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    What Will Happen With the Brickell Condo Market in 2018?

    January 25, 2018

    Should you sell your Brickell Condo now or hold on to it for a few more years?

    This blog focuses on Brickell, but the analysis is valid for the greater Downtown Area including Edgewater

    The Brickell condo market is now seeing those price corrections we have been talking about for the last two years. Many sellers see their units sit on the market for a long period of time while potential sellers are contemplating whether to sell now or wait till the market shifts. For these sellers it is important to understand the “Months of inventory” of the Brickell market. It might not be new to you that the Brickell condo market is seeing high levels of inventory, but what many sellers (and buyers) don’t understand is what this level of inventory really means. Once you understand the months of inventory, also known as absorption rate you will be better able to understand whether you should sell or hold on to your unit.

    Months of Inventory or Absorption Rate

    The months of inventory tells you how fast a property will sell in a given time frame based on previous sales data. With other words, how fast will listings be absorbed by the market. To calculate months of inventory we divide the number of active listings in a certain month by the amount of properties that sold per month in a previous time frame.

    The months of inventory in the Brickell Condo Market in 2018

    The Brickell Condo Market in 2018. Should you sell your Brickell condo?

    As you can see from the above data, the Brickell condo market is seeing low levels of absorption / high levels of inventory. Of course, the 63 months of inventory measured in the $750K range is based on the amount of properties that sold last year. If we sell at the same speed as last year it would take up to 5 years to sell all current inventory. Needless to say, today’s market conditions might change and a sudden sharp decrease in prices might lead to a new pool of buyers and a faster absorption of listings. With other words, depending on the market conditions these 63 months of inventory might be absorbed at a faster or slower pace than last year. In the last two years the Brickell Market has seen high inventories while we barely saw any price decreases.  In today’s market we see that these price drops are actually starting to happen in order to move units.

    Fast Take Away

    The inflated prices and extremely high levels of inventory puts Brickell condo sellers in a unfavorable position. As the market is unlikely to see a fast recovery (not within 2 years) and prices need to adjust by 15%-20%, we advise sellers to be ahead of the game and to adjust their prices now by 10%-15%. This provides for an instant competitive advantage and might result in a faster sale.

    – David Siddons

    Selling My Brickell Condo Now vs Selling my Condo in a Few Years

    The question on everybody’s mind is whether we foresee any change in the Brickell condo market. To be honest: No. The Brickell condo surge was fed by the massive influx of foreign investors, which led to an upwards price spiral. A high percentage of these investors are now looking to offload their condos. Many have bought a generic unit above market value and because of tough competition they unfortunately might have to take a hit in order to sell. We are seeing condo units today that are listed at $600K, while their actual value is $500K at best. There are less buyers looking at the Brickell condo market than a few years ago and these buyers are not willing to pay inflated prices. With many months of (often overpriced) inventory and no increase in the number of buyers, we do not see the months of inventory decrease any time soon. As a matter of fact, the market might only get more months of inventory as the supply side is moving faster than the demand side. This means that the only way to bring back the market balance is by decreasing sales prices. 

    More Pressure on the Brickell Rental Market in 2018

     

    The sooner sellers will decrease their price, the more advantage they will have. Decreasing your price now will give you a competitive advantage over other sellers. In case you wait with selling till next year, most sellers will have dropped their prices, which affects your unit’s competitiveness. With an inventory of 2+ years and many units being priced at between 10% and 20% over its actual value, we expect that holding on to your unit will only have a negative effect on your sales price. This is specially true for the generic units mostly in the brand new condos. These generic units all offer equal features and many do not have water views or obstructed water views. From our own experience, as well as from what we hear from colleagues, many of these units do not even show more than once per two weeks.

    Lets say you have a Brickell condo on the market priced at $600K. Decreasing the sales price with 10% to $540K gives you a massive competitive advantage (This might be less than you paid for, but that is the reality). If you keep this unit on the market for the next two years, the market will have adapted its prices in order to sell. If you want to stand out in that market you will have to lower your price even more, lets say at that point you will need a total reduction of 15% or 20% in order to sell . With HOA costs between $600 and $1000 per month and yearly taxes of approximately $10,000, each year you don’t sell will cost you an additional $20,000 (not even mentioning when you bought with a mortgage and you are paying interest)

    Should we now all massively reduce our prices you might ask yourself? No, of course if you have a Brickell unit that shows several times per week and stands out in the crowd with for example a large terrace or bay views you are in another game. We are talking here about those units that are not moving, the standard new construction is seeing many of these units. They are overpriced and their sellers are waiting for a wonder that will not happen.

    Be ahead of the crowd and call David Siddons today 

    David Siddons | Siddons.d@ewm.com | +1.305.508.0899

    David Siddons is a top producing agent with over $65M in yearly sales. He has been the best producing Brickell agent for four years in a row. David’s ethos is “We want to help you stay wealthy by stopping you from doing dumb stuff with your money!” inspired by the best selling book “The Road less Stupid”. The David Siddons Group has warned its readers since 2014 to be cautious with the Brickell market and to use an established agent to educate you on the Brickell Market. If you didn’t take advantage of his knowledge then, please do it now!

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    THE 2018 MIAMI REAL ESTATE REPORT

    EX-STOCKBROCKER’S ANALYSIS OF THE MIAMI MARKET

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