The Luxury Miami Condo Market in 2021 | When to Buy and What to Buy?
- February 19th, 2021
The Luxury Miami Condo Market in 2021 | When to Buy and What to Buy?
In the last three months the luxury Miami condo market has seen a spike in demand. After several years of price corrections and an extremely bearish 2020, buyers are now focusing on Miami luxury condos. In this article we go into this massive shift in buyer’s behavior and we explain the sudden increased interest in the Miami luxury condo market. We will also explain what we expect moving forward into 2021, whether this is the right time to buy and what you should be buying.
Why are we seeing changes in the Luxury Condo Market?
When we speak about the luxury condo market we refer to the $2M even $3M+ condo units of at least 2,500 SF+. We are specifically talking about the larger units, the ones that can function as a home and offer space for a home office. We are talking about premium units with large terraces and high ceilings in primary markets. These are the units that are in demand with buyers these days.
There are several aspects that come into play when looking at this shift in demand. First of all the Miami condo market reached a point of saturation in 2015/2016. These were the years in which the condo market experienced its peak prices and demand started to drop, resulting in a massive oversupply of condos. It took a while, but sellers started to realize that in order to sell they had to take a hit. Therefore this market has been correcting since 2016. In some way 2020 was a boiling point for the Miami condo market. The majority of buyers were relocating families from the northeast, Midwest and California (high-tax states) looking to permanently settle in Miami, therefore preferring a single-family home. Covid-19 boosted the Miami single-family home market as decisions to move to Miami accelerated, but didn’t do much for the condo market. Condos were closed due to Covid-19 and people tried to stay away from small condo units, elevators and shared spaces. This made 2020 a very slow year for condo sales and prices started decreasing even more.
The heavy demand for single-family homes resulted quickly in a lack of good-quality inventory and sellers realized they could increase their asking prices. With the fast absorption rate of Miami luxury homes (specially the new and waterfront ones) and premium price tags, buyers started looking at the ultra-luxury Miami condo market. As the condo market has been suffering for several years with 2020 being an extremely bad year for the market, we are now seeing real price corrections and that poses real value. Buyers are getting discounts and the units that were previously overpriced are now providing for really good value. Furthermore many condos are brand new, have never been lived in and offer spectacular views not common elsewhere in the US. With Covid vaccinations being rolled out, more and more people are starting to adapt to the new reality while fear takes a backseat. Buyers realize there is really good value in today’s market and the large units give them everything a single family home will give them with extras such as beach service, conference rooms, pools and all the services they need to have a great lifestyle.
Continuum on South Beach sold 9 units in the last half a year. The same amount of units sold in the same time frame one year ago. We are seeing however 17 properties under pending contract or active with a contract in place already. Pictured here is unit 2709 in the South Tower. This 3 bedroom unit sold for $3.6M or $1,696 per SF
What to expect moving forward into 2021?
We do not expect the rate of relocations to slow down in 2021. There is an enormous pull to move to Miami including tax advantages, a great climate, superb real estate, A-rated schools and an unmatched lifestyle. Wall Street and tech companies are now considering Miami as a new home base with Mayor Suarez spearheading the initiative to make Miami the next Big Tech mecca. We still receive daily relocation calls and indeed buyers are looking for large condo units. Today’s buyers, mostly relocating families coming from San Francisco, NYC and Chicago, are looking for a new primary residence. They are looking for large 3+bedroom units and the purchase is necessity driven. This means they are looking into the prime condos for the prime lines. This also means the market is not investor driven and therefore it is a stronger market.
Unit 1409 at the South Tower sold for $3.1M. This 2 bedroom condo residence sold in 22 days for $1,943 per SF.
Where are the Numbers and is this the right time to buy?
Although we have always been sceptics of the Miami condo market, there is a right price for everything. We believe the 2012 price levels represent the bottom of the next economic cycle. If you buy at the price levels of 2012/2013 it is safe to say you are paying prices that are close to the bottom of the market and there is room for your asset to appreciate. At this very moment the market is close enough to the numbers of the 2012 market. I believe this is the bottom of the market right now and from here onwards we can only go up. Prices have corrected and the demand is high. Furthermore this cycle is not dominated by investors, the buyers are primary residents who will not put these units up for rent, flip them or sell them at the first signs of economic struggle. Below we have shown a graph from ‘Smart Geeks’, our Condo Analytics tool. This graph represents today’s most desired markets for large luxury units. If you want to go into more detailed mode of specific neighborhoods or even condos please give me at call at 305.508.0899.
The Real estate cycle for $3M+ units in Miami’s primary markets
The Real estate cycle for $3M+ units at Continuum in South Beach
What is Condo Geeks?
Condo Geeks is a brand new and sophisticated tool, which is essentially a Bloomberg terminal for real estate. The tool empowers you to analyze entire neighborhoods, individual condos or a selection of condos. It provides users with the ability to look at the performance of a neighborhood / condo over time (amount of sales, prices per SF, discounts given and days on market) or to compare neighborhoods / condos to one another. It is essentially the best tool for consumers to see what a market is doing.
What Should you be Buying?
You should stay away from generic condos, condos with a lot of rental units and areas dominated by investors (Brickell, Edgewater). It is essential you buy in primary condos in the primary areas. With this I mean the areas where people will want to live all year round and not the areas that are dominated by investors and renters. Choose the best lines in unique projects with high ceilings, large terraces and high ceilings. Right now the most desired and recommended areas for condos are Coconut Grove, Surfside, Fisher Island, Bal Harbour and South of Fifth. The most desired condos with large, well finished residences are Palazzo della Luna on Fisher Island, Continuum on South Beach, Arte Surfside, Park Grove in Coconut Grove, Eighty Seven Park in Miami Beach, The Surf Club in Surfside, Oceana Bal Harbour and St Regis Bal Harbour. Call me for more details of these properties!
We are able to track the economic cycles of all of Miami’s neighborhoods and specific condos so call us for details at 305.508.0899