As we move into Summer 2018, the overall Miami real estate market is in good shape, according to a report by the Miami Association of Realtors. Low housing inventory and rising prices in the majority of Miami-Dade County has homes selling at near asking price. However, the Brickell luxury condominium market has not seen the same market appreciation as the majority of South Florida. The biggest obstacle for the sale of Brickell condominiums is the difficulty in obtaining affordable financing. Out of the 9,307 condo communities in Miami-Dade and Broward, only 12 are Federal Housing Administration (FHA) approved to receive financing, and none of the 12 are in Brickell. When a condo is FHA approved, it allows buyers to obtain FHA loans that require a very low down payment— 3 – 5%—which makes them attractive to many borrowers. The lack of FHA approvals, coupled with the decline in foreign cash investors, has stalled the Miami Brickell condo market. This market shift is creating opportunities for buyers as sales prices decline. We will shed some light on this shift and what it means for buyers and sellers.
BRICKELL CONDO MARKET REPORT (33130 & 33131 Zip Codes)
As all signs continue to point downward for the Miami condo market, we are often asked the question, “How is the Miami Brickell Condo Real Estate Market?”. To provide educated answers to these questions, we rely on our analysis of various sources of market sales and economic data. The Vaughn Real Estate Team has researched the Southeast Florida Multiple Listing Service data and Zillow Research to deliver you up-to-date information about the Brickell condo market. Here are some market data highlights:
• The current median listed sale price in Brickell is $387,900 (down 3.0% over the past year).
• The average Days on Market is at 8 Months or 241 days at the end of June 2018.
The Brickell market continues to show evidence of slowing down. Along with a decline in the median listed sale price, inventory levels have also increased as new high priced condos units continue to enter the market (mostly priced between $500,000 and $800,000). These 2 factors are most likely the reason Zillow Research predicts that the Brickell market will continue to decline another -0.6% over 2018 and into 2019.
We continue to follow the market data because it answers the question “How is the Market?”. The current market data implies that we are still in a buyer’s market for Miami Brickell condos and we expect to see this trend as more new condos enter the market in 2018-2019.
WHAT TO DO IN A BUYER’S MARKET?
For Buyers: Brickell condo prices are on the decline and are continuing to shift downwards. This may be a great time to buy. Keep in mind; you may need to factor in your income and current mortgage interest rates to gauge how much you can afford to buy. The good news is that condos in Miami are becoming more affordable, mostly due to the growing “generic” condo inventory. Most of these generic condos were purchased by investors with the intention of reselling them. These condo do not offer water views, unique features or high-end finishes. In this market, buyers have the upper hand, as it is not easy to sell these generic units and the investors do not like to sit on to these properties for too long. It is for this reason that the market is seeing high condo inventory levels.
For Sellers: Brickell condo prices are on the decline and you are in a downward shift. You may have to list your condo for a lower value than when the market is trending upward. However, if you price it competitively during this time, you could attract a lot of buyers’ attention and possibly spark a bidding war between your property (further driving up its value) — since buyers will be on the hunt during this shift in the market. Also keep in mind that we expect to see a growing condo inventory well into 2019, so buyers continue to have a plethora of condo units to choose from.
THE MIAMI CONDO MARKET AS A WHOLE
It is important to note that you should compare both the price values of condos and the inventory level of the market together. Typically in Miami, as the inventory decreases, condo prices go up. As the condo inventory increases, condo prices go down. In late 2017, Miami condos on the market continue to surge up. Supply hit around 26 months. Developers are sitting on completed units that they are unable sell, and months’ supply in their projects has reached several years.
Also, there are external factors that are affecting the Miami real estate market. As mortgage rates continue to increase, buyers can afford to buy less. In addition, South Americans and Europeans historically make up a big percentage of the Miami condo buyers, and with the U.S dollar now stronger than most of these foreign currencies, these buyers have now backed away from the market. Foreign purchasers could also be chased off by the efforts of the Treasury Department’s Financial Crimes Enforcement Network which has Geographic Targeting Orders for hotspots of cash money laundering in real estate markets like Miami.
Miami Brickell condo market statistics used in this article are based on the Miami, Florida zip codes 33130 & 33131.
Written by D. “Alex” Vaughn
Alex Vaughn, is a Broker Associate Realtor on The Vaughn Real Estate Team with Carrington Real Estate Services (US) LLC and specializes in helping first home buyers find condominiums and homes in the Greater Miami area. Alex is a highly experienced agent, offering end-to-end professional service.