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Black swans, magic unicorns and fantasy land: the Miami condo market in 2020

The corona virus is exposing underlying fragility in the Miami condo market and in the general global economy. Ignoring risk is not a strategy with a limitless time horizon, and this cycle was in its last innings.
Opportunities ahead.

The video in this post covers my thoughts on the credit cycle, human nature, and how it all relates back to the real estate market.

Ana's comments, from the Analytics Miami 2020 Supply & Demand Report:

The Miami area condo market is not a magic unicorn that will defy supply and demand fundamentals. There are fundamental disconnects in this market, and the high percentage of all cash buyers may be delaying the clearing process. This market is vulnerable to an external trigger event.

Miami real estate market: unsustainable conditions were in place before the Corona virus.

Miami condo market: Extreme Disconnect

There is a fundamental supply & demand disconnect in the Miami area luxury condo market. Since Q4 2013, the Miami $1M+ condo market saw a 178% increase in supply. Demand decreased 18% in the same time frame.

Miami Condos: Cash was King

This last cycle was fueled by cash buyers. At 2013 volume highs, Miami Beach was 76% all cash and Miami was 70%. In 2019 those numbers were 61% and 42%. The high % of cash means there is low debt service pressure, which may be why we are seeing listings languish.

Press References in Video

The "Magic Unicorn" reference is an expansion upon a quote I gave in this 2020 Miami real estate market forecast for the Real Deal.

https://therealdeal.com/miami/2020/01/02/the-cold-spell-blanketing-south-floridas-luxury-condo-market-will-continue-in-2020-experts-say/

The reference to "fantasy land" in the video can be found in this article I contributed to on the Sunny Isles condo market:

https://therealdeal.com/miami/2020/02/24/ritz-carlton-residences-sunny-isles-beach-gets-tco-starts-closings/

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