Report: South Florida Properties Sell At -43% Discount In 2008

Nearly 2.7 million square feet of condos, townhouses and single-family homes in coastal South Florida sold in 2008 at an average discount of -43 percent, or -$323,784 per residence, according to a new report from Condo Vultures® LLC.

There were 1,717 properties east of I-95 in Miami-Dade, Broward, and Palm Beach counties in the Vultures Database™ that traded last year for a combined price of $775 million, down from a historical high of $1.33 billion.

The overall price drop equates to a combined discount of more than $550 million off of the historical high asking price for the properties that were sold, according to the report by the Bal Harbour, Fla.-based consultancy.

"Every month in 2008, an average of 143 residential properties in the Vultures Database™ sold at 57 cents on the dollar," said Peter Zalewski, a principal with Condo Vultures®. "Given the difficulty in obtaining financing, our data and anecdotal evidence suggests that at least two-thirds of the units sold were purchased by all-cash buyers who didn't need financing to complete their transactions. We don't know how many of these buyers obtained financing after closing."

All-cash buyers who have the ability to close quickly have enjoyed success in South Florida negotiating down prices on residential product from distressed sellers, Zalewski said.

For comparison, consider that in 2007, there were 1,272 properties in the Vultures Database™ that sold at an average discount of -29 percent, or $258,818 per residence, according to the data.

"The Vultures Database™ is comprised of residential properties east of I-95 in Miami-Dade, Broward, and Palm Beach counties from Cutler Bay to West Palm Beach that have dropped in price by at least -10 percent or -$100,000.

On Dec. 31, the Vultures Database™ was comprised of 4,301 condo units, townhouses, and single-family houses in South Florida that had dropped in price by an average of -39 percent, or -$259,356 per residence, according to the report.

Condos and townhouses, which account for 69.6 percent of the total Vultures Database™ inventory, are down an average of -38.5 percent, or -$210,121 per residence. Single-family houses, which represent the remaining 30.4 percent of the inventory, are down an average of -40.2 percent, or -$372,265 per home, according to the Vultures Database™ Report for January 2009.

Pricing in Miami Gardens is down an average of -60.3 percent, making the Miami-Dade County community the city and/or neighborhood with the biggest price drop in South Florida, according to the data.

The Hypoluxo area in Palm Beach County ranks second with an average price drop of -48.4 percent. The neighborhood in Broward County with the biggest price drop is the Oakland Park area, where discounts have reached -45.9 percent, according to the data.

As buyers increasing pick off deeply discounted properties on the barrier island, the difference in pricing is becoming wider and wider for sellers located on the South Florida mainland, according to the data.

For instance, Greater Downtown Miami has an average price drop on condos of -41.8 percent while across the causeway in Miami Beach the average discount is -34.3 percent.

"This is a classic example of buyers flocking to quality, which for many means sand and surf," Zalewski said. "Many people consider a quality building on the water, especially the ocean, a great hedge at times of uncertainty."

The 2008 closed sales of residences in the Vultures Database™ appear to support the notion that buyers, especially those purchasing second homes, are willing to spend more to be near the water.

In 2008, there were 278 Miami Beach properties in the Vultures Database™ that sold for an average discount of -37 percent while the South Florida tri-county regional average discount was -43 percent, according to the data.

In Miami, where the bulk of the new product was constructed based on widespread speculation, there were 378 sales of residences in the Vultures Database™ at an average discount of -48 percent, according to the data.

In Fort Lauderdale, there were 208 transactions of properties in the Vultures Database™ that closed at an average discount of -41 percent.

Hallandale Beach ranked fourth in the region in 2008 for the greatest number of closed deals from the Vultures Database™ with 138 properties at an average discount of -45 percent.

Rounding out the top 5 markets for Vultures Database™ discounts was Sunny Isles Beach with 109 transactions that closed at an average drop of -39 percent.

It is worth noting that Hollywood, just north of Sunny Isles Beach, had 105 deals close out of the Vultures Database™ at an average discount of -43 percent.

All told, there were 29 cities and/or neighborhoods in South Florida that experienced a transaction where the property was being monitored in the Vultures Database™.

The list of South Florida cities ranges from ultra-wealthy Fisher Island, where a property was purchased at a -53 percent discount, to Boca Raton, where 13 properties were sold at an average discount of -49 percent, according to the data.

Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .

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