Nearly 5 South Florida Distressed Condo-Hotel Units Listed For Sale Amidst COVID-19 Pandemic

Condo-Hotel Units Typically Permit Short-Term Rentals For Home-Sharing Serivces Such As AirBNB 

(This Report Is Powered By The Condo Vultures® Podcast Series Featuring Expert Peter Zalewski

DOWNTOWN MIAMI (July 31, 2020) - Nearly five distressed condo-hotel units - both shortsales and real estate owned (REO) by lenders - are formally listed for sale in the tricounty South Florida region of Miami-Dade, Broward and Palm Beach amidst the COVID-19 pandemic, according to a new report from Condo Vultures® Realty LLC.

Condo-hotel projects typically permit units to be rented daily, which is suitable for home-sharing services such as AirBNB. 

Based on distressed condo-hotel sales of less than one unit monthly in the first three months of 2020, South Florida now has nearly a 10-month supply of REO and shortsale condo-hotel units available for purchase in the tricounty region during the traditional Summer Buying Season, according to the report based on data from the Southeast Florida MLX Matrix.

A balanced market is generally considered to have about six months of supply. More months of condo supply listed for sale suggests a buyer’s advantage and less months typically indicates a seller’s advantage in the market.

In this new COVID-19 pandemic era, numerous questions exist about how the South Florida residential real estate market will perform going forward, both in the short- and medium-term periods. After a typical start to the new year, the South Florida residential real estate market began to change dramatically at the end of the first quarter of 2020. 

When Florida Gov. Ron DeSantis declared a "state of emergency to create a pathway to obtain funding and resources to stop the spread of COVID-19" on March 9, 2020, the South Florida residential real estate market continued to function, albeit with changes for safety that included social distancing and a push for virtual tours instead of buyer actually visiting properties.  

Nearly a month later on April 3, 2020, DeSantis instituted a 30-day "statewide stay-at-home order" that effectively shut down the Florida economy but in doing so deemed residential and commercial real estate businesses "essential services," according to an industry press report.

Despite the ability to transact real estate during the "stay-at-home order," it is unclear how many buyers have been willing to view properties - either in person or virtually - in hopes of purchasing residences. It is also unclear how many sellers have opened their properties to potential buyers given the contagiousness of the COVID-19 virus. 

Once the "stay-at-home order" was finally lifted on May 4, 2020 for nearly all of the state - excluding the tricounty South Florida region of Miami-Dade, Broward and Palm Beach - the Florida economy was thought to be in recession like much of the United States. Palm Beach County eventually opened its economy on May 11, 2020, and a week later both Miami-Dade and Broward counties opened for business on a limited basis on May 18, 2020.

A month later during the week of June 22, 2020, Miami-Dade and Palm Beach counties instituted mandatory mask wearing in public areas in response to a "spike" in the number of COVID-19 cases in the South Florida region, according to a press report. 

Broward County - located between Miami-Dade and Palm Beach counties - did not mandate masks in public areas.

After Independence Day, Miami-Dade County took a step backward and shut back down restaurant dining rooms, party venues, gyms and short-term rentals due to a spike in new COVID-19 cases, according to a press report.    

With the situation worsening, the state of Florida surpassed New York on July 12 for the distinction of having the most new COVID-19 cases reported in a day with more than 15,300, according to a press report.  

A day later on July 13, an additional 12,624 new cases were reported in Florida, pushing the state number of COVID-19 cases to at least 282,435 with more than 121,000 cases in the tricounty South Florida region. On a county-by-county basis, Miami-Dade has nearly 67,715 cases, Broward has nearly 31,485 cases and Palm Beach has more than 21,800 cases, according to a press report. 

As of July 24, Florida had more than 402,300 confirmed cases of COVID-19 with nearly 5,700 deaths, according to the Florida Department Of Health's COVID-19 Data And Surveillance Dashboard.

On that same day, the tricounty South Florida region had about 172,440 confirmed cases - representing about 43 percent of the Florida total - and about 2,660 deaths - representing about 47 percent of the state total, according to the state dashboard.

On a county-by-county basis, Miami-Dade had about 97,594 confirmed cases and about 1,370 deaths; Broward had about 46,101 confirmed cases and about 546 deaths; and Palm Beach had about 28,745 confirmed cases and about 744 deaths, according to the state website.   

This being said, the tricounty South Florida region had about 172,440 confirmed cases - representing about 43 percent of the Florida total - and about 2,660 deaths - representing about 47 percent of the state total, according to the state dashboard. 

On a county-by-county basis, Miami-Dade had about 97,594 confirmed cases and about 1,370 deaths; Broward had about 46,101 confirmed cases and about 546 deaths; and Palm Beach had about 28,745 confirmed cases and about 744 deaths, according to the state website.  

This being said, about one distressed condo-hotel unit is currently under contract - or pending - and waiting to transact. 

On the REO front, the asking price of the two South Florida REO condo-hotel units currently listed for sale is about $516,500. This works out to an average asking price of about $518 per square foot, according to the data compiled by CondoVulturesRealty.com.

In the first three months of 2020, the average transaction price of a South Florida REO condo-hotel unit was about $169,000 or about $263 per square foot.

This means the current asking price of a South Florida REO condo-hotel listed for sale is nearly 206 percent higher than the average transaction price achieved on a per-unit basis and about 97 percent higher than the average transaction price on a per-square-foot basis between January and March of this year.

In the first quarter of 2020, the lender that was able to unload its REO unit needed about 301 days to transact the South Florida condo-hotel listed for sale. The current Days-On-The-Market average for a South Florida REO condo-hotel unit listed for sale is about 238, according to the statistics.

On the shortsale front, the asking price of the single South Florida shortsale condo-hotel currently listed for sale is about $399,900. This works out to an average asking price of about $572 per square foot, according to the data compiled by CondoVulturesRealty.com.

In the first three months of 2020, no South Florida shortsale condo-hotel units transacted.

CondoVulturesRealty.com is a licensed Florida brokerage that specializes in assisting buyers and tenants in value-oriented condo acquisitions and leases in the tricounty region of Miami-Dade, Broward and Palm Beach.

More Info