Miami has attracted a lot of pre-construction condo flippers — i.e. institutional investors — because the city’s real estate, particularly near the waterfront, has seen an explosive construction boom after the housing bust. Today, this boom has created a supply problem and condo flippers have contributed to an excess of unfinished buildings.
Take Brickell for example. Among the newest condo projects is Bond Brickell, a tower with 328 units that was completed last August. StatFunding analyzed the Brickell condo area — specifically Bond Brickell — and found that while 318 units (97%) have been sold, the developer is still sitting on 10 units. Of the 10, four are listed for sale. And many of the sold units were purchased by preconstruction condo flippers with 69 of these units now listed for resale.
During booming times, developers typically unload all their units either to end-users or to flippers within a few months of completion. But these days, developers are getting stuck with unsold units, and flippers cannot flip. To make matters worse for the developer, Bond Brickell isn’t the only new tower in the area but is competing with other towers that have just been finished or will be soon. Another 1,700 new units will be completed over the next 12 months within blocks of Bond Brickell.
In the Brickell area alone, 2,547 condos are listed for resale. In 2016, only 1,017 sales closed. In Q1 2017, 227 sales closed. At the Q1 rate of sales, there is 34 months of supply.
If and when prices drop enough, there will eventually be a buyer… but current price levels have not lured buyers in yet. We’ll keep an eye out for future price drops in case this area or elsewhere in Miami might be of interest to future buyers!