Why you should sell you South Beach Condo NOW….
If you have followed the Miami Beach Condo Market, you are probably wondering, why I’m saying the time to sell is now.
“I heard that the South Beach market is slow right now ? Weren’t prices higher last year ?”
Yes, you are absolutely correct.
So why am I telling you that the time to sell is now ? You’re probably thinking “oh, he’s just another realtor that will tell you whatever so he can get your business…”
Please hear me out as I’m going to try and get at least some of my credibility back…
First of all, if you are ok hanging on to your condo for another 3-5 or or more years, this information does not really apply to you. The market will eventually get better again and you will be better off selling when it does !
If however you have a compelling reason to sell in the next 1-2 years, then you should read on.
Here’s why I believe that selling your South Beach Condo now is better than selling it 1 or 2 years from now.
First of all let’s look at inventories. In other words, these are South Beach condos that are currently listed for sale. The following chart shows you a trend from Jan 2012 until Dec 2016. As you can see the number of South Beach Condos listed for sale grew by more than 50% from roughly 1300 listed condos in Jan of 2012 to roughly 2000 that are currently listed.
If you look at the trendlindes on the chart, you can see that the main increase in inventory started around Jul 2014 and inventory has been steadily growing since then.
Now let’s take a look at sales.
Here you can see the actual amount of South Beach condos sold per year from 2013-2016. As you can see we went from 1,666 sales in 2013 down to 1,069 sales in 2016. That a decrease of about 35%.
So…let’s sum this up. The amount of Condos for sale has grown by more than 50% in the past 2.5 years while sales have decreased about 35% in the past 4 years.
So what do you think this is doing to prices ?
Not compelling enough yet ? Ok, let’s keep going….
Let’s look at another metric. Average days on market. The time it takes for your condo from the time it’s listed to the time it’s sold. Comparing 2013 to 2016 you can see that today it takes roughly 20% longer to sell your condo that it did in 2013. While that is not as drastic of a change as the other metrics we previously looked at, the graph shows you that there was a steady upward trend since 2013.
And as if that wasn’t enough yet…last, but not least here is the sold / vs. list price ratio or in other words, the average percentage of the list price a seller can expect to when selling their South Beach condo.
The change here is the least drastic of all the metrics we have looked at, however the trend is the same and it’s not a positive one. While a South Beach condo seller in 2013 could expect to get 95.5% of the list price, in 2016 they only received an average of 94.6%.
In case you are already getting bored of numbers and statistics, please bear with me for just a one more piece of information.
The real estate market is considered balanced (neither a seller’s nor a buyer’s market) when there are 6 months of inventory. The amount of inventory is calculated by the amount of available condos for sale divided by the amount of condos sold per month.
Looking at the South Beach Condo Market, the last time we had somewhat of a balanced market was back in 2011. At the beginning of 2016 there were roughly 25 months of inventory. In December that shot up to almost fifty (yes, 50 !) months, however that is likely an outlier due to the fact that December is generally a slow month for sales.
So let look at the year’s average instead, which is close to 30 months. Still far from a balanced market and deep into buyer’s market territory.
Now that I’ve told you that the market is obviously bad, you are probably still wondering, why my suggestion is to “SELL NOW” ?
The answer is very simple. Looking at this data, I don’t see any improvement of the South Beach condo market in the near future.
Further taking into consideration some other factors, like:
- Miami Beach (unlike the greater Miami area and Florida in general) is has not experienced any population growth since 2000.
- This is the BIG ONE: Currently thousands of condos are being built in the area. While most of them are not located directly in South Beach, all these new condos will likely impact the South Beach market – just like the last pre-construction boom in Downtown / Edgewater / Brickell did – when they come on the market in the next 12-24 months.
=> All the pre-constructions condos currently under construction will make the inventory of available condos grow even more drastically over the next 12-24 months then it did in the past few years.
So my conclusion from all of this. (Drumroll, please !) It’s going to get worse before it get’s better !
How long this cycle will take is anyone’s guess, but I definitely don’t see any improvement in the next 24 months, therefore, as I said in the beginning, if you are playing with the thought of selling your condo in the next year or 2, you are better off doing so ASAP. Unless of course you want to wait 3, 4, 5 or more year before selling your South Beach Condo.