According to media stories all over the country, the South Florida market, from West Palm Beach to Miami, is awash in overpriced condominiums, just waiting for eager buyers to snap them up for pennies on the dollar.
For those who believe everything they read, I have a wonderful bridge, right near Manhattan, that’s for sale…cheap. For those who are paying attention to what’s going on in the real estate market, take a look at the real condominium sales numbers for these cities.
According to the Sun Sentinel, of the 4185 condos built in Fort Lauderdale since 2000, only 173 still remain unsold. In West Palm Beach, where 32 new buildings were constructed after 2000, there are only 3 with unsold condominium units. Only Miami, which added more than 23,000 condo units, has not fared so well. It still has more than 8700 condos remaining.
Fort Lauderdale, in addition to unsold new condo units, has fewer than 500 total condominium units for sale with the city limits. This amounts to just over 10% of the total condominium units ever built in the city. With demand for condominiums on the rise - as of the end of July sales figures across the state were up 48%, and the median price drop was around 33% - the outlook appears to be very positive.
To pick up the pace in Maimi, many of the developers of these high-end condos are giving discounts of $100,000 or more on million dollar units with ocean or intra-coastal views. As prices drop down from $500 per square foot to around $200 per square foot, many of these units will sell at close to developer’s costs, or below. Condominium units that are in less desirable locations (away from the water) are likely to sell as low as half of that.
These developer misfortunes are seen as opportunities for foreign investors and hedge funds from the Middle East and Asia, and Latin America It is even possible that some domestic hedge funds will join the chase. These cash rich individuals or funds will purchase the unsold condos in bulk and hold them until prices rise.
But the condos will not stand empty. Instead, the investors are likely to rent them out in order to earn high returns on their money. A number of real estate analysts fear that rentals will devalue the properties and once again change the character of the neighborhoods.
Other analysts, myself among them, suggest that renting otherwise empty condominiums helps to revitalize a neighborhood. Filling buildings with working people who can pay rent brings in retail establishments, such as restaurants, clothing boutiques, and art galleries, which define neighborhoods and create hubs within a city. These new hubs simply add to the attractions available to nearby residents and out of town visitors.
Based on numbers of condos currently selling and condos standing unsold, Fort Lauderdale and West Palm Beach are keeping pace with the rest of the nation and showing overall gains. Only in Miami is there still a glut of unsold condominiums. However, over the next two years, we can expect that group of condos to shrink down to very small numbers as investors help to close the gap.
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.marcjablonhomes.com/
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