I want to tell the truth about housing supply and demand in Miami Beach. As previously posted, there's been significant Miami Beach Real Estate Sales Momentum in the last few months -continuing a strong upward trend. According to financial experts, this simply wasn't supposed to happen so soon after the financial crash of 2008. I heard all summer that when the tax credit expired, we would begin to see a sharp degradation in purchasing of existing homes AND condos in Greater Miami and Miami Beach and a corresponding price decline, predicted as much as 20% to 25%!
We're experiencing the opposite -- strong sales momentum, and prices that are holding steady to actually increasing. For example, we are seeing this upward trend in Miami Beach's South of Fifth Neighborhood, which has a finite supply of luxury waterfront buildings such as The Continuum on South Beach, Murano at Portofino, and Icon South Beach. When you link the latest sales numbers with a zero new building construction starts, you get this monumental shift that explains the increase in sales and the increase in prices that were NOT supposed to happen so soon! A case in point, even in Miami Beach's long-troubled Bentley Bay condominiums at the southern end of West Avenue- we've seen a dramatic decline in inventory from approximately ninety (90) condominiums offered for sale in late 2008 to under sixteen (16) today. Also, due to the high volume of pending contracts we will probably see gradual price APPRECIATION for select waterfront South Beach condominium buildings.
I came to the conclusion long ago that the overall Miami Beach housing market (whether for condos or single family homes) is on the rebound. Particularly when we look at the City of Miami Beach's STRONG anti-development restrictions on tearing down existing buildings, and limited Floor to Area ratios, the conclusion is that there's a PERMANENT limitation on future housing supply in the city of Miami Beach.
This is particularly relevant for South Beach's South of Fifth neighborhood, and the appropriately named "South of Fifth" development that was just acquired by iStar Financial Inc. (NYSE:SFI). It was announced last week that iStar will have full ownership of the luxury Miami Beach real estate condominium project “South of Fifth,” located at 125 Ocean Drive (right next to the Bentley Hilton). iStar plans to rebrand South of Fifth, reposition the condominium in the market, and redesign the intimate, seven-story beach-front condo with a multi-million dollar luxury investment. South of Fifth currently features 28 oceanfront residential units, three office units and one retail space. Units range in size from 660 square feet to 6,240 square feet. Preliminary marketing plans will have asking prices in the $1,000/S.F. range. Condominium amenities will include a private lounge, gym facilities, beachfront pool, private beach club, hotel services, as well as 24-hour valet, security and concierge.
Miami Beach is an International tourism mecca, drawing affluent foreigners from South America and Eastern Europe. The South of Fifth Neighborhood is where everyone wants to be these days. This has turned into a diverse & complete vacation destination for tourists who crave year-round sunshine, modern luxury waterfront condo residences, a vibrant night life, and a wide variety of gourmet restaurants & beaches.
If you're a potential Miami Beach condo or home buyer, my recommendation is to act NOW. The fact is that there's a very limited supply of WELL priced luxury waterfront homes and condos in Miami Beach, particularly for waterfront luxury residences located in the immediate South Beach area. The more motivated Miami Beach sellers, whether they be lenders or individual owners, are rapidly disappearing!
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