Miami’s crop of new condo towers, built with big deposits from Latin American buyers and lots of marketing glitz, are opening with many owners heading for the exits.
A third of the units in some newly built high-rises are back on the market, though most are listed for more than their owners paid in the pre-construction phase. At the current sales pace, it would take 29 months to sell the 3,397 condominiums available in the downtown area, according to South Florida development tracker CraneSpotters.com.
With the U.S. dollar strong, South American investors who piled into the downtown Miami market after the real estate crash are now trying to unload their recently built condos, adding inventory to an area where 8,000 units are under construction and nine towers were completed since the end of 2013. Some are offering homes at a loss as demand cools. Condo purchases from January through April slid 25 percent from a year earlier, while the average price fell 6 percent on a per-square-foot basis, CraneSpotters data show.
“The problem is that investors are no longer buying, and now they’re going to be looking to sell,” said Jack McCabe, a housing consultant based in Deerfield Beach, Florida. “And what buyers are going to replace those other than vulture buyers looking for deals?”
Lower Prices
Investors have much more at stake than the speculators who walked away from deals in last decade’s crash and left the market with thousands of unsold homes. In the latest construction boom, projects required cash deposits of as much as 60 percent, and contracts had stiff cancellation penalties.
Because owners of condos in new towers signed contracts over the course of a couple years, it’s difficult to know how many made purchases at prices above today’s values, said William Hardin, a professor of finance and real estate at Florida International University in Miami.
“The people who bought at the beginning are probably below where the market is today, but some bought later, at higher prices,” he said.
After several price cuts, one Brazilian owner at Related Group’s new Icon Bay tower is offering his two-bedroom condo for $539,000, 7 percent less than he paid in July. It’s now one of 100 listings in the 299-unit building.
“We are now the most affordable unit in Icon,” said listing agent Anthony Giuffrida of Elite International Realty. “To sell it quick, you have to put it at the right price.”