Miami Condo Market Report 2022 Q3 | Catching a Falling Knife!

Introducing the 90-Day Miami Condo Market Reports

Introduction to our Q3 2022 Miami Condo Market Report. In Q2 2022 we wrote the report, Crash, Correction or Continued Growth. It was approaching the end of June Q2 and I was just starting to feel the economic ground shake with a media chatter that was less than bullish. It felt like a fitting time to address the ‘what comes next question’. As always with months of inventory as the focus, I took a look at how much it was growing. The inventory was creeping up but we were so low on inventory in so many sectors that it did not seem like it was going to become a real issue. It still is not a problem in many sectors. However, by the end of Q3, we have seen accelerated inventory growth in a number of condo markets well beyond what I predicted.

Miami Condo Market Report | The Accelerated Inventory Growth

The below graph shows the sales, listings, and inventory per quarter of 2022. In the individual articles referenced at the end of this blog, we go into further detail per neighborhood. This is the overall $1M-$10M condo market in the referenced neighborhoods. The below table shows the market shift that started between quarters one and two of this year. The market no longer absorbed the new listings. With supply going up and closed sales taking a hit, it will be no surprise that inventory is growing from 4 months or below to 14 months.

As the Miami Real Estate Market Shifts, who is MOST vulnerable?

In this podcast we discuss the state of the Miami real estate market and answer the most common question that we are asked every day: ‘What is going on in the market today?’ This podcast focuses on the state of the Miami real estate market as it pertains to the start of Q4 2022 and answers three key questions: -What is happening with the Miami real estate market? -In what areas could Miami real estate prices potentially drop in 2023? -When should sellers get out and should buyers buy or wait?

A Shift in the Miami condo market

Inventory levels are growing, pending deals are down, and new listings are up. In combination with negative press, whether true or not, it encourages sellers to get out and buyers to hold back. At the same time, some sellers are still asking for record prices. This results in those properties sitting in the market for extended periods without any traction from buyers. While sellers look at the past, buyers look six months ahead and this gap needs to be closed for deals to happen. Sellers will need to be more realistic and price their condos according to today’s market. Like Paulo mentions in the podcast:”listing prices used to be the starting point of negotiations, now they are the ceiling“.

The condo market is more investor-driven than the housing market. It attracts speculative buyers. Several condo markets are heavily investor-driven, and these markets will see more corrections as inventory starts to rise. This will firstly affect short-term investors who will be the first out of the door, as prices drop. Those most at risk of loosing value fastest are the more generic condos and condos that are very investor-driven or have a high percentage of rental properties. If you are in this market for the short term or are looking to sell in the next two years, then today is a good moment to sell.

The Rental Market

Another Concern is the rental market. We have mentioned this in several of our past articles already. The rental prices have been increasing by 30% in most markets.  Locals find it hard to afford a Brickell condo for rent. A residence that used to rent for $3,500 is now asking $5,000, while income levels have not increased. The median income in Brickell is $80,000. Moreover, we hear reports of locals making six figures a year of no longer being able to afford the lease in Brickell. This is something to worry about because any correction in this rental market will change the value of those properties.

Whether its best for you to sell or not depends on your timeline and type of condo. Please give me a call at 305.508.0899 to discuss your personal situation.

What our Software Analysis tells us

Our Condo Geeks software has allowed us to track the economic performance of the Miami condo market. We can track neighborhoods, price ranges, and even specific condos over the last 15 years. It allows buyers and sellers to see where we are in the condo life cycle and when we will reach a peak or a low. As you can see from the screen, we are currently at an all-time peak in the Miami condo market. To understand this tool better, please watch our interview with Salil Gupta, one of our partners and creator of this tool.

Catching a Falling Knife

So what is the point of talking about catching a falling knife? In essence, it means chasing the market down. As you read our interview with Paulo Rodriguez you will notice he talks about sellers having their heads in March 2022 and buyers their heads in 2023. Sellers who think of pricing higher than the market and then gradually reducing are making a terrible mistake. All they achieve is tracking the market down but never catching it. Always being one step behind.

So, please read the neighborhood stats that are relevant to you. Use our Neighborhood Statistics page to read the numbers accurately – appreciating finish, age, and all the specifics that we know make every sale unique. Plug in your property’s stats and see how it stacks up to the sales from the last 3 months. As always, please call me direct to discuss your personal needs.

Introducing Our 90-day Miami Condo Market Report for the Different Neighborhoods

Below I have detailed the reports for each respective neighborhood. What you will notice is that the condo market is now seeing some more considerable increases in inventory. In short my message to many sellers (call me and find out if you fall into that category) is for some to sell. Especially, if you have the likely consideration that you want to sell in the next 18 months.

History of Condo Market Predictions

I have been doing this since 2008. I have historically predicted movements in the market in 2014 and 2015 and 2019-2020. Back in 2014 I also saw storm clouds on the horizon. At that time I advised owners of generic condos the investor-driven one and two bedroom condo market to sell while the market was still high. Those who listened sold for top dollar, those who did not faced devaluations in the years after.  In 2019 I warned again for Miami’s most vulnerable markets and Miami’s least vulnerable markets. I gave the different neighborhoods and price ranges a score. The score was about the market’s elasticity; about robustness and resilience of the market against economic change. A low score can present a world of opportunities at the right offer and a high score meant the market was more resilient to economic change.

Below list of neighborhood boxes to reports where we may predict potential issues.