Is it time to start investing in Miami Homes? – A Comparison between Homes and Condos
Miami Homes vs Miami Condos – the best Return on Investment Opportunities
The answer is a simple case of demand and supply!
The Condo market is becoming one of more and more supply, yet the Single Family homes market is becoming one of increasing demand.
Miami’s real estate is known for its great new luxury condos and beautiful waterfront mansions. Investing in this booming market offers an excellent opportunity to guarantee great return on investment and this is on the agenda of many international buyers.
These days however we see a great investment value in Miami homes compared to Miami condos, despite the ever increasing prices in the Brickell Condo market.
The Challenges on the Miami Condo Market
The Condo market is becoming one of more and more supply, more competition and decreasing values. Many of the clients whose condo I listed asked me the same question; “Why sell now if the prices are still increasing?”. That is true, prices are still increasing and good value condos are still sold in a rapid paste, however, the high amount of new Brickell Pre-construction condos that will hit the Miami market between 2014 and 2016 may negatively affect the value of your unit if it is considered relatively generic by Brickell Condo standards. These new condos will provide an enormous new supply to the Brickell market, providing you with more competition when you do sell.
3,849 New condos are coming into the market. This table is not taking into consideration already sold out buildings like SLS Residences, MyBrickell, Millecento and Brickell House which represent another 1,000 units to the market. Most people looking to sell their Brickell condo are seeing an increasing competition from these new condos, as they have a lot of new features and amenities to offer that the older Brickell Condos don’t have, while selling for less or the same price. Soon these almost 5,000 units will be coming up for rent, also increasing the competition in the Brickell Rental Market
The Number of Condo Units for Sale has gone up
In the 2007 market crash there was a surplus of inventory in the Brickell Condo market (2,255 units), which has dropped significantly in the years after that yet started to go up again in 2012. The 816 Condos for sale in Dec 2012 have almost doubled compared to the current month of June 2014 where we see 1,437 condos for sale in the Brickell market.
Between 2012 and now the months of inventory have almost doubled from 6.5 to 12 months leading Brickell’s condo market from a neutral to a buyers market, while the absorption rate, another important real estate indicator, decreased from 15.5 to 8.4.
“Months of Inventory” = The amount of time it would take to sell all current listings at the current sales pace if no new listings became available. 0-4 months is a “Seller’s Market with increasing values” 5-6 months is a neutral market and 7 or more is a “Buyer’s Market resulting in a downward pressure on prices and declining values”
“Absorption rate“: The figure shows how many months it will take to exhaust the supply of homes on the market. A high absorption rate may indicate that the supply of available homes will shrink rapidly, increasing the odds that a homeowner will sell a piece of property in a shorter period of time. So a lower absorption rate will decrease the odds that a homeowner will sell a property in a shorter piece of time.
This article is not meant to push everyone to sell, but merely to raise awareness. Great value waterfront units in Brickell will not necessarily loose value in 2016, but as the law of supply and demand rules: The more supply, the more pressure on a downward price.
The David Siddons Group wants to update its clients on the facts. If you are considering moving in the near future or are considering selling your apartment in Brickell or moving your investment strategy sideways and buying a single family home instead please call us. We will be able to help you sell and will start by providing you with an honest and free market appraisal of your property.
The Miami Home Market
The house market is becoming one of less and less supply and more stable yet increasing values. The Home market is a different market. Homes in certain neighborhoods are limited and one can’t simply increase the amount of homes in a certain area pushing up the supply. Also homes are normally speaking properties to reside in for a longer period of time making this entire market more steady.
In this particular example we will be using Coconut Grove often the preferred option for those young professionals after moving out of Brickell. One of Miami’s most popular areas known for its tranquility yet close to where the action is and home to number of superb private schools.
Unlike in the Condo Market the Coconut Grove market doesn’t have a surplus of homes for sale. As a matter of fact most successful agents are snapping the good value units off the market before they can even hit the market, to deal with the enormous scarcity. I have many clients looking for homes in the Gables and the Grove but very few people are willing to sell
In the Coconut Grove Home Market the months of inventory varies between 6.5 and 7 months meaning its a neutral market. The absorption rate however is 14.6 leading Brickell’s condo market from a neutral to a buyers market, while the absorption rate, another important real estate indicator is 14.6 meaning the inventory of homes that are for sale are scooped up pretty fast for what is available.
Coconut Grove homes are very demanded these days and it takes a well connected and eager real estate agent to find that perfect gem! However once you have a Coconut Grove home, you own what many are looking for. Furthermore Coconut Grove Rentals are hot. On a weekly basis we get desperate emails from agents all over town looking for a Coconut Grove rental, and this is what helps making the value of those properties more and more interesting.