Miami Has a Four-Year Backlog of Overbuilt Luxury Condos Amid Affordable-Housing Crisis

Miami Has a Four-Year Backlog of Overbuilt Luxury Condos Amid Affordable-Housing Crisis
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By nearly every metric, Miami-Dade County is one of the most difficult places to live if you don't make a ton of money. The county's median income is a staggeringly low $44,000, compared to the $80,000 median income in a comparably expensive city such as Seattle. That means Miamians wind up spending a higher percentage of their incomes on rent than residents of any other city in America.

What have Miami-area officials done to help the working poor? They've encouraged developers to overbuild so many luxury condos for millionaires that it will now take years to sell them all, according to new research from local real-estate analyst Peter Zalewski.

Zalewski's CraneSpotters.com reported at the end of February that it will take 49 months (just over four years) to sell all the luxury condos developers have built across town. As of February 27, there were 2,767 luxury-grade condos up for sale across the county — despite the fact that ultrawealthy buyers bought only 684 of those units (57 per month) in 2017. A luxury condo in this instance costs a minimum of $1 million. (There were, in total, 14,452 condo units for sale across the county as of a month ago — an oversupply of about 16 months.)

The problem is especially bad in some of Miami-Dade's fanciest zip codes. Earlier this month, Zalewski noted that Miami Beach, Bal Harbour, and Sunny Isles Beach each have a four-year backlog. Downtown Miami has a whopping 6.5-year backlog.

The analyst notes that those numbers will likely seem low in a few years because there are still a gigantic number of condo towers still under construction across Miami-Dade.

"It is worth noting this report only tracks those South Florida condos that are formally listed for sale," Zalewski wrote two days ago. "The report does not factor in the nearly 47,450 new condo units currently in the development pipeline east of Interstate 95 in the tri-county South Florida region." (The Real Deal South Florida first reported on the county-wide data.)

If the county-level data wasn't dire enough, the numbers look worse when broken down by city. In Miami Beach, it will likely take 41 months to sell the 742 luxury units for sale. In Bal Harbour, the 281 million-dollar units will also likely take 45 months to offload. And in crane-saturated downtown Miami, the 505 luxury units available make up a 78-month supply.

Across South Florida (in Dade, Broward, and Palm Beach Counties), the touted "free market" has led to a total glut of 3,685 million-dollar-plus units, which will take roughly 3.3 years to sell at current rates.

It's astounding this near-unprecedented overbuilding scheme has not yet cratered the local real-estate economy. At the beginning of the month, the Miami Association of Realtors reported that the overall market in Miami-Dade is humming along strong — but that 42 percent of all home sales were paid in cash last year, which suggests that international buyers and a fair share of potential money launderers are still flooding the market.

But simple "sale" data doesn't actually explain how the Miami real-estate market is designed to work. Census data from 2016 and 2017 shows that established Miamians are moving out of the city in droves because middle-class housing has become prohibitively expensive, according to the Miami Herald. The city has grown over the past decade only thanks to a huge influx of international immigrants, but they too have found themselves quickly priced out of the real-estate market, as developers have become increasingly incentivized to build luxury condos for the global 1 percent to stash away as "investments."

In the meantime, the people who do essential work across town — servers, teachers, hotel housekeepers, nurses, people who stand in the sun and scrub BMWs by hand at luxury car washes — are squeezed into homes on the literal margins of the county's south and west ends. Last week, Miami Beach revealed in internal documents that more than 5,000 families applied for only 169 newly opened affordable-housing units in 2015. (Other waitlists exist for different affordable properties across the city.) After selecting 1,000 of those applicants, more than 500 are still sitting on a waitlist, and in the meantime, the city has admitted it has failed to create affordable homes for the working class over the past decade.

Similar criticisms can be levied at the county as a whole. The nonprofit Urban Institute in 2017 scolded the city's class of wealthy developers for intentionally fighting building affordable-housing units over the years. The new data this month might suggest the housing market is humming along smoothly — but it's clearly not working for actual Miami-Dade residents.

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