LGD’s Len Dugow Breaks Down the State of the Miami Condo Market in a 3-Part Series
The Real Deal: “Bulls and bears debate: is another bust imminent in SoFla?”
The Miami Herald: “Is Miami in a housing bubble?”
The Wall Street Journal: “Another condo bust looms in Miami.”
If you believed everything you’ve been reading lately about the luxury condominium market in South Florida, you’d probably think we’re heading for an epic crash like the one we saw eight years ago.
Relax, folks. We’re not.
Sometimes the media get carried away, and a story gets perpetuated until it becomes a self-fulfilling prophecy. And that’s partly what’s happening here. Sure, the market is adjusting, as it must from time to time. But you can ignore the voices of doom and gloom predicting a repeat of what happened here in 2008. It’s not going to happen.
What we’re experiencing now is a normal – and healthy – correction following one of the biggest building booms in South Florida history. It’s merely an adjustment from a market that’s been running in overdrive the past few years to one that’s more sustainable and will help balance out supply and demand. (And weed out the rookies and the reckless, I might add.)
Do we have an oversupply of luxury condos right now? Certainly. According to the latest report from Peter Zalewski at CraneSpotters.com, during this current development cycle, now in its fifth year, at least 417 new condo towers with nearly 50,800 units have entered the pipeline across South Florida. (The bulk of these – 262 buildings and nearly 37,100 units – are in Miami-Dade County.)
A total of 63 towers with 4,900 units have been completed, and another 130 buildings with nearly 14,700 units are under construction. An additional 210 buildings with 31,200 units are currently in the planning or pre-sale phase of development. Who’s going to buy all of these residences?
South Florida’s real estate market is and always has been cyclical – expanding and contracting based on economic and socio-political issues not just here at home but around the world.
For developers who haven’t launched their projects by now – especially those in oversaturated areas like Brickell, Downtown Miami, Edgewater and Sunny Isles Beach – they would be well advised to hold off until the market stabilizes and supply is more in sync with demand.
“Calibrating supply and demand is a tricky proposition, and timing is everything. Even seasoned developers can mistime the market and find themselves saddled with units that can’t be sold, loans that can’t be repaid or projects that can’t be built.”
For those who have projects currently under construction or already in the planning and pre-sale phase, they’re going to need a sound strategy to move from concept and construction to completion and closings. This is especially true for developers who don’t have experience or expertise selling in a market that’s slowing down.
The opportunities are there. The buyers are there. You just have to know where to find them and how to market to them. In my next post, I’ll share with you some of the successful strategies we’ve employed at LGD Communications to help our clients move from “For Sale” to “Sold Out.” Stay tuned.