Picture the city of Miami Beach and South Beach. Chances are good that condo properties loom large in that mental image. There’s a good reason for that. They’re immensely popular throughout Miami-Dade County. However, that doesn’t mean that single-family homes have fallen out of favor or aren’t in demand. Many would-be homeowners would prefer to have their own home designed and built on their own land, rather than buy into a condo property. The problem is that few people can actually manage that. Why is this the case?
One of the problems here is that the Miami Beach area is highly developed. That means in order for something new to be built, something else usually has to be torn down. In the absence of empty lots and buildings that need demolishing, would-be homeowners are finding it harder and harder to locate a parcel of land that suits their needs. (View All Miami Beach Homes For Sale Here)
There’s also the zoning problem – what little available land there is may not be zoned for residential use. Most of it has already been zoned for commercial use (including the building of condos). Why? There are two primary reasons. First, the demand is there. Second, the area makes more in tax revenue from land that’s been zoned commercial rather than residential.
While the impact of the land conundrum has been felt by homebuyers, it’s homebuilders that have been hardest hit. The Atlantic Ocean bounds builders on the east, and the Urban Development Boundary prevents expansion to the west. Builders have nowhere to go, and that means smaller builders have actually gone out of business. Very few builders remain operating in the area that aren’t big businesses. Even large construction companies are finding the going tough, though.
Down the Road
Currently, the Miami-Dade area has a three-month supply of existing homes on the market, but the problem comes from the lack of replacement lots. Once those vacant homes are sold, there are fewer and fewer empty lots available to build on to replace them. Lot shortages have already had an impact on the industry, and that effect will only become stronger in the coming months. Experts predict that things will get worse before they get better.
One way that builders are coping with the shortages is to change their development and building habits. In the past, massive, sweeping neighborhoods were constructed. Those are largely gone now, though. Builders are instead focusing on the smaller 20-acre lots, or even 10-acre lots, and developing them as best they can.
The Condo Market
In direct contrast to the single-family home construction segment, condo construction is thriving. Sunny Isles Beach alone had 15 multimillion dollar developments (View all preconstruction projects in Sunny Isles Beach) in the last 10 years, and the greater Miami area has seen countless more. Condos are viable because they require a much smaller initial footprint, and can be home to hundreds, even thousands of families. A single 20-acre site might accommodate 900 units.
It remains to be seen just how long it will take the single-family housing industry to recover, but in the meantime, the condo industry continues to thrive.