Miami Beach Real Estate: 2008 South Beach Condo Market Index

Last year was very telling for Miami Beach real estate in terms of how the market actually performed versus how people think it performed.  Everyone has an opinion on where the market was, is, or where it’s going, but the current evidence speaks for itself. Read on, and you’ll find some surprises. As for the future, even a shiny crystal ball isn’t sufficiently predictive (and EVEN I don’t have one).

I’ve comprehensively tracked condo sales in Miami Beach’s SoFi (South of 5th) neighborhood, which includes:  Apogee South Beach, Continuum North, Continuum South, Portofino Tower, South Pointe Tower, Murano at Portofino, Yacht Club, Murano Grande, and ICON South Beach, since I began this blog in 2007. The data in this post is based on info from the Southeast Florida Regional (SEFR) MLS and from the associations participating in the SEFR for the period 1/1/2008 through 12/31/2008.

If we were to believe EVERY media story, our perception would be one of complete devastation.  Let’s look at the “devastation” for 2008.  Note that there hasn’t been much change since my last market stats post in November.

Miami Beach Condo Sellers: Are You “Chasing Down the Market?”

If you’re an owner of Miami Beach real estate and would like to sell your house or condo, this is the most important graph for you.  In a market that’s in decline, pricing your property against your competition’s list price is deadly.  Heck, at this point, pricing your property against the most recent sale(s) isn’t good enough either.

The key – and the hardest part – is to know where the market is RIGHT NOW.  This takes the help of a well-connected and informed real estate professional. Hopefully, your agent (if you have one) has great relationships with other top local agents.  In a declining market, the goal is to stay ahead of the market. To accomplish that, I rely mainly on information from transactions happening NOW that will close in one to three months.

For the graph above, the rule of thumb is that up to approximately 10% of the total number of condominiums in each building could be available for sale at any given time without concern.  It’s too early to judge Apogee South Beach and Continuum North because it’s typical for new buildings to open with a lot of inventory.  In a normal market, a building usually “rights” itself within a year or so; then the inventory is in a normal range.

Wow. Wow. Wow!  Apogee is pretty impressive.  From a stats post on 9/2007, you can see that every one of these buildings in the index has declined in $PSF, except for Continuum South.  There’s more interesting news on the way about SoFi/South of 5th – the neighborhood in South Beach that continues to defy ALL trends, but I’ll save that for my very next post.

Okay – let’s get to some eye candy.  I love to end my posts by giving you a little reward for reading all the way through:

Continue Browsing Miami Beach Luxury Condos Here

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  • Thom Abbott

    Kevin…Great Post! We all need to work together and get good news out there!

  • http://www.kevintomlinson.com Kevin Tomlinson

    Thom

    It’s really not about “getting the good news out there,” It’s about getting the RIGHT news out there!

    Thanks for stopping by.

  • http://www.raincityguide.com ARDELL

    Kevin,

    I have a couple of questions, if you don’t mind.

    1) What are the counters made of in that “eye candy” condo? Are they a cement product? Are you seeing trends away from granite for counters, and if so…to what?

    2)Is the variance between PSF asking prices and sold prices in line with the variance between accepted offers and asking prices? For instance Apogee is showing $1,483 asking vs. $1,354 sold. Roughly 93%/94% of asking price. Is the average unit selling at 95% of asking price or less? Or do the on market asking prices have a little too much room?

    If people are on average offering 95% or less of asking, then the list PSF looks good. If they are selling at 98% of asking, then the list looks a bit high.

  • http://www.kevintomlinson.com Kevin Tomlinson

    Ardell,

    Mind? Naw. I’d love to answer your questions. Just running out to show some property. I’ll be back!

  • http://www.raincityguide.com ARDELL

    Thanks for the quick reply. Look forward to the response, when you get time. No hurry, of course :)

  • ja

    The absorption rates in these buildings is horrendous. To act like there’s good news in this neighborhood is, quite honestly, deceptive.
    You know as well as I know that you don’t want to be a holder of RE in most of these buildings right now.

  • http://www.kevintomlinson.com Kevin Tomlinson

    ja-

    Actually, I couldn’t disagree with you more. The numbers are the numbers and we all all beholden to them, no matter how you want to view them.

    The condos in this neighborhood may have quite possible out-performed ALL real estate in South Florida.

  • ja

    Kevin,

    I agree that this area outperformed most areas. However, you need to be forward looking in your analysis. Right now is NOT the time to own in these buildings. Absorption rates are completely out of alignment. A lot of finance money that bought in this area is gone. Demand has dwindled. Inventory is high for most of the buildings.

    All of this is a recipe for massive price cuts.

    And yes, numbers are numbers. So tell me what the current absorption rates are for these buildings, bearing in mind 6 months is a balanced market.

    Conveniently you left those #s out.

  • ja

    Following up: I don’t have month-to-month sales figures, but based on total sales of 2008 let’s look at the Continuum buildings.

    * Continuum South: 20 units sold all of 2008, 52 on the market now. Absorption rate = 52/20 = 2.6 yrs!
    * Continuum North: 14 units sold all of 2008, 54 on the market now. Absorption rate = 54/14 = 3.86yrs!!

    Now 0.5yr absorption is considered a balanced market as you know. Guess what 2.5-4yrs is considered??

    **Feel free to correct any # I might have wrong, or to break it down monthly. I’m getting # of units availabile from a website other than yours.

  • http://www.kevintomlinson.com Kevin Tomlinson

    JA
    With reply to your comment:
    >>you need to be forward looking in your analysis..<< That statement is the problem right there. If you have read my blog, I have never offered any insight on anything except for things that have already happened. You have NO idea what is going to happen in the future, and nor do I. To be honest, I get a good chortle out of people who analyze things to death and churn out an opinion of what definitely is going to happen. I’ve been watching people/media/observers do this for the last FOUR years. I don’t have it in me anymore. Sorry. Yes, absorbtion rates are high AND real estate is governed by laws of supply/demand AND location. South Beach/SoFi neighborhood is probably one of the most desirable areas in one of the most exciting cities in the world. Further, the land that Continuum North and South sit on is most assuredly one of top twenty locations in the World. You don’t have to tell me how to interpret the numbers. I sit with the owners of those properties EVERY day. For most, money is NO object. Here is the most insightful thing I have to say: The best neighborhoods are the last to go down…and the first to come up. Now, I agree with most of what you say, but the first place the inventory will get absorbed is in the best location(s). I can see how empassioned you are about the morbidity of the market–but the reality is not one person in anyone of those towers is going to go without health care or food. On my blog I WILL not be a purveyor of doom and gloom; nor will I be a cheerleader for ANY desired outcome. As the cliche goes: “what will be, will be.”

  • http://www.kevintomlinson.com Kevin Tomlinson

    ARDELL,

    It looks to me as if the countertops are Silestone. Since modernism is in, yes, I am seeing a trend away from granite because it seems to be too “warm” for modern interior design (except for Absolute Black, of course).

    With regard to asking prices vs. actual sale prices, I’d have to say that there really is no real gauge of list to sell ratio.

    As you know, the “numbers are the numbers” and when sellers are open to hearing the real value of their property that is when properties tend to sell. As @jonathanmiller says: “..more people actually want to know value vs value they need.”

  • ja

    “You have NO idea what is going to happen in the future, and nor do I.”

    No, but that doesn’t stop people from making educated predictions. If the requirement for a prediction is absolute certainty, you’ve set the bar too high. We might as well invest by throwing dice to make our decisions.

    “Yes, absorbtion rates are high AND real estate is governed by laws of supply/demand AND location.”

    Absorption rates are SKY HIGH. And pricing is determined by supply and demand. Location, as perceived desirability, falls under demand. Absorption rates nicely capture both the demand side and the supply side of the equation. And those #s look horrific, as you must admit. 2.6yrs and 3.86yrs absorption rate, when a balanced market is 6 months. There is no way to spin that into something remotely positive.

    “Here is the most insightful thing I have to say: The best neighborhoods are the last to go down”

    I agree. And they are going down as we speak.

    “I can see how empassioned you are about the morbidity of the market–but the reality is not one person in anyone of those towers is going to go without health care or food.”

    Maybe not. But there are people who view their condo as an investment and don’t mind taking a loss if they think it will save them in the long-run. Actually, if you talk to some of the owners who are dropping their prices you’d know this is the case. And some people are financially pinched (though not to the extent of going homeless, of course).

    “On my blog I WILL not be a purveyor of doom and gloom; nor will I be a cheerleader for ANY desired outcome.”

    If this were the case you would have openly provided absorption rates in your above analysis and acknowledged that they are horrible, rather than claim that Sofi is “the neighborhood in South Beach that continues to defy ALL trends”. Just curious what trend it is defying with respect to increasing inventory and dwindling demand.

  • http://www.kevintomlinson.com Kevin Tomlinson

    JA,

    As a courtesy to you and your time, I will let your comment stand. Lucas over at miamicondoinvestments.com is my good buddy, BUT what goes on in his comments WILL not be allowed here.

    Good debate will always welcomed, but questioning my ethics will not be welcomed, nor tolerated.

  • http://www.kevintomlinson.com Kevin Tomlinson

    JA,

    One last thing, I have good relationships with people see things differently than I.

    I have a good relationship with Miamicondoforum.com.

    He completely has the right to say whatever he feels.

  • http://www.kevintomlinson.com Kevin Tomlinson

    JA-
    Educated predictions are what people pay me for. I don’t do what I do, for as long as I have done it, for free.

    If you have a question about real estate or this building or neighborhood vs. that one, this blog is not the forum for that.

    If I have a opinion that could hurt an innocent by-stander, it will not be trumpeted on this blog. It will be private, and I will get paid for it.

  • ja

    Kevin, obviously I’ve hit a nerve and for that I apologize.

    I have no idea what that Miami condo forum is but I’ll check it out. Thanks

  • Chris

    Continuum North has a lot more unsold than you might think. The developer still has plenty of units left that are not listed for sale on the MLS. I guess they don’t want to saturate the market.

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