020
The Miami Beach Condo Market Report; Discounts on the sales price in Q3 and Q4 of 2019 compared to 2020
The Miami Beach Condo Market Report; Months of inventory in Q3 and Q4 of 2019 compared to 2020
The Miami Beach Condo Market in 2021
As we are approaching 2021 we have become more bullish about the Miami Beach condo market specially for the $1M-$2M range and the $10M+ range. For buyers in the $3M-$5M range we see a lot of opportunity as some great gems can be bought with considerable discounts. With a continuous flow of tax migrants mostly from NYC, New Jersey, Chicago and San Francisco we expect the demand for good product to remain strong, although most of these buyers are looking for large, newer, ocean facing condos. We expect good-quality units in desired buildings such as 87 Park, Faena House and Continuum to remain strong over 2021. We do get a fair share of inquiries for Miami Beach condos for sale and most of these buyers are looking for good deals, which they often get. This market is excellent to get top product for a discounted price and savvy buyers know it! Besides that, the single-family home market is drying up fast and those who are indecisive between a home or a condo often opt for a condo now, as the supply of good quality homes is limited. 2021 Will be a better year for the Miami Beach condo market for sure.
Miami Beach Condo Investments: At What Price Should You Buy?
When buying a Miami Beach condo it very important to know at what price point you should buy. Miami’s economic cycle started to rise in 2010 after the recession years of 2007 and 2008. In 2010 Miami’s real estate market boomed and we saw an aggressive rise in prices towards 2015. Depending on the neighborhood we are talking about, the general peak was near the end of 2015 and start of 2016. This is essential to know in order to establish the price range we will need to work with. We have to look at the base and the peak of the previous cycle to see the baseline of this cycle and to establish how much range we have. You do not want to pay peak prices (2015-2016 prices) in today’s market for an average condo. As we are currently on the downturn of the condo cycle, we look at 2012 as a baseline. The price levels of 2012 should give us a good guide of how much one should want to pay in 2021. You need to make sure you do not pay more than the 2012 baseline prices.
With the help of our brand new condo geeks tool you can trace back these condo cycles for different neighborhoods and price ranges. In the screenshots shown below you see the condo cycles for Miami Beach condos in different price ranges. For all markets we see that the 2012 baseline prices have been reached or are about to be reached and one should not pay much more than these prices (depending of course on what line in what condo you buy). In the last screen, which shows active data for Miami Beach condos, you can see see which condos have most inventory and in which condo the units stay longest on the market. Contact David Siddons if you would like to get more information about this tool or would like to ask more specific questions regarding the Miami Condo market for which our Condo Geeks tool might be able to help.
Miami Beach Condo Market Report: Which Miami Beach Condos sold in 2020?
Please find below several Miami Beach condos that closed in the last year to get a better glimpse of what is selling!