11/17/2018
What happened to the Miami Condo market and how did I know it would Correct (mild crash) years ago? This is a question that I am asked all the time by residents, developers, and city officials.
When I look at the Miami Skyline, I see a BIG mess 1000's of condo's that were sold to investors. Everyone from all over the world is buying Pre-construction condo's in Miami, hoping to sell them when they are finished. The major mistake a buyer made is when buying an investment, you need to run your cash flow. For example, you buy at $600K condo and put $150K down leaves you with a $450K mortgage. The rent is $3k per month based on those #'s, best case you would lose $15k a year. Would you put $150K in the bank, if every month the bank asked you to pay $1k a month and fix the toilets?
Fast Forward 3 years, all the condominiums are finishing at the same time and everyone is hoping to sell. Except now there is not any buyers at their inflated price, so they need to rent them. Which brings us back to the cash flow, how long is one willing to lose monthly, before they give up. That's where we are now, it's a stalemate. Time will tell.
Last question I get, "why did Miami Beach market fall, when it didn't have many new Condominiums?"
If you are drawing from the same demand, then you are the SAME supply. People have chosen to live in Brickell, Wynnwood, and Miami over Miami Beach. This is not Manhattan, it's easy to cross the bridge. For now, it's best to wait and for the supply to settle in. Miami/Miami Beach need to take deep reflection at themselves, decide if they want to be a community or a commodity. Until then, DON'T BUY, RENT.
