Carlos Rosso, president of condominium development at Related Group, tells the Wall Street Journal that this time last year, his company was selling an astonishing 100 units a week in Miami. This year, it's averaging about 20 per week. Condo transactions in Miami Beach were down about 20 percent in the last quarter of 2015 compared to 2014.
Though the median sale price of condos in Miami-Dade has continued to rise slowly, developers don't expect the trend to continue. More than 7,300 new units are in the pipeline, and developers tell WSJ they're preparing to lower prices and offer more perks to move them.
The reason, as we've all heard before, is in large part because of lowered interest from Latin American buyers. Economic problems and less favorable currency exchange rates i
Developers have seen it coming for a while and have been quixotically trying to tap the Chinese market instead (despite the fact there's not a single direct flight from anywhere in China to Miami International Airport). They've had some success coupled with increased interest from New York-based buyers looking for a second pad, but it won't make up for all of the losses.
"The condo market has peaked,” Neisen Kasdin, former Miami Beach mayor and current real-estate development lawyer at Akerman LLP in Miami, tells the Journal. “Sales velocity has slowed down considerably.”
It won't be a repeat of the 2008 crisis, though. This time around, developers asked for 50 percent of the price upfront. Developers are also curbing their plans and canceling projects that were in development to lessen the potential problems of excess inventory.
That means developers won't be left in proverbial wooden barrels, but the market is definitely shifting to favor buyers. Related Group it selling condos for $600 per square foot now that it might have offered for $850 earlier in the cycle.
However, don't expect the price correction and condo market shifts to make it necessarily easier for locals to buy real estate. A shift in the luxury condo market won't necessarily affect the single-family home market, where prices continue to soar.