Buying burst eats into downtown Miami condo supply, prices edge up
May 23, 2011
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By Marilyn Bowden
Bulk sales are tapering off, but brokers say a burst of buying activity since the beginning of the year is eating into the downtown condo inventory and, in some cases, even leading to appreciation.
According to a residential closings and occupancy study prepared for the Downtown Development Authority by Goodkin Consulting and Focus Real Estate Advisors, at the end of 2010, of the 14 residential condominium buildings in Miami's central business district, 71% of units were sold and 78% were occupied. Since then, brokers say, business has been brisk.
“This year has been phenomenal. Sales velocity is up at least 100%,” said Jeff Morr, CEO of Majestic Properties. “We haven't seen price rises across the board, but it is happening in some buildings.”
Eddy Martinez, CEO of Worldwide Development Services, said his company “did a couple of deals on two-bedroom units at Epic around November for around $650,000-$850,000. By February or March, the price for similar units had gone up $40,000-$50,000 more.
“At the Marquis, an investor bought 21 units in November
. When we tried to repeat the same deal in February, they refused it, asking for an increase of 15%-20%.”
There's still a flow of distressed inventory coming through from properties that closed between 2005 and '07, Mr. Martinez said, but lenders have timed their release so that they've never overwhelmed the market.
Because only buyers with very high credit scores are getting financing, he said, most deals are still all cash, and foreign buyers predominate.
“Our top buyers are Latin Americans, then Europeans, and also New Yorkers and Californians,” Mr. Morr said. “Their intent is to rent them out and hold them for three to five years.”
Many of those buyers are investors, Mr. Morr said, though buildings that are able to offer FHA financing are attracting end users.
Investor demand for bulk sales is dying out, said Zach Sackley, director of operations for the multi-housing team at CB Richard Ellis, because there's not much opportunity left.
“The last was in Everglades on the Bay,” he said. “Other than that, most of the other properties are selling out units at a velocity where they don't need to do a bulk sale.”
Investors will probably have to hold units a few years, Mr. Sackley said, and renting them may not cover all their expenses, but since their strategy is to sell when the market recovers, these buyers have an interest in paying their association fees and “the overall status of the buildings is going to be a lot cleaner than in the past.”