During the past few years, the scene in South Florida has transformed from low-rise structures to high-rise luxury condominiums hundreds of feet high. No doubt the South Florida condo market has been booming. However, as the building heights rose, so did the prices. Now, the dramatic hype of condo construction and development is on the verge of landing its way back to the ground, as real estate analysts predict.
The apparent upward movement of the South Florida condo market has been thwarted by inevitable economic realities, thus making even the most headstrong condo developers of the region recoil. Supply now outpaces demand in the South Florida condo market, and selling prices already are equilibrating. Values of newly-built condos could probably fall by at least 15% by the time the market plummets. Due to unbridled overbuilding, lenders are now wary of financing condo construction, thus compelling developers across South Florida to defer, cancel or overhaul their respective projects.
A lot of condo units in different part of South Florida such as Palm Beach, Miami-Dade, and Broward counties were either still under construction or already done but still unoccupied. Analysts projects that activities will soon resume in these places as soon as everything normalizes.
Analysts trace the South Florida condo problems to short-term investors, who bought condos at low pre-construction prices and waited as the units rise in value before having to close on the properties. These investors then sell the properties to other buyers for hefty profits, trading condos like shares of stock. This trend systematically induced demands to inflate and steer prices upward while driving developers to build more. For the case of a place like downtown Miami, which is the epicenter of the condo construction shockwave, the development is fuelled by international money.
In West Palm Beach, condo construction is as a result of it amazing shopping and exquisite entertainment complex. Fort Lauderdale also has its share of this condo boom, but it is not as overbuilt as the other locations in South Florida, I guess this was as a result of the restrains of further residential building downtown until an affordable housing law is passed. Overall, the insufficient number of long-term owners purchased condos combined with investors dumping properties for sale has created a surplus of properties across the South Florida condo market. Investors have been getting frantic as they have been advertising all sorts price slashes attract buyers.
While some lenders have stopped financing for condo construction, others who remain have tightened ad heightened lending policies, such as insisting at least 60% pre-sales. This, however, contrasts the former situation. Another striking blow to developers is the continually increasing costs of construction materials. Because of this, several condo developers have canceled projects, returned deposits, put the land up for sale and are at risk of foreclosure.
Despite the odds in the South Florida Condo market, at Trent Estate we are available to help you secure the best deal money can buy in any of your choice location.