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.
Winners | Losers |
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.