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MIAMI RESIDENTIAL REAL ESTATE NEEDS MORE HOUSES' SUPPLY!



BRICKELL CONDO MARKET ANALYSIS

The pandemic has affected the real estate market in several ways. The Brickell condo market for instance has shown a relatively stable outcome to this unusual year.

Scroll down and discover how the prime condos in the financial district have behaved since January compared to 2019 in terms of volume of sales.

Brickell's prime condos showed a -6.3% average decrease in the volume of sales.

The average sold price/sqft had a small overall increase of 0.5%.

The Plaza condo had a big drop of -39.4% in the volume of sales, but it had an increase in the sold price/sqft of almost 3%.

The condo with the best sales performance was the Bristol Tower, which showed a 250% increase in the volume of sales.

Icon Brickell condo showed the biggest increase in average sold price/sqft, with a 36.1% growth in 2020 compared to 2019. However, it had a bad performance in terms of volume of sales, as it had a decrease of 11.8%.

The Bristol Tower average sold price decreased by -17.6%, which was the biggest price/sqft drop from the condos studied.

The worst performance was the Santa Maria condominium, as it showed a -50% drop in sales. It also had a bad performance in terms of average sold price, as it showed a decrease of -6.5%.

Newer buildings are performing better than the older ones. It does make sense since from my experience it’s very hard in Brickell to sell an older condo when you are surrounded by new flamboyant constructions.



WE NEED MORE HOUSES !

A few months back people were going stir crazy thinking that Miami residential real estate would be facing a recession like the one in 2008. Five months later, there is still no crisis on the horizon, and the industry is booming with surprising strength.

Trends have changed, and now people are looking for single-family homes instead of the condos.

In the first quarter of 2020, half of the home buyers were looking for single-family homes and the other half for condos.

In the second quarter, after the pandemic hit the U.S., 85% were interested in houses compared to 15% for condos.

This last quarter, the condos had a dramatic recovery, and now the interest of houses is 65% compared to 35% for condominiums.

The sudden interest for houses has made the inventory plunge and prices to go up.

Only 0.67% of the single-family home market in Miami-Dade County is listed for sale. This has forced bargain-seekers back to the condo market, as the high inventory still makes it a buyer's industry.

The inventory for single-family homes has dropped from 7.3 months in May to 3.2 months in August, and the median price has risen from $375,000 in May to $425,000 in August which is the highest median price on record!

The condo market has had a great performance as well.

From 24 months supply in May, it dropped by half to 12.8 months in August. and the median price has also increased from $259,000 to $275,000.

The single-family homes that are getting the most sales are Miami Shores, Palmetto Bay, and Key Biscayne.

Miami Shores closed sales rose by 42.66% in the third quarter of 2020 compared to 2019.

Palmetto Bay increased by 6.3% in closed sales

Key Biscayne had a 43% increase in total dollar volume of sales from $101 million to $144 million.

One-third of the home-buyers in July 2020 were first-time buyers.

33% of the mortgages from June-August were first-time-buyers. This shows a growth of 200% year-over-year.

The foreign vs. local buyers has also been a really interesting trend, as, since 2010, there were 49% foreign buyers compared to 21% local buyers. This year, the data has flipped, as 23% are foreign and 49% are local.



THE SUBURBS ARE NOW THE HOT PLACE TO LIVE

After the pandemic hit the U.S. lots of new trends appear, one of them is the rising preference of home buyers for houses in the suburbs instead of the city center in big cities. Here are the facts...

After March, homes in the burbs started to get sold at a higher rate, as well as home prices started to increase due to a limited supply.

The demand for homes in the suburbs has caused that supply in these areas decrease by -41.2% compared to -34% in urban areas last month.

New listings dropped by -12% year over year, and in the top 10 biggest metro areas, the inventory for houses in the burbs decrease by -40%.

Shortage has caused an increase in sale prices of 7.3% in the suburbs.

Homebuyers started looking for suburban houses 54% more after COVID compared to last year.

This nationwide trend has been especially strong in the biggest metropolitan areas, such as New York and Los Angeles, where the research of the suburban home was 56% higher than in 2019.

The short-term tendency to move to the suburbs could rapidly change if a vaccine for COVID-19 becomes available, as cities will always be attractive for younger adults.

This trend didn't start due to COVID-19, the pandemic was a simple accelerator.



WILL OCEAN DRIVE BECOME A PEDESTRIAN STREET?

As part of the COVID inspired proposals, Ocean Drive completely restricted car access, which increased room for restaurants outdoor seating, and became the most accessible street for emergency transportation.

This solution showed to be really effective, as even pre-pandemic, Ocean Drive users were 62% pedestrians and there was only 42% of the space intended for walker's use. With more space for pedestrians, Ocean Drive started promoting the street's commercial economy.

Ocean Drive has always been an extremely pedestrianized street in Miami. However, the fact that the city committee has a proposal to transform it into a permanent solution as part of the game plan to revamp transportation in Miami Beach, is something different. The traffic of Ocean Drive would go to Washington and Collins Avenue, and Ocean Drive could start being used for delivery services and even become a valet-parking-only zone.



LINCOLN ROAD POP UP SHOPS: THE NEW STRATEGY TO SHOVE LOCAL ECONOMY

Retail vacancies and an approaching holiday season have been the best combination to propel local commences with "pop-up shops".

This original idea consists of creating shorter commercial leases of 90 days, with lower than usual rates to fill out vacancies of locals on the busy Lincoln Road. Locals are being rented for about $80/sqft for short term leases, compared to $250/sqft for annual rentals.

This program has the goal of fighting against the 8% drop in the occupancy rates since December 2019, with 60 empty storefronts.

Retail landlords are now offering lower rents for short term leases compared to annual contracts. The cost they are charging helps landlords break even, but they do it with the idea of keeping the street busy, as normally contracts include a percentage of sales.

There are already three retailers that signed up leases with the "pop-up shops" program, and hopefully, there are more to come. This program has the idea to incentivize retailers to test the market in the bizarre times we are living in.

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