Prices for condos in downtown Miami have risen 14 percent year-over-year while the sales have decreased by more than half in the first quarter.
South Florida Business Journal reported that condo sales have declined by 54 percent, which equals 111 transactions per month from 239 transactions a year ago. According to CondoVultures.com, consumers were paying, on average $306 a square foot a year ago, and that price has risen to $348 in the first quarter this year.
Peter Zalewski, principal with Bal Harbour-based real estate consultancy Condo Vultures, believes that this decrease in condo sales is directly related to the rising prices. In early 2009 developments like Brickell on the River ignited condo sales by undercutting their competition and this is the opposite of that trend. It is working to slow down sales.
Zalewski believes potential buyers are still looking but they may be looking for alternative pricing or different communities that are offering better pricing.
“As greater downtown Miami heads into the humid summer months after a busy winter tourism season, the question is whether sellers will stand firm on their sales price objectives or roll back prices to generate more transaction velocity, given the 29-month supply of unsold condo product.” Zalewski said.
On top of the unsold developers stockpile of condos there are an additional 2,300 or more resale units on the market. Around half of that 2,300 are currently owned by bulk buyers. This information applies to a 60-block area connected by the Julia Tuttle Causeway, Rickenbacker Causeway, Interstate 95 and Biscayne Bay.
Around 22,250 condos were built in downtown Miami dating back to 2003. In the 40 years prior to the real estate boom, developers had built around 11,500 units in the same market. At the end of March there were around 3,200 new condos that were built during the boom period that remained unsold.
The Mint condominium located on the Miami River topped the charts with the highest number of sales in the first quarter with 69 transactions. The Marquis followed in second with 61 and Infinity at Brickell came in with 51 sales.