MIAMI-Developers sold 57% more new condos in Greater Downtown Miami in 2010 than in 2009. So says a new report from CondoVultures.com.
Buyers purchased nearly 3,700 new condos in Greater Downtown Miami in 2010 compared to less than 2,400 in 2009. In the two previous years of the South Florida real estate crash, many preconstruction buyers with 20% deposits at risk decided to buy, closing on nearly 5,000 units in 2008 and 2,000 units in 2007, CondoVultures reports.
“The were 2,000 new condo sales to individual sales in 2010, but the investors who bought in bulk have also taken to market and were able to move roughly 350 units,”
Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures, tells GlobeSt.com. “If the bulk buyers are out of the equation, the total number of sales is more in line with previous years."
The bulk buyers will be largely out of the equation in 2011, at least in Downtown Miami. Bulk buying for new construction in Downtown Miami came to an end in October of 2010 when a bankruptcy court selected Rockwood as the buyer of the note and ultimately the suitor for Everglades on the Bay.
“Cash has come in to these bulk deals that says its patient and well healed and its going to try to achieve certain pricing,” Zalewski says. “So watch for 2011 sales to slow. The expectation from all of the investors is to achieve $325 or $350 a foot. I don’t know that the market is going to be able to sustain that this year.”
Zalewski says the market is at a crossroads. If buyers agree that $325 a foot is the right price, sales will pick up. But if there is some hesitation to adjusting the psychology around condo values, then sales will slow. Most buyers are accustomed to spending $200 or $300 a foot max for new construction in Downtown Miami, Zalewski says.
“I am proposing an OPEC type of scenario,” Zalewski says. “Assuming they are all playing loosely with some general benchmark, the prices will hold steady. I am not sure if every group will stay firm. It just takes one group to flinch and lower the prices and you’ll see a run on one building versus all the other ones that stagnate out there.”
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