Has KB Real Estate Hit Bottom?

Photo illustration (Adobe)

By CLAUDINE COTO KNAUTZ 

Claudine Coto Knautz Key News Contributor

Key Biscayne real estate is on its fourth year of a down market, with many sellers hoping it’s hit bottom. Overall, Key Biscayne activity decreased 31 percent this first quarter of 2019 versus the same period last year, according to the Miami-Dade Multiple Listing Services.  Properties are also taking longer to sell, with an average of eight months on the market prior to closing. Needless to say, it’s the market-priced properties that are selling.

The median sale price for condominium and single-family homes is $970,000. This represents a slight decline of 8 percent versus 2018 and a 24 percent decline versus five years ago. The average sales price skews higher to five transactions over $5 million, including 250 Harbor Drive — a waterfront home with Miami skyline views that sold for $10.1 million.

A total of eight single-family homes sold in the first quarter, while 126 houses are actively listed for sale. Of the eight, five were priced between $2 million to $3 million. This price segment experienced the most activity in the last couple of years. The lowest-priced sale — 465 Ridgewood Road — was $1.1 million.

Two-thirds of the Key Biscayne condos sold were priced under $1 million, which seems to be the sweet spot for condo buyers. EWM Realty President Ron Shuffield told a recent Key Biscayne meeting that Miami-Dade County has more luxury inventory than it has ever had: 5,000 units (condos and houses) for sale above $1 million.

Conclusion: it’s still a buyer’s market.

Real estate professionals attribute the weak market to a mix of factors. South Florida real estate boomed for several years; a price correction after the 2015 peak was bound to happen. In 2016, The U.S. Treasury Department began to aggressively track money laundering through Miami-Dade real estate, pursuing shell companies that bought homes for $1 million using cash. At the same time, currency devaluation in some Latin American nations affected the purchasing power of many potential buyers. Interest rates have also begun to inch up, which makes borrowing more expensive.

There is some promising news for sellers amid the gloom. The U.S. Census indicates Florida welcomes 884 additional people per day, and most gravitate to the still-booming Miami market.  While exchange rates impact foreign buyers, many are still eager to purchase real estate in South Florida. For the domestic buyer, Florida does not have state income tax and offers significant advantages to those living in high-tax states, such as New York and California. This will be more evident this tax season given tax law changes. Historically, when the market is about to spring up, it happens quickly.

EDITOR’S NOTE: This is the first of what Key News hopes will be a regular column on real estate. The author leads the Coto Group, and has decades of experience in Miami real estate.