Nearly 80% of Owners Lost Money Reselling New Miami Condos

Nearly 80% of Owners Lost Money Reselling New Miami Condos

Nov 02, 2018 November 02, 2018

The average Miami preconstruction buyer lost 11% in resales from Q1-Q3 2018

CondoBlackBook.com recently teamed up with HB Roswell Realty to analyze new construction resales across Miami. We tracked condo units built from 2016 to 2018 in Miami’s urban core and beach areas where the original owner sold in the first three quarters of 2018.

What we found was suprising—most sellers lost money. On average, they lost around 11% when you factor in costs (1.7% at purchase and 6.8% at sale).*

Our team analyzed 102 new construction resales in Greater Downtown Miami, Coconut Grove, Miami Beaches and the surrounding islands (except Fisher Island and Key Biscayne) that closed in 2018 and found that 38 broke even or made a profit, while 64 resales lost money—nearly 63% of the owners in our study. When factoring in likely buying and selling costs, we can reasonably conclude that only 22 broke even or made a profit, while 80 resales lost money.

That means 78% of sellers were most likely left in the red after closing.

Click here to download a list of all the sales we used in our analysis
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Biggest Individual Winners & Losers

WinnersLosers
Biggest winner by %
Palau Sunset Harbor at 1201 20th St, Unit #201. Purchased new in 2016 for $1.549M and sold in June 2018 for $2.65M, a gain of 71.1%.
Biggest loser by %
Centro #1711. Purchased new in 2016 for $376,900 and sold for $230,000 in August 2018, a loss of 39%.
Biggest winner by $
The Surf Club at 9001 Collins Ave, Unit #505-S with a gain of $1.4475M.
Bigger loser by $
Porsche Design Tower #4405. Purchased new in 2017 for $11.8M and sold for $7.4M in August 2018, a loss of $4.4M.

The Downside of Speculation
Many people buy preconstruction condos to get first choice of inventory, enjoy discounts and buyer incentives, or to realize equity growth while a unit is still under construction. Many of these buyers are end-users who don’t mind the ups and downs of Miami real estate, which inevitably yields growth on a long enough time line.

However, our analysis reveals the downside of trying to resell a new construction property in too short a time frame. The Miami condo market in 2018 simply wasn’t strong enough to absorb resales at newly completed condos, and many owners suffered as a result.

Biggest Condo Building Winners & Losers

Condo BuildingAvg. Gain or Loss %Sales in 2018Max GainMax Loss
Palau Sunset Harbor42.6%2$1,101,000$149,000
Echo Brickell23.2%3$414,000$118,900
Fendi Chateau Residences15.2%2$1,123,000$678,400
Oceana Bal Harbour13.5%2$1,044,000$500,000
One Ocean12.0%4$600,000-$1,354,100
Le Parc at Brickell11.3%1$77,600$77,600
The Surf Club9.4%4$1,447,500-$500,001
1010 Brickell3.0%8$129,500-$28,000
Hyde Midtown-0.7%1-$2,900-$2,900
Biscayne Beach-3.5%18$197,200-$329,900
Grove at Grand Bay-3.9%7$700,000-$850,000
The Bond-5.4%8$56,100-$158,900
Brickell City Centre-6.5%3$41,300-$130,900
Centro-8.3%7$22,100-$146,900
Cassa Brickell-8.6%1-$30,100-$30,100
SLS Brickell-8.6%7$37,100-$160,000
Brickell Heights-9.2%11$6,100-$249,900
Brickell City Center-11.0%3-$32,012-$96,800
Peloro-13.4%4-$14,900-$140,000
Marina Palms Residences-15.8%4-$35,500-$249,200
Porsche Design-34.7%2-$1,900,000-$4,400,000
Grand Total-2.6%102$1,447,500-$4,400,000

An Overabundance of Condo Inventory
In a 6-month period ending Nov. 2, our target analysis area saw 138 units sold in buildings built from 2016-2018. However, there are currently 1,840 units listed on the MLS, which doesn’t even include unlisted developer inventory.

Whereas normal inventory levels range from 9-12 months, we are currently averaging 81 months of inventory – that’s 7-9x normal.

To absorb these units, Miami either needs a major new major demand source, such as Amazon HQ2 opening in Miami or a major devaluation of the dollar, or else we should expect to see prices come down further on new construction units.

Conclusion: An Opportunity for Buyers
The good news is that those looking to buy now or in the near future have many advantages. They have their pick of new construction resales at excellent price points (often lower than what they first sold for), plus they can see the finished product as opposed to just floor plans and renderings. This means less risk and more clarity about what they are getting for their money. And finally, with inventory at such high levels, buyers who have time and patience will have a lot of negotiating power.

New Condo Construction Inventory Levels

Buildings built 2016-2018
(Source: Miami MLS; stats as of Nov. 2, 2018)

Months of New Construction Inventory
Highest: Downtown Miami (33132)
Lowest: South Beach (33139)

New Construction Units for Sale
Most: Downtown Miami (33132)
Least: Miami Beach / Mid-Beach (33140,33141)

Zip CodeSales in 6 months ending Nov. 2Available UnitsMonths of Inventory
3312944669
331302630169
331312539595
331322113339
331331910633
3313716410154
33139155321
3314000N/A
3314163434
331541214271
3316010227151
TOTAL135183081


*All numbers are best estimates based on public records research and knowledge of the average costs and fees associated with Florida real estate transactions. Analysis based on sales data pulled from tax records on Sept 16, 2018. Only sales where both the original sale and resale were listed, and the resale showed up as a qualified sale per county tax records, were included in this report. We did not factor in unknown expenditures such as upgrades and finishes or mortgage-related costs, if any, and treated each sale like an all-cash deals for the sake of simplicity.

Contact Sep Niakan
Founder, Condoblackbook.com & Owner/Broker, HB Roswell Realty
(305) 697-7667
contact@condoblackbook.com
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