Miami Beach overheating
The city of Miami Beach, home to many of South Florida’s grandest properties with hefty price tags, is showing signs of overheating after its quick recovery from the housing bubble burst in 2007.
A heavy influx of buyers combined with low supply drove the prices of condo and single-family homes to record levels. Resales during the past two years have created an asking price that is higher than the real estate boom of South Florida in 2006.
Many watchers regard a healthy residential market to have around six months of resale inventory. Any higher than the conventional threshold and buyers would have a greater advantage than the sellers.
In addition to the high levels of resale inventory in the area, the rental inventory is also adding to the numbers. Many tenants are leasing newer units at low prices on the Greater Downtown Miami and Biscayne Bay.
During the first quarter of 2013, 108 single-family homes were bought at a median price of around $384 per square foot.
In the previous years, the first quarter only reported 101 single-family homes sales at a median price of $316 per square foot. In 2011, only 92 single-family homes at $308 per square foot were bought.
Before the market collapse, South Florida reported 43 single-family homes sales at the median price of $462 per square foot.
There are around 230 single-family homes resale listed in Miami Beach at $650 per square foot.
The rental market of Miami Beach is following the same trend.
Rental owners are seeking a median price of $2.70 per square foot per month. The asking price was despite the units’ fair median price of $1.94 per square foot per month.
Overall, both the sales and rental market have seen tremendous growth during the first quarter of 2013 as compared to their performance during the same quarter of the previous years.
On the bright side, the rental market of Miami Beach has about 121 days of inventory at the current pace of leasing in 2013.
The question remains, however, if whether landlords and sellers would remain their aggressing pricing scheme as more and more properties are placed in the inventory and other areas of South Florida, including the Greater Downtown Miami and the Sunny Isles Beach, are entering the competition for tenants, especially during the summer stretch.