In another sign that a new Florida condo boom is under way, the Miami Herald last week reported that 45 new condo towers are in various stages of development for the Southeast Florida area, including about 1200 new units in the tiny beachtown of Sunny Isles Beach, just north of Miami Beach. Even more amazing, according to another report from Miami Condo Investments, three Miami projects that launched earlier this year - 1100 Millecento, BrickellHouse and MyBrickell – are already 97 percent sold out. Two of the three projects have not even broken grounded yet.
Florida's amusement parks and real estate are a lot alike. Lots of peaks and valleys, dark tunnels, and unexpected turns. In 2006, Florida condo prices hit record highs and people waited in line to buy pre-construction opportunities that were being sold out of aluminum trailers. By 2010, many of those same buyers had walked away from their dreams losing thousands of dollars, and on one else was waiting in line. The Sunshine state was awash with empty condos, and prices plummeted about 50% by 2011. New buildings that were completed in 2007 and 2008 sat empty - buyers were nowhere to be seen. Developers filed bankruptcy all over the state and slashed prices to try to sell the excess inventory. Experts said it would take years to liquidate the condo-bust nightmare.
Today, the glut of unsold, new condos in much of Florida is virtually gone. According to Robert Walsh, project director at
www.toptenrealestatedeals.com, the Florida real estate recovery started in late 2010 and picked up a huge head of steam in 2011 and 2012. Walsh said there are still a few good bargains but most of the condo boom hangover has been purchased by investors, baby boomers and internationals.
Real estate in some parts of Florida is actually flourishing again. The Gold Coast area from Palm Beach to South Beach has seen a big increase in sales since early 2011. Apogee Beach is a luxury oceanfront building in Hollywood between Miami Beach and Fort Lauderdale that started construction late last year with 49 units priced in the $1 to $2 million range. In a big departure from the boom days to discourage speculation, buyers have to pay 40% of the total price when they sign the initial contract. Nevertheless, most of the units have already sold. Another new project that launched in late 2011 was Barefoot Beach Villas in Pompano Beach. They were priced in the $300,000 to $400,000 range and sold out in just a few months – mostly to Canadian buyers.
Most U.S housing experts agree that Florida is in the early stages of a huge rebound. Almost 95% of the 49,000 new condos that were constructed in South Florida's seven biggest coastal markets during the boom are now sold and the inventory of new beachfront condos priced under $1 million is down to a handful. According to the Miami Herald, the housing market in much of South Florida is almost back to the peak boom years of 2005 and 2006.
Florida home prices are probably going to jump over the next decade since there has been very little construction in the state since the bust and nothing substantial will be coming to the market for at least a few years, when most of the baby boomers will be in their retirement phase. Some real estate people believe prices in the most popular coastal areas could be twice as much as today's market. According to a recent report from Fiserv, most metro areas in Florida should see annualized appreciation of 8% to 10% in home prices over the next five years.
TopTenRealEstateDeals.com has been tracking Florida condo market sales since the market began to collapse in 2007. Walsh said that there are still a few new buildings in Southwest and Central Florida with good inventory and closeout pricing. These are often
projects that were completed in 2007 and 2008 just as the market was collapsing. Sales efforts at several of the buildings slowed down or even stopped as the original developers tried to work through multiple foreclosures, law suits and canceled buyer contracts. In order to liquidate inventory and repay the money lenders, new condos that were originally projected to sell in the million-dollar-and-up range were reduced 40 to 70%.
Walsh says that the current Florida condo situation is a repeat of what has happened several times in the past when robust real estate sales led to overbuilding and subsequent busts. In the late 1970s, developers slashed prices 50% and more to try to restart stagnant sales. One developer near Palm Beach was giving away a free Cadillac with every new condo to try to jump-start sales. Those same units are now worth about 20 times more than what they sold for in the 70s.
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