Miami’s condo market was in the midst of a comeback in 2015, according to the Miami Downtown Development Authority’s annual report. That might not be the case today.

Fueled by luxury and international demand, 90 percent of the more than 1,800 new condo units delivered to the market last year closed to pre-contracted purchasers, the report read, demonstrating what the agency described as “the strong commitments of current buyers.” The DDA also pointed to the strength of condo price appreciation as another indicator of demand – median sales price for condos rose 5.3 percent in 2015.

At first glance, the market seems poised to further strengthen in 2016 – which has certainly already been the case in terms of price, which increased 8.8 percent year-over-year in January.

“Downtown Miami’s residential market has hit its stride when it comes to pricing for condos and rental units, thanks to steady demand and a tickling supply of new units,” said Anthony Graziano, principal of Integra Realty Resources, which provides research for DDA.

But is the demand still “trickling”?

A Rapid Trickle

In 2016 alone, there are 95 new buildings and over 7,800 condo units planned for completion – more than double last year’s numbers. In 2017, 6,900 more units are scheduled, and a further 3,650 in 2018. By 2022, South Florida is looking at upwards of 22,000 new condo units.

Despite the coming tide of new inventory, Alicia Cervera Lamadrid, managing partner of Cervera Real Estate and a Miami DDA board member, remains confident that builders aren’t overdeveloping.

“Given the measured pace with which new units are delivering and the cash-heavy deposit structure that’s become the new normal in Miami’s condo market, it’s clear that the development community has learned from its past mistakes,” she said,  referencing the now-common practice of buyers paying 50 percent of the cost of a new unit prior to its completion.

Not everyone is convinced in the market’s strength, though, as the second half of 2015 (and the early months of 2016) have been characterized by steep drops in condo sales and wide-gated leaps in inventory – which now sits at more than a 10-month supply (well over normal supply levels).

Massre: Declining Sales Were “Inevitable” 

“Remember that before the housing meltdown we had the same people saying the same thing,” said 20-plus-year Miami real estate veteran Morris Massre, who currently hangs his license with All Luxury Miami Realty.

Sales are declining, he said, and what’s more, the trend was “inevitable.”

“Foreign buyers are pulling out slowly,” he explained. “Part of the reason, I would assume, is they are wising up to the glut. Secondly, they are afraid of federal scrutiny.”

In the final quarter of 2015, luxury condo sales in the city dropped 15.1 percent from the same period in 2014, but still active listings in the sector jumped an astronomical 84.7 percent. And it is that kind of unexplainable, anomalous increase that is prompting the Treasury Department to increase scrutiny on the county’s high-end cash sales; they are looking for dirty money.

Covering Up or Ignoring?

But Morris believes the city doesn’t want to talk about that stain on the market.

“It is possible that the city of Miami is trying to spin this in a positive light,” he said, adding, “it can’t afford any negative publicity.”

The ultimate question will be: can current (and will future) demand justify the mass increases to condo inventory in the city? According to some the answer is “yes,” but Morris is not convinced the demand the city and association reference regularly actually exists.

“How do you even define demand?” he asked. “Website hits? Walk-ins? To me, demand is tied to closings.”

He made sure to clarify that pre-construction sales don’t factor into his reasoning, because, as he explained, “buyers can walk away from those at anytime.”

“To sum it up, ask yourself: excluding pre-construction, do closed and pending transactions outnumber those available? The answer is no.”

Miami is admittedly an unusual market (considering the high number of international buyers and cash sales) so determining the ultimate direction of the market will be a matter of careful monitoring and time. But as far as current numbers go, he’s right.