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

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

Nov 18, 2019 November 18, 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.

WinnersLosers
Biggest winner by %
Park Grove – 41% Gain
2831 S Bayshore Drive Unit #503
Purchased for $1.425 in February, 2019, and sold for $1.012M in July, 2018 for a gain of
41%.
Biggest loser by %
Brickell Heights East – 41%Loss
55 SW 9th St Unit #LPH4309
Purchased in 2017 for $999,900 and sold for $588,000 in August 2019, a loss of
41%.
Biggest winner by $
Park Grove – $413,000 Gain
2831 S Bayshore Drive Unit #503
Purchased for $1.425 in February, 2019, and sold for $1.012M in July, 2018 for a gain of $413,000.
Bigger loser by $
Jade - $950,000 Loss
16901 Collins Ave Unit#1402. Purchased in 2018 for $2.8M and sold for $1.84M in July 2019, a loss of
$950,000.


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.

Condo Building


Neighborhood

Avg. Gain or Loss %

Sales Q1-Q3  2019

Max Gain ($)

Max Loss

($)

O Residences

Bay Harbor

-35.35%

2

-249,500

-270,000

Brickell Heights East

Brickell

-22.70%

3

-58,900

-157,900

The Harbour

N. Miami Beach

-22.59%

1

-152,000

-152,000

Brickell Heights West

Brickell

-20.93%

6

-10,400

-411,900

26 Edgewater

Edgewater

-18.34%

1

-64,000

-64,000

Hyde Midtown (1st Ave)

Midtown

-16.45%

1

-68,900

-68,900

Hyde Midtown (34th St)

Midtown

-15.49%

1

-55,900

-55,900

Jade Signature

Sunny Isles

-15.45%

3

-160,000

-951,000

Marina Palms Residences

N. Miami Beach

-14.97%

7

166,300

-374,000

Paraiso Bayviews Condo

Edgewater

-14.47%

3

-51,400

-103,900

Biscayne Beach Condo

Edgewater

-13.59%

10

36,100

-245,900

SLS Lux Brickell

Brickell

-10.52%

13

78,100

-193,900

Paraiso Bay Condo

Edgewater

-9.57%

9

-3,900

-98,900

Two Park Grove Condo

Coconut Grove

-8.94%

1

-275,000

-275,000

Aria On The Bay

Edgewater

-7.92%

14

36,100

-300,000

Porsche Design Tower

Sunny Isles

-7.69%

1

-375,000

-375,000

One Paraiso

Edgewater

-6.99%

2

-39,900

-125,900

Habour House

Bal Harbour

-3.13%

1

-18,900

-18,900

1010 Brickell

Brickell

-2.81%

11

48,100

-100,000

The Muse Condominium

Sunny Isles

-0.89%

1

-20,600

-20,600

Elena Sobe

South Beach

0.00%

1

0

0

One Bay Residences

Design District

0.00%

4

0

0

Parcview Villas

N. Miami

0.00%

2

0

0

L'Atelier

Miami Beach

0.00%

1

0

0

The Pines

Coconut Grove

0.00%

1

0

0

Echo Brickell

Brickell

0.93%

3

280,000

-336,100

Aria On The Bay

Miami Beach

4.38%

14

1,200,000

-139,900

Prive

Aventura

5.27%

3

203,100

0

Palmhurst

Coconut Grove

5.56%

1

40,000

40,000

Oceana Bal Harbour

Bal Harbour

8.07%

1

280,000

280,000

The Hundred Collins

Miami Beach

14.77%

2

375,000

175,000

6080 Collins Beach House

Miami Beach

24.99%

1

69,969

69,969

Club Residences At Park Grove

Coconut Grove

26.55%

3

413,000

36,000

The Palms

Bay Harbor

36.04%

1

154,700

154,700

Frow Homestead (3211 Percival)*

Coconut Grove

76.65%

1

377,500

377,500

Grand Total

-6.29%

116

$413,000

$-951,000

  *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)

Zip

Sales in 6 months ending 30 Sept, 2019

Available Units

Months of Inventory

33129

2

48

144

33130

43

298

42

33131

41

347

51

33132

15

180

72

33133

27

108

24

33137

53

399

45

33139

22

106

29

33140

2

61

183

33141

2

31

93

33154

10

70

42

33160

16

201

75

TOTAL

233

1849

48


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.
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