(To read more on the multifamily market, click here.)
MIAMI-With continued softening in the housing market, some developers are canceling condominium projects or selling off a portion of developments to cope with the dip in the market.
Attorney Garry Johnson, a director with Fort Lauderdale-based Tripp Scott, tells GlobeSt.com that financing for condominium projects is becoming increasingly difficult to obtain because a perceived saturation of condominiums in the market. Johnson works with developers and other in assisting them to obtain financing and other aspects of commercial real estate. "Construction prices are continuing to escalate and land costs are high," Johnson says. "You have developers that are selling off a portion of projects and some that are canceling projects."
Johnson declined to name specific projects that have been sold or cancelled. In previous announcements, however, some condominium projects that have been cancelled in recent months include 1390 Brickell Bay and ICE in Miami, the Waves Las Olas in Fort Lauderdale and Promenade in Palm Beach County.
Other developers are canceling contracts with land developers prior to the beginning of planned construction. "The fear of developers is whether or not buyers will walk from deposits," Johnson says. "At the end of the day, they don't want to end up with canceled contracts."
The cancellations and selling off of projects is the result of a housing market that has shown continuing signs of softening in recent months. According to the Florida Association of Realtors, in July there were 4,260 condominiums sold, a 37% decrease from the same period last year when 6,739 were sold. So far this year, there have been 36,156 condos sold this year, a 29% decrease from last year when 51,179 were sold. In Miami 837 were sold, which reflects a decrease of 12% from last year when 949 were sold. Fort Lauderdale experienced a 39% drop, from 1,143 last year to 696 this year, and the West Palm Beach area experienced a 28% decline from 710 last year to 509 this year.
However, most developers see the soft conditions as temporary and are making adjustments to cope with what many see as a short-term problem. "They don't think South Florida will lose value, with the one caveat that the condo market seems to be saturated," Johnson says. "They see this as a slowdown with, perhaps, a reduction in some prices."
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