Whether you think it’s good or bad, but there aren’t any significant changes to point out in this month’s South Beach Condo market statistics.
The most significant difference is that there were 56 condos sold in January of 2010, while the amount of units sold per months in the 3rd and 4th quarter of 2009 was 70. Whether this is a trend, remains to be seen, but I would guess that it can be attributed to slower sales activity during the holidays, which is completely normal.
Looking a little more long term, average sales prices are still declining (see graph below)
So does this mean, we can still expect prices to fall and should therefore wait if we are planning on purchasing a South Beach condo ? Yes and No.
Let me explain…
First of all, there are still plenty of overpriced units on the market, so if you have your eyes set on of them, you should either try to aggressively negotiate a lower sales price or wait until the price comes down (any Realtor worth their salt, will be able to give you detailed advice based on the actual units you are interested in). By the way, the current list / sales price ratio is 88% or in other words, on average a unit listed at:
$250k sell for $220k
$500k sell for $440k
$1 mio. sell for $880k
I do however see a trend of increasing prices and lower inventory when it comes to either extremely well priced condos, or prime units that rarely come up for sale. If you have your eyes on anything that is “rare” and priced well, you should move on it very quickly.
Why would the statistic show that prices are declining, but you are saying that is not necessarily true ?
Some of you might have that question in your mind right now. The answer is NOT that I do not trust my own statistics, but a much easier one.
The average sales prices can either decline if:
– actual sales prices come down (i.e. the same units sell, but for less money) OR
– cheaper units are selling (i.e. in Dec. 50 units sold for a total of $ 50 million and in Jan. 50 different units sold for a total of $25 million, thus reducing the average sales price by 50%)
I believe that the latter is the culprit. Looking at sales over the past few months, the vast majority of condos that sold were in the $350k and less range, with as much as 85-90% of sold units being in the below $600k price range. Of course this is due to the fact that prices have actually come down a lot over the past 3 years, but currently I think what we are seeing is a bit of a holdout from luxury condo buyers, who are waiting to see if the high end segment of the market will see further declines, whereas the low end sector is already seeing increases and buyers therefore feel more “urgency” to get in quickly. The first time homebuyer tax credit is also much more likely to affect the lower end segment of the south beach condo market.
All in all, no exciting improvements, however I’m happy to report that there are also no negative signs either.