I had an interesting discussion this morning with a multi-billion dollar developer via LinkedIn regarding the condo market in Miami. I made allusion to construction slowing due to oversupply. Interesting take, I thought:

Nicholas: "Sputters"? Interesting that word was used. If oversupply is really a threat, why does it seem more projects are being green-lit every week? Or is this a case of comparison-fatigue; the market seeming to cool because it went from white-hot to just red-hot?

Developer: I can appreciate how one could draw this conclusion, but you must decipher fact from fiction. The only two new projects that are coming online is Una and Okan Tower. These projects are the exception because they do not require financing. The developers are multi-billionaires that are building for cash, without the usual financing condition of pre-sales. They are in a very advantageous position, because when these projects come online in 2022 or so, the market will have swung back around, and they will be the hottest product on the market, when others are just starting to break ground. What you see with Elysee and other towers of the 2014-2019 vintage, are developers that made 50% to 80% pre-sales in the building during the 2012-2014 run-up, and now have buyers over a barrel with significant deposits. The cranes are still up, and the developers are closing on many of their units, but the re-sale market is all but frozen. Take a look at several of our Friday Wrap Up videos for details on specific buildings, many of which have 100-400 months of inventory when you look at transaction volume over the last 6-18 months.