Just a few short years ago Miami's condo market was booming and foreign buyers were snatching up properties to add to their portfolios. This lead to South Florida becoming the hottest market in U.S. real-estate as it recovered from its 2007 crash. Condo prices have rapidly been on the rise over the past several years, but this stands to change as new supply prepares to hit the market to the tune of investors slowing down their buying spree as global markets enter a period of volatility.
2016 will be a great time to keep an eye out for a new investment property in South Florida. With so much market volatility stemming from China, low oil prices, South American currency devaluations and tons of new supply hitting the Miami Condo Market, it appears that we are about to see a market correction. There are already tell-tale signs of a market slowdown including a slowdown in single-family home sales. While single-family home closed sale averages continue to rise, the percentage of closed sales has fallen year-over-year. Single-family home sales median prices rose 12% to $274,900 while the median condo price grew 7% to $203,000.
Sellers are typically the last to accept that prices are beginning to fall. The original market recovery was fueled by foreign investors, who accounted for about one third of condo sales. Today, many of these investors have backed off adding to their portfolio as GDP from their native countries have dropped. Brazil's Real currency has fallen in value by more than half since the market correction and tough economic sanctions on Russia have slowed down Russian money coming to Miami. Both of these countries are also heavily exposed to falling oil prices and unstable governments. Additionally the large amount of new inventory has caused investors to be slower and pickier with their investments as opposed to a fast closing market. Venezuelans have stayed quite strong in their desire to acquire Miami properties as they try to get money out of their country and into the stable U.S. economy.
To sum up, their simply just aren't as many buyers willing to pay the prices that sellers are asking. The market appears to be heading in the direction of 2014 pricing in order to stimulate buyers and get inventory moving. Areas that remain hot are where units are priced between $350,000 and $700,000. Higher priced areas such as South-Of-Fifth have begun to see a slowdown following a hot market that lead to some of the highest prices per square foot in Miami. The ultra-high end is also still strong above $3 million fueled by new buildings such as Faena House, Surf Club Four Seasons and Eighty Seven Park.
If you are considering purchasing a property in Miami but have been weary of jumping into a hot market, 2016 is looking like it is the year to consider pulling the trigger. With unstable economies, prices should fall which will open up great opportunity to acquire prime property at discounted prices. Don't be scared by falling prices, seize the opportunity!