Miami is one of America’s great cities, but it has some problems – its luxury condo market being one of the biggest. And a recent report from Condo Vultures Realty shared three stats that really drove that fact home:
1. Days on market – The most positive stat in the Condo Vultures report was the improvement in the amount of time it takes a condo to sell. In 2016, the average days on market for a luxury condo listing was 168 days. Currently, it is 155 days. The decline shows an increase in demand, which is what the luxury condo market needs, as sales have been falling precipitously.
However, it bears stating that the increase we’re seeing could be less a result of added demand than a response to the steep rise in interest rates, as well as the uncertainty surrounding a Trump presidency. In November and December, home sales across multiple price points spiked nationwide.
2. Average price – Last year, luxury condos in South Florida sold at an average of $2.03 million, or $805 per square foot. Right now, they’re selling at nearly $2.9 million per unit, and $1,047 per square foot. That’s more than a 42 percent jump in average price. The reason agents should be concerned about that increase is because in a time when Miami needs more buyers, it’s a disincentive to purchase.
3. Inventory – The fundamental issue that’s going to continue plaguing Miami’s luxury condo market is its bloated inventory. The Miami Association of Realtors, and most housing economists, says that a 6-month supply of inventory is ideal for a balanced market. Miami currently has just over 33 months of luxury condo supply, and that’s not including the literally thousands of new condo units currently in development. Even more alarming, that calculation is based on the current sales rate, which is falling. So today’s 33-month supply could be tomorrow’s 35-month supply, or 40 month, or 50.
These are problems the city of Miami and the local real estate community are going to have to address, and soon, if they want their market to continue thriving.