The average Miami Preconstruction Condo buyer lost 14% in resales through Q3 2019

This year, CondoBlackBook.com again teamed up with HB Roswell Realty to analyze the latest new construction resale data across Miami. We tracked new condo units built between 2017 and 2019 in Miami’s urban core and beach areas that have since been sold by the original owner in the first three quarters of 2019.

What we found builds upon last year’s report and is surprising—most sellers lost money. On average, Miami new construction condo resales lost around 13.9% when factoring in costs (1.7% at purchase and 6.8% at sale).*  This follows our analysis conducted over the same period last year in which we found sellers lost 11% on average.

Our team analyzed 116 new construction resales in Greater Downtown Miami, Coconut Grove, Miami Beaches and the surrounding islands (except Fisher Island and Key Biscayne) that closed in 2019 and found that 40 broke even or made a profit, while 76 resales lost money—nearly 65% of the owners in our study (compared to a similar figure of 63% in last year’s study). When factoring in typical buying and selling costs, we can reasonably conclude that only 13 sellers broke even or made a profit, while 103 resales lost money.

That means almost 89% of sellers were most likely left in the red after closing.

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 timeline.

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 and 2019 hasn’t been strong enough to absorb resales of newly completed condos, and many owners have suffered as a result.

Biggest Condo Building Winners & Losers

Here are the most active new construction condo buildings in the Miami area for resales in 2019. Our report shows condo buildings that are yielding the biggest losses and gains in resale values, as well as the Miami neighborhoods.

  *These units were duplex units and possibly converted from single family, making their gains not directly comparable to condo units. 

An Overabundance of Condo Inventory

In a 6-month period ending 30 September, our target analysis area saw 158 units sold in buildings built from 2016-2019. However, at the end of September there were 1,339 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 48 months of inventory – that’s 4-7x normal.

To the rest of the nation, Miami’s condo market can seem hyperactive. But even by local standards, it’s unlikely the area will experience a major event to absorb the excess condo inventory. Last year, there was hope that Miami might land Amazon’s HQ2, however, without a major devaluation of the dollar, we should expect to see new construction condo prices decrease under pressure.

Conclusion: Prime Opportunities for Buyers

So what’s the takeaway? In Miami there’s always sunshine to be found and the good news is that buyers looking to purchase now or in the near future are really in the driver’s seat, particularly for first-time condo buyers, empty nesters or snow birds seeking a relaxing vacation home. Buyers can have their pick of new construction resales at excellent price points (often at near or lower than what they first sold for), plus they can see a completed unit with finishes as opposed to buying off of 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 2016-2019
(Source: Miami MLS; stats as of 30 Sept, 2019)

Months of New Construction Inventory
Highest: Miami Beach (33140)
Lowest: Coconut Grove (33133)

New Construction Units for Sale
Most: Downtown Miami (33137)
Least: Miami Beach / Mid-Beach (33140,33141)

If you would like to verify or run your own numbers, we have made the source data available here.

*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 30, 2019. 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.