MIAMI-Downtown Miami was the heart of the state’s condo craze—and subsequent condo crash. But while real estate prices are still declining in most parts of South Florida, condo prices in the urban core are on the rise again.
Indeed, buyers paid about 14% more for new units in greater downtown Miami in the first quarter of 2011, compared to the year-ago period. So says a new report from Condo Vultures. Prices for new developer units rose to $348 per sf in 2011. But higher prices are curbing the recovery. The average number of sales dropped by 54 percent to 111 transactions a month in the first quarter. That compares to 239 sales in the first quarter of 2010, according to the report based on an analysis of Miami-Dade County records.
“You are definitely seeing the pricing going up, but at the same time the velocity is slowing,” Peter Zalewski, principal at Condo Vultures, tells GlobeSt.com. “This shows that if the pricing is right, the building moves. If the pricing is not right, the building languishes. The only exception being Epic. Pricing went up and velocity went up.”
The Epic West condominium at the base of the Brickell Avenue Bridge in downtown Miami did 40 transactions in the first quarter of 2011. Zalewski says the quality of the project is attracting foreign investors, despite the higher prices. The Mint condo on the north bank of the Miami River saw the greatest dip with a mere 69 sales while the Marquis on Biscayne Boulevard saw 61 sales and Infinity at Brickell inked 51 sales.
Developers constructed nearly 22,250 condos during the real estate boom beginning in 2003 in greater downtown Miami. In the four decades prior to the boom, developers had created some 11,500 units in the same market. As of March 31, 3,200 new condos created during the boom remained unsold. Condo Vultures reports the unsold units are located in three-dozen projects out of the 84 projects that were developed since 2003.
“Developers, lenders and bulk buyers will tell you that the inventory is burning out, which it is, but you still have 3,200 units left,” Zalewski says. “That’s still 30 months of inventory at this rate. If they continue stand firm on pricing, it’s going to take longer to sell these units. But if one project decides to cut prices, watch for all of the buyers to flock to that project.”
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