A Slowdown In Miami Condo Sales?
Big names in the Miami condo marketplace are scrambling about and shouting to the hilltops declaring that the Miami condo industry is oversaturated with supply and seeing dwindling demand. They are basing their theory on some indicators, but mostly on historical trend data. They have frantically been moving into the rental space and hunkering down for what they see as an extended lag to this segment of the industry.
Is this doom and gloom justified? Could they be wrong?
Just like with any other type of investment and investor, those who get out of the game too soon can miss some tremendous gains. It does not take a genius to see that the Miami of today looks nothing like and acts nothing like the Miami of yesteryear. Now, some data reports are showing that Miami is shifting development cycles with higher peaks and smaller valleys. Let’s say we are entering a slowdown in the condo market is tightening up, there is nothing to stop an upswing in the next couple of years.
Those backing the stance that the condominium development cycle will stay healthy cite the large quantities of cash- not debt- that has been fueling the high-end condo buildings and that the majority of those outstanding units will close. All the current projects that are currently underway do not show signs of slowing. Even if the market softens, the idea that developers will take hard line discounts to unload units seems a little pre-mature.
Just looking at the multiple options these major real estate players are currently using suggests that they do not expect a major exodus in the Miami development industry.
- The players who already have space will look to head in either of two ways: invest to design projects, market and sell, or stay on the sidelines until they feel that the next up-cycle is clear and present.
- Those without land will sit and wait for prices to become more “affordable,” as they did during the 2009 to 2012 cycle. They might find themselves sitting on the bench a long time if a large number of distressed properties do not come around as they did last time.
- There also seems to be small groups of international players that are looking to press forward with large projects no matter what the current indicators are projecting. Some foreign investors are just not concerned with short-term cycles they are focused on grabbing long term plays.
- Lastly, some of the top tier wealthy players who do not have a current deal in place will be looking to pay current prices to start developing immediately. They too are playing the long game.
The big difference is that Miami did not have the deep-pocketed players with visions, timetables and diverse strategies in the last up and down cycle. The same goes for most of the condo buyers who will not be high tailing it out until they are told the coast is clear.
Miami is still as attractive a place to live as always. The city has continued to grow in its economy and its social landscape. Its offerings are more diverse and plentiful than the city has ever had. Who would want to leave or live anywhere else?
Maybe the residential condo landscape is just getting comfortable in a mature cycle. Yes, one with a constant, steady, but not “crazy,” demand for beautifully designed and highly customized condos. Time will tell.