How price discounts are driving condo sales in Miami
Reduced prices have boosted Miami’s luxury condo market.
According to a new study by EWM Realty International, sellers lowered prices to propel sales of high-end condos in Miami-Dade in March 2017.
Ninety-two condos costing over $1 million were sold that month — a 31 percent increase over March 2016.
But only two of those units sold at full price. The median sales price of luxury condos in March was $1.47 million, and the average discount was almost 20 percent off the asking price.
Those that were listed closest to the final sales price went faster (122 days) than those with higher prices (259 days).
Despite the increase in sales, though, Miami still has a luxury-home glut. According to data from the Southeast Florida Multiple Listing Service (MLS), 4,467 high-end single-family homes and condos were for sale on March 31 — a 124 percent increase over the same day in 2013, when there were 1, 996 listings.
“There are more properties on the luxury market right now than we’ve ever had in history,” said EWM president Ron Shuffield, who conducted the study. “When you have a stockpile of four years’ worth of supply of luxury condos, that’s too much.”
Also hurting the luxury market: the loss of Latin American investors, who have shied away from South Florida due to the strength of the U.S. dollar.
Shuffield said 42 percent of all luxury units sold in Miami in 2015 were bought by someone outside the U.S. That percentage has dropped to 33 percent.
Real estate analyst Jack McCabe says he believes buyers from the U.S. and Canada will continue to invest in the South Florida market. But it will take some time for the current inventory to go down.
“How many multimillionaires could there possibly be in the world, and how many of them haven’t bought in South Florida yet?” McCabe said. “As new buildings are finished and hit the market over the next 18-24 months, the increase in inventory is going to surge. Already, you drive by these huge condo buildings at night and there are only 12 units out of 100 that have the lights on.”
Price reductions may be the key to keeping the sales momentum going.
“We’ve been seeing sellers bringing their prices down for the past year,” said Jill Eber, a broker-associate for The Jills, which markets luxury properties. “A lot of people who were holding back on buying have jumped in because of the reductions.”
Raul Santidrian, executive director of sales for Douglas Elliman Florida, represented the buyer on the sale of a 7,774 square-foot penthouse at Oceana Bal Harbour, which closed Tuesday at $18.2 million.
“It was originally listed at $20.5 million, but I negotiated,” Santidrian said.
McCabe believes prices in the luxury market will continue to fall before they stabilize.
“People always think that their unit is worth more than it is,” he said. “Brokers will tell sellers they’ll get what they’re asking just to get the listing, even though they know they will have to go back 60 days later and tell them to lower their prices. We’re going to see more inventory coming to market as demand is waning, which means prices are going to keep coming down.”