The Red Hot South Florida Condo Market
The South Florida real estate market is on fire again! According to the home sales website, Zillow, the median sold price of a Miami condo is up 38 percent since January, 2013 and Fort Lauderdale condo prices have increased 32 percent. A new housing project in Delray attracted so many buyers that the builder awarded the homes in a lottery to keep people from camping out for days. Developers have announced plans for a $1 billion project of 1,600 apartments and condos near Fort Lauderdale's Galleria Mall and a $1.5 billion development of over 2,000 condos and 300 townhomes in Sunrise, Florida.
The situation is particularly frenzied in the Miami area, just a few years after condo prices were in free fall. Optimistic developers built almost 50,000 condos during the 2000 – 2007 boom years, many sold with just 10 percent down. But then came the Great Recession and the market collapsed. Buyers, who expected to flip the units they purchased in pre-construction for big profits, walked away from their contracts. Buildings that had sold out in just a few days during the good times were now empty. New prospects were few and far between, even after condo prices were slashed as much as 50 percent. The experts said that it would take years for Miami condo prices to recover.
The experts were wrong. Most of the South Florida condo bust inventory is sold and some areas are almost back to their 2006 peak prices. Once again, Miami is a city of cranes with 60 new condo towers either under construction or planned for the downtown area. Over 30,000 new condos are proposed for the Gold Coast corridor from Miami to Palm Beach. New projects on the water are priced from about $800 to as much as $5,000 a square foot. The best new penthouses on the Atlantic Ocean are selling in the $20 million to $50 million range.
The Miami Beach condo market is booming with pricey highrise developments that appeal to the world's wealthiest people. According to the developer, Gil Dezer, over 20 billionaires have purchased at Porsche Design Tower in Sunny Isles where owners will be able to send their cars up an elevator to their sky condo homes. Prices range from $6 to $32 million and the building is almost sold out. A few blocks from the Porsche building, fashion designer Giorgio Armani's development launched sales in July with prices ranging from $1.1 million to almost $6 million. According to the project's vice president of international sales, the 260-unit building is already almost 90 percent reserved.
A big reason why the huge South Florida condo bust inventory was liquidated in a couple years, instead of a generation, is a result of international buyers. According to the National Association of Realtors, about 25 percent of all international buyers of U.S. homes are buying in Florida - almost $8 billion in the last year. Although Canadians, South Americans and Europeans represent most of the foreign buyers, more buyers are also showing up from the United Arab Emirates, Switzerland and China. Florida has more all-cash home sales than any other state at a bit over 50 percent.
South Florida's weather and no state income tax attract baby boomers, internationals and vacation home buyers, but also athletes, celebrities and wealthy executives who buy the multi-million dollar condos and build trophy homes. People such as Tiger Woods, Rush Limbaugh and Michael Jordan. A Palace of Versailles knock-off mansion, officially named Le Palais Royal, is under construction in Hillsboro Beach, just north of a long stretch of 1970's era Pompano Beach condos. At over 60,000 square feet with a 30-car garage, an IMAX theater and a 22-karat gold leaf gate, it is the most expensive home currently on the U.S. market.
Other parts of Florida have also recovered from the condo bust days with new pre-construction condos and rising prices. For the second consecutive year, The Villages, near Orlando, had the highest number of master planned community housing starts in the United States. Most of The Villages housing is restricted to people age 55 and older. According to “Forbes Magazine,” it is the fastest growing small city in the United States.
Florida condo prices have increased so much in the South Florida area that some people wonder if another housing bubble is on the horizon. However, developers are now requiring large down payments - as much as 70 percent - that will discourage flipping and abandoned contracts. The more likely future is rising demand and prices as more baby boomers move into retirement, wealthy South Americans look for a safe haven for their money, and Canadians and Europeans gobble up the cheaper Florida real estate. The state has almost 20 million residents and will soon surge by New York as the country's third largest state.