This week a friend and client who owns a unit in the luxury Porsche condominium in Sunny Isles Beach asked me if now would be a good time to put the unit up for sale. The unit was purchased at the plant at first list prices. This client is from Brazil and, therefore, in addition to the dollar appreciation that would occur, he would also realize a significant exchange gain, as the Brazilian currency has devalued a lot in recent years. So I decided to write this article, punctuating my considerations about the specific situation of this friend of mine, but which also serves as a basis for decisions in the segment of “condos” (apartments in luxury condominiums) in Miami. After all, is it time to buy or sell apartments in Miami?
Let’s first understand the difference in the segment of “condos” (apartments) and “single-family homes” (residential houses)
The first consideration I made when responding to my client was to point out some differences today in the behavior of different segments.
Apartments in luxury condominiums belong to the “condos” segment (building condominiums). The term “condo” is often used to refer to an apartment in Florida.
A residential home can mainly belong to two different segments: 1 – Single-Family home or 2 – Townhome.
Single-Family Homes are single-family, non-detached residential homes. These are traditional American homes, with a recess and an outdoor area, which does not share a wall with another house. Townhomes are row houses that share a wall with another house and usually have two floors (story) or more. In this article I explain in detail all these terms and types of properties.
Over the past two years, the residential housing segment, particularly single-family homes, has experienced a strong imbalance between supply and demand. Due to the pandemic, this type of property has become extremely in demand, as it offers more space than an apartment and can even come with an outdoor area (swimming pool, barbecue, gardens, etc.). Considering the difficult times of quarantine, spending the days in a large residential house would be much better than confinement in a small apartment. As a result, the single-family homes segment has strong demand and very low inventory, specially in neighborhoods with fewer people (low density) like the planned community of Weston or cities near Orlando in Central Florida. Therefore prices have risen and continue with an uptrend.
For the same reason, the apartments in Miami were left out. Many who already had apartments put the unit up for sale to exchange for houses. As a result, the inventory of condos in Miami went up a lot and there was little demand. Prices have dropped.
Units in the Porsche Design Tower and other Miami luxury condos have seen their prices plummet.
Obviously putting up an apartment for sale in late 2020 in Miami was not a good idea. With inventory sky-high and prices depressed, the perceived dollar price on sale could be even lower than what it paid for the property years ago.
Devaluation of South American currencies
However, for Brazilians, and South Americans in general, who have witnessed a sharp devaluation of their currencies in recent years, even selling at a lower value than the purchase price, still saw the sale of their apartments as a great opportunity for profit taking on your currencies. For Brazilians, the profit perceived in reais justified the decision. Taking as an example the devaluation of the real, where the dollar jumped from 3.74 in August 2020 to 5.50 in a few months, selling the apartment cheap in dollars could still be a big deal.
At this time, several South American clients contacted us to sell their apartments in Miami. Unless the client needed the money and wanted to take advantage of the high dollar, our recommendation was to maintain fair value (pre-pandemic), even if it was high by the standards of that specific moment in the market. We knew that it was a temporary situation and that prices were going to return, as they are already returning.
This willingness of the South American homeowners ended up flooding even more the “shelf” of apartments for sale in Miami, pushing inventory in the condo segment to the highest levels.
This situation started to reverse in the first half of 2021! In the next topic I explain why.
Condos became interesting
With the lack of single-family homes in the market and the extremely high prices in this segment, buyers started to turn their attention to the large luxury apartments in Miami. After all, luxury condominiums in Florida offer a real club in their common areas, with all the safety and health protocols. The apartments in these condominiums are spacious and with excellent distribution.
In the specific case of the Porsche Design Tower condominium, the building ended up benefiting from another great advantage in times of pandemic. It is the only condominium in Florida that has a car elevator, which allows the owner to drive up and park the car inside the residence. In times of pandemic, this luxury feature is essential, as it avoids crowding in elevators and common areas.
The Porsche units are also super spacious and offer a large terrace with barbecue and private pool on every floor. That’s right! Every unit in the Porsche has a private pool on the balcony (and it’s not small!).
“It’s like being in a house in heaven!” says Heloisa Arazi, broker and owner of AMG International Realty in Miami. “You park in your garage and in a few steps you are in your kitchen or living room, like in a house. Tired of a busy day at work? How about a dip in the pool right there on the porch?”, she adds.
Like the Porsche Design Tower, most luxury condos in Sunny Isles Beach and other upscale Miami neighborhoods also offer amenities and infrastructure that hardly a single-family home can compete with. In this article we highlight the luxury amenities of select condos in Miami.
This perception that an apartment can be better than a house in times of pandemic is growing among buyers. “Why not take advantage of the very low prices of luxury condominiums in Miami, facing the sea, and in regions with great restaurants and attractions?”, asks Heloisa. “It’s much better than a house in the suburbs, away from everything and at sky-high prices,” she suggests.
Not mentioning the fact that a new trend in Florida are the so called low-density condos, an exclusive boutique type of living with fewer residents.
Condo segment behave the same as single-family homes?
Our understanding is that some of the demand will gradually flow from the single-family home segment to the condo segment. Miami apartment prices are already recovering and Florida has a greater influx of residents from other states. At the height of the pandemic, there were more than 1000 new residents per day, a frightening number and one that could bring no other consequence than the strong imbalance between supply and demand in the market.
We do not believe, however, that the imbalance in the condominium segment will be as significant as it is today in the residential housing segment. Condo inventory remains at high levels to absorb growing demand. However, new units will not enter the market for the next two or three years.
We believe that at least in the next two years, the condominium segment will experience considerable appreciation of existing apartments, until a new batch of units are presented to the market in the form of launches.
Is it time to buy or sell condos in Miami?
In general, our understanding is that the apartments (condos) will see a considerable appreciation in the coming months and years. Buying an apartment in a luxury condominium in Miami, in this context, is what we recommend today. However, for those who need or want to sell, it is an interesting time as demand in this segment is increasing.
The strategy we recommend, for anyone looking to sell a Porsche apartment today, is to list it for a fair price, close to pre-pandemic values. Pricing down may only speed up the process, but it is a loss of value in a warming market.
Have an apartment in Miami and are thinking about selling it?
AMG International Realty is a global real estate company specializing in Florida. If you are the owner of an apartment in Florida and want to know the best strategy and time to sell it, contact us right now and chat with us via WhatsApp: +1 (305) 318 6968.