From Miami to Manhattan

Miami condos were probably some of the first home product to be hit by the slump.  As we all know Miami was leading the condo boom while being flooded with buyers and investors from the United States and abroad.  While the market started to correct and make the downward shift, builders were still moving forward with projects and flooding the market with more condos.  This is understandable knowing that these massive condo highrises are years in the making and go into planning, financing, and construction phases while the housing market is healthy.  All builders can do is go off of years of experience (hopefully), following market trends, hope for the best but plan for the worst. 

During the condo boom from 2005 through 2007 there were almost as many condos planned in Manhattan, New York as there were in Miami.  The problem in Miami has been that only 25% of those planned units have been constructed.  This is actually a good thing for the time being because inventory levels for Miami condos are rising while the absorption rates for New York condos are staying quite healthy.  Inventory levels in New York are actually going down...even with all of the new condos being built anf planned for 2008. 

There is a vast difference in the demographic however from Miami to Manhattan.  There is also a vast difference in who is buying the condos.  In Miami over the past few years much of the purchasing has been done by speculators and foreign investors.  The median price spent on a Miami condos last year was in the mid $300's.  Almost all of the affluent investors, both foreign and domestic, have left Miami and turned to New York because it is seen as one of the most stable condo markets on the country.  The median price for New York condos purchased last year (specifically in the Manahattan area) was in the mid $800's...a big difference from Miami as you can see.  Also, one of the key factors the keeps the New York condo market healthy is that the majority of buyers are purchasing to live in the unit or at least keep it as a legitimate second home.  That has not been the caase in Miami. 

New York condos for sale will continue to be snatched up by local and foreign buyers for a long time to come.  Buyers there are more affluent and can afford the prices.  They are not as concerned with the short term market conditions.