Luxury Condos on the Beach. Daytona Beach Shores. June 1, 2021
Real Estate market is weird to say the least. Inventory is probably lower than even in the peak market of 2005- 2006, yet today and then is not really comparable.
In 2005 the number of permits issued was double what we have right now. So, the trend may continue, and developers are snatching land, as they have not enough land to build on. Spoke to a national home builder covering this area, and he said he plans to double the number of homes built this year, and this is a huge goal.
However, prices are same or a little lower than they were at the peak of the market 15 years ago. Which means that though practically everybody was saying that we will never reach the same level as in 2005-2006, we will reach it and go higher.
It is worse for condos. Houses are coming up like mushrooms, and there is some land to build more, but it is very different with condos. There is very limited land on the ocean and on the beachside to put more condos.
15 years ago the market was crazy, but in Ormond Beach only 2 condo building were built. There was no land on the ocean to build more. A bunch of condos was built in Daytona Beach Shores. Actually, practically all our luxury condo buildings are in Daytona Beach Shores.
Daytona Beach Shores is still a place with more land than Ormond. 2 newest condos came up here and are on the market, but combined number of units is under 100, and this number is not going to affect the market.
There is and will be a significant shortage of condos. Which we are watching today. The inventory of units in Daytona Beach Shores including the new 2 buildings is dismal – 43 units out of 5,214 condo units in the city. It is less than 1%. “Healthy” market is 7%-8% of all the units, and we only have 10 times less.
There are many buildings where there is not a single unit for sale. And there is no surprise that prices are starting to go up. This is still a transitional market, there are still prices low or just insignificantly higher, and prices, which are today’s market prices.
With the less expensive units being snatched, the new listings will be coming at a higher price.
N general, we need to understand that the market in 2005-2006 was dramatically different from the market today and tomorrow, and the reason for that is that 15 years ago about 80% of buyer of new luxury condos were investors, who were buying with the goal to flip, and when the market changed, they left, causing the crush of the market.
We do not see any meaningful number of investors now. These are not flippers, so the market is by far not as vulnerable as it was 15 years ago. Financing is tighter than then, so people who put a deposit close on the deals.
I am tired of people telling me that it is all because of the free money and unemployment money. It is not. People who were getting unemployment have barely enough to put food on the table and with “free” money you can’t by a $600,000 condo. So, the minute unemployment payments end, NOTHING will change in the condo resale market.
As it stands today, there are only 9 luxury good condo units on the MLS. Today it is not really a matter of the best, it is a matter of what is still available and is worth buying. And yes, there will be time when the crazy market would flatten, and prices stabilize, and inventory grows. The big question is when this happens, and what level of prices will be set once this happens. Considering that we have a way to go in this rising market, that number may still be higher than today’s prices.
But none of us has a Chrystal ball