South Florida Condo Price Spike Expected — With Nothing to Offset Demand

The number of active condo listings in South Florida is rapidly shrinking, according to a recent report that anticipates a rise in condo prices over the next few months.

There were nearly 24,000 condos for sale in listings across Miami-Dade, Broward and Palm Beach counties last year, but now there’s a low of 12,382. That’s according to RelatedISG Realty, which recently released its 2021 Q2 Miami report.

While condos are “a great buy” right now, according to RelatedISG President Craig Studnicky, that could soon change. 

“The data shows that current sales velocity will cause serious tightening of condo inventory in the next six months,” Studnicky said. “Condos will more than likely be selling at close to list prices, very much like single-family homes are today.” 

Single-family homes are often selling at the listing price or higher, with no contingencies, all cash, and bidding wars.

Studnicky said for every three condos that are sold, there’s a new condo that goes into multiple listing service, which is a database where real estate agents and brokers can look at private home listings for prospective buyers.

“Clearly, the amount of sales are outpacing new supply,” Studnicky said. “The prices have remained kind of flat until now. If condo sales maintain the same pace they’ve been on all year, in 2021, by the end of this year, you could see at minimum a 10% to 15% price spike in condos.”

There are no substantial new condos that are being delivered by developers in the next couple of years, according to Studnicky.

“There have only been two new constructions in the last year. Those have both been in Miami. There’s nothing new coming to offset the current demand for condos,” Studnicky said.

A seller’s market?

If the demand for condos remains, it’ll be a seller’s market for condo owners this time next year. Studnicky said quarantines due to COVID-19 caused a lot of people to rethink where they were holed up, and purchase residential real estate in South Florida.

Now, with delta variant cases increasing, Studnicky expects the number of people wanting to purchase condos will continue to rise. 

“I think it will. This is all domestic growth. It’s people moving from the U.S. moving here. Canada is on a travel restriction, as are many countries in South America, so that great residential boom we’ve seen this year has been driven by domestic demand,” Studnicky said. 

The way Studnicky sees it, once travel restrictions in foreign countries start to decline, condo prices will skyrocket. That means condo owners wanting to sell up should wait until next year, Studnicky said.

“You’re going to get a price for your condo. I will say, this is what happens with houses a lot, you might be tempted to sell, but where will you go? If you like living in a house and you want to live in another house, there’s nowhere to go. That’s partly why kitchen and bathroom renovations have been booming. It’s giving them kind of a new house,” Studnicky said.

The timing is perfect, in Studnicky’s view, for empty nesters to sell their house and move to a condo.

“It couldn’t be a better combination if you’re a house buyer thinking about a condo,” he said. “The metrics couldn’t be better for you.”

According to the report, with current sales prices, new condo resales are projected to be triple what they were in 2020 by the fourth quarter of this year. One out of three condo sales is in Brickell.