The Miami-Dade County condo market is coming under severe stress, and turmoil is spreading.
There are two aspects: supply and sales activity overall, and the more obscure but highly indicative “preconstruction market.”
Preconstruction condos are a favorite playground for condo flippers. They buy the units before construction begins. When the building is completed, some of the buyers (in recent years 30% to 40%) flip their units at a profit, benefiting from the run-up in condo prices in the interim. This activity is crucial in helping developers fund their working capital. Alas, the math has stopped working.
The overall condo and townhouse market in Miami-Dade County is already in trouble. In October, sales plunged 30% year-over-year, while inventory for sale rose to over 14,000 units as of November 1, according to StatFunding’s Preconstruction Condo Market Update.
At the current sales rate, that makes for over 13 months’ supply.