118 condos sales in a month! condo sales in Key Biscayne reach record numbers!
During the last 30 days, there have been 30 condos closings, 66 pending sales, and 22 active contracts. Just a year ago, the Key Biscayne condo market had 289 condo units for sale. A large portion of the market prior to Covid-19 had properties for sale for over 500+ days that would not sell. Sellers experienced a tough Buyer’s market.
Is Key Biscayne Real Estate Back to a Seller's Market?
Key Biscayne as many other markets and submarkets across the country have experienced the demographic changes produced by Covid-19 as well as the low-interest policy implemented by the Federal Reserve during this crisis.
The first 6 months after the pandemic, buyers principally concentrated in the single-family home market. For some, the low-interest meant they could finally invest in a house, for others it was the right time to upgrade. On the other, hand the lockdowns imposed during the Covid-19 drove many out of their condo living searching for the larger area a house could offer for their privacy and leisure.
For Key Biscayne and the Miami real estate market it was the demographic stampede of people relocating from heavily taxed states that have impacted the most. New Yorkers as far as San Francisco’s buyers chose Florida, especially Miami as the new city of choice to relocate. 118 condos sales in a month in Key Biscayne while at the same time condos in the downtown area of Miami are experiencing waiting lists for buying or rentals on specific condominiums.
As a result, Key Biscayne starts the month of March with 63 single-family homes for sale a record low inventory. As single-family homes start being scarce the condo market is now going thru the same phenomenon. January 2021 started with an inventory of 303 condo units and after 119 sales it leaves the market with a 6 month supply. The condo market is back to a seller’s market and we are still in the middle of the high-peak season for real estate.
This year condo closings have all shown discounts going no more than 4-5% at the closing table over the listing price, very soon the low inventories across the market will bring multiple offers to the listings and prices will spike. If you were considering buying or investing in the condo market this is your last chance before prices start changing in Key Biscayne.
What to Expect on the Next Few Months
At this time, the tendency is low inventory and property scarcity. The single-home new developments in Key Biscayne as well as in Miami are very low. The Miami condominium new cycle projects are not expected until the other half of the decade, there are only a handful of projects scheduled to be delivered before 2025 therefore during that frame of time, the market will be primarily left with the re-sale properties in inventory.
Additionally, as a result of the economic lockdown, the high price spikes on construction materials as lumber and other construction costs, plus delays due to short supply has made it more difficult for builders to develop or deliver homes.
Some will argue that once the mortgage forbearance and foreclosure moratorium is lifted the market will be flooded with properties. But this is yet to be decided, the federal agencies, Fannie Mae, and Freddie Mac have been more open to refinancing or negotiating deferment to be tacked onto the end of the loan term. Loans backed by HUD/FHA, USDA, or VA, are being more open to solutions. The difference between this mortgage crisis and the 2008 crisis is that most of these loans were done with larger down payments therefore they have equity. How much will the foreclosure affect the market is yet to be seen. The government decision extending the forbearance and moratorium to palliate the crisis until the economy is more stable will define the foreclosures market.
It is on the interest yield that most are focusing on, will the interest go up or not? Until when would the interest remain this low? Jerome Powell, Chair of the Federal Reserve has maintained that interest would remain low. Can the economy itself or the commercial banking entities be pressured by different financial components? Is the expected inflation going to raise interest rates? Are the government policies going to succeed? All these questions are on the table and speculation is not the best advice. The reality is that residential real estate is being financed at a record-low fixed interest rate that you can lock for 30 years, even if houses are slightly higher in price it is still a great deal. Now if you are waiting for the housing market to lower its pricing it does not mean it is a bad deal either, you will pay higher interests over less money. The only difference will be on the down payment and the financial banking liquidity. At this time banks have so much money that it is unquestionably a great time to buy.
The Luxury Market Behaves Differently
Key Biscayne and a vast area of Miami real estate fall into the luxury market category when compared to national averages, but when you analyze it closely, luxury properties fall into a different segmentation of the market that requires a separate analysis.
The luxury or wealthy buyers and property owners have different behaviors than regular markets, their wealth management, and investment motivation slightly differ. Now in a niche market, as Key Biscayne sellers tend to hold their properties in the market for a much longer time-frame, they are searching for an expected return. Additionally, both property owners and buyers tend to be more business-oriented and very savvy when it comes to understanding economical factors and cycles. If you have the means to purchase a property in the ranges of $10M-$20M+ it is natural to understand key economical and financial factors.
With this low inventory, sellers could be subject to multiple offers or buyers could get zero % discounts at the table. It is important to have an experienced realtor that understands the multiple factors to guide you through the negotiation, at this level expertise is very valuable.
When it comes to foreclosures, Key Biscayne is not a market commonly affected by it. In the luxury market owners have a lot more resources to prevent foreclosures in times of hardship. Nevertheless, the effects exerted by foreclosures on the economy and financial institutions can affect the market and luxury property will feel the impact.
Now, if you are a seller and for special reasons, you cannot put your house on the market at this time that does not mean that you cannot sell it at another time. Real estate sells in any market conditions you only need to understand the economic cycles, and how the Key Biscayne property market reacts to it. Moreover, with the new era of data analysis and database digitalization, artificial intelligence is key to new business models. A savvy real estate specialist that invests in these technologies can now be prepared for the slower economic market cycles. Long days in the market are something of the past, luxury real estate should not be subject to old fashion school models just because of a lack of real modern marketing. As a digital marketer myself it is mesmerizing what digitalization is doing, later on, I will dedicate a post entirely to help you recognize what is digital marketing and whether your real estate agent is using it or not.
If you have any questions related to Key Biscayne and Miami real estate market feel free to contact me