A past contact of LUXE reached out regarding selling a unit they purchased in Midtown 4. They did not purchase this unit with us, which is more than fine because we would have never advised them to buy a 2 bedroom in 2014 for $480,000 with all the looming new construction inventory coming on the market. As we suspected, prices have dropped significantly since their date of purchase. While they have made several upgrades to the unit, there are properties for sale in their line as low as $399,000. Taking into consideration the upgrades they made to both bathrooms and kitchen we can see their unit selling between $420,000 and $430,000. That is still a considerable loss from just a few years ago of over 20% when factoring sales costs.

They are currently expecting their 3rd child and have a need to move, so we decided it would be best to do a sell vs hold analysis for them. They are concerned with future inventory still under construction along with future traffic concerns. The information we looked at is current supply vs demand, a buy vs rent investment analysis, upcoming projects to be delivered over the next 3 years and absorption of new construction. Below are some snapshots:

Current 2 Bedroom Inventory 33137 – Via MLS Sales

  • All Prices – 344 units
  • Over $800,000 – 77 units
  • $500,000-$800,000 – 142 units
  • Up To $500,000 – 126 units

Historical Sales Activity – Via MLS Sales

  • 2014 – 138 Total Sales
  • 2015 – 144 Total Sales
  • 2016 – 101 Total Sales
  • 2017 – 101 Total Sales
    • Q1 – 36 Sales
    • Q2 – 23 Sales
    • Q3 – 18 Sales
    • Q4 – 24 Sales
  • 2018 – 95 Total Sales
    • Q1 – 16 Sales
    • Q2 – 35 Sales
    • Q3 – 23 Sales
    • Q4 – 21 Sales
  • 2019 – 80 Total Sales To Date (On Pace For 115-120 Sales)
    • Q1 – 24 Sales
    • Q2 – 33 Sales
    • Q3 – 23 Sales/22 Pending

2019 Breakdown

  • Up to $500k – 44 Sales
  • $500-$800k – 35 Sales
  • Over $800k – 1 Sale

Supply Duration

  • Average For Total Supply – 43 Months
  • Up to $500k – 22.9 Months
  • $500-$800k – 32 Months
  • Over $800k – 77 Months

Supply duration refers to the length of time it will take for the inventory of units to sell. Based on current inventory findings, the rate of sales has increased monthly and yearly, which suggests a bottoming out of market. Also, there are few new condos being completed in the price range of the unit. The months supply tends to be a lagging indicator because if rate of sales increases over short term, then the months supply can change drastically. There is one issue if the higher priced units continue to lower prices, which is very likely adding inventory in the lower tier.

Rentals Within Building

  • Unit should rent for $2,800 to $2,900 a month
  • There are currently less than 2 months supply of rentals

While rental fundamentals are strong there are many new projects scheduled for completion as apartments. This should create some downward pressure for pricing but on the upside these apartments typically have standard finishes and still rent at market or above.

Price Breakdown – Average Sales Price / SQFT

  • 3 months – $403
  • 6 months – $397
  • 12 months – $374
  • 24 months – $373

Oncoming Inventory or completed in 2019 – Via Miami Development Authority

  • Missoni Baia – 249 Luxury Condos
  • The Edgewater – 30 Condos
  • Elysee Miami – 100 Luxury Apartments
  • Midtown 6 – 447 Rental Apartments
  • Amli – 720 Rental Apartments
  • The Bradley – 175 Rental Apartments
  • Modera Edgewater – 297 Luxury Apartments
  • 26 Edgewater – 86 Luxury Apartments
  • Wynwood 25 – 289 Apartments
  • Blu27 – 330 Apartments
  • Yard 8 Midtown – 387 Apartments

 

Buy Vs Rent
A Buy Vs Rent analysis below shows that purchasing the property of up to $450,000 is about equal to the investment opportunity of renting the property over the same horizon if prices and rents only increase at 1% rate. Sales stats show property sales in building have already begun to increase. While sales are lower I believe that the property is under valued at current prices and it would be better to hold at todays sales prices since we seem to be bottoming out in the current market.

 

In conclusion, we told them to rent and hold the condo as an investment. Based on current mortgage payments they’d break even monthly and we confirmed this data with Wiss Analytics, who forecast the 33137 market to increase by 4% over the next 12 months.

If you have a property you would want us to prepare a Buy vs. Rent Analysis for please reach out to a LUXE agent. If you need help with a home valuation please click here to get an estimated home value.