I had a terrific conversation this week with a local builder in Coconut Grove.
This Coconut Grove builder’s question was…
What should I build on this property? What does the market need right now?
Here is the analysis that I shared with him…
“I selected closed sales in Coconut Grove over the past 365 days between 2000-3500 sq feet (that were built between 2000-2012). There are three sales that match this criteria. They can be found in the link below.
- 4040 Matheson Avenue sale was a distressed short sale and sold for under market value in my opinion at $213/sq foot. Therefore, it is not a good indicator of market value for new construction in the Grove.
- 3740 Irvington… 3472 sq feet 6850 lot size built in 2007. 4 Bedrooms/4 Bathrooms/ 2 car garage. It was located on a no-thru street with minimal traffic and a community park for the homeowners to enjoy. It Sold for $1,275,000 ($367/sq foot). It Sold in December 2011.
- 2635 SW 17 Avenue… 3471 sq feet… 7700 lot size. It was built in 2005. It featured 4 Bedrooms/ 3.5 Bathrooms/2 car garage. It Sold for $1,000,000 ($288/sq foot) in August 2012.
I recommend building a contemporary home over 3,000 sq feet. Something with clean open spaces and ample natural light. My recommendation is not to over-improve the property with too many high end finishes. Allow the buyer to do this after they purchase. The most important thing to do is build the home as large as you can (3,000 sq ft plus) and present it to the market at $899,000 or below. We find that the market is extremely active under $800K. Above that, buyers are more timid and financing is more of a challenge. At $899,000, your 3,000 sq foot creation would be priced at $300/sq foot (close to that $800K sweet spot). The market would respond very well to a brand new contemporary design home in Coconut Grove at that price point.
Buyers today remain very sensitive to lot size. They seek value and lot size is one of those value components. The two recent closed sales at 3740 Irvington and 2635 SW 17 Avenue had lot sizes of 6,850 and 7,700 respectively.
Overall, I think you are very well positioned given that today there are only 11,000 listings for sale in the Dade County MLS (5 years ago, there were over 44,000 listings for sale in the Dade County MLS). Supply is tight…realtors and buyers are noting low Miami inventory and quality offerings. Your new construction project will definitely command the market’s attention (especially if you introduce it to the market at the start of peak home buying season in early January).
P.S. As a matter of fact, I may have a buyer to present to you. They are seeking a home in Coconut Grove up to $1 million. We’ve been searching for 3 months but they have not yet found anything that interests them.
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