What's up with Miami's condo conundrum?

After a long, cold housing crash, Miami bounced back to a record year in 2014. Like the city itself, however, some of the rebound is over-the-top and potentially overheated, specifically in condominiums.

Sales of single-family homes increased 7.7 percent in the fourth quarter of 2014 from the same period in 2013, according to the Miami Association of Realtors, but condominium sales fell 3.3 percent. What is particularly troubling is that the drop in condo sales comes as thousands of new units are headed to the market.

There are currently 325 new condo towers proposed, with just more than 41,200 units. Of that, roughly 13,000 are in the planning stages, 15,000 are planned and approved, and more than 13,000 are under construction, according to Peter Zalewski, founder of Condo Vultures, a Florida real estate company. Developers claim there is huge demand, and they are requiring large down payments this time around, but Miami has seen this before, barely a decade ago.

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"Every year that goes on, you have to get a little bit more and more cynical and skeptical as to whether or not developers will be able to deliver what they ultimately promised, and we know what our history is here for the last century," said Zalewski.

Cityscape of Miami
Andreas Seidel | EyeEm | Getty Images
Cityscape of Miami

The vast majority of condominium demand comes from foreign buyers. Some of them, especially Russians, are seeing the value of their money drop precipitously against the U.S. dollar. South Americans are still very strong in the Miami market, but Europeans aren't far behind, and as the dollar gains strength, they too, lose purchasing power.

The median sales price for single-family homes in Miami-Dade County increased to $246,140 in the fourth quarter, a 4.7 percent jump compared to the same period last year, according to the Miami Realtors. The median sale price for condominiums increased 8.6 percent to $190,000. The county has now seen 12 consecutive quarters of growth for both single-family homes and condominiums.

"We expect Miami home prices to continue to increase in 2015 but at a more moderate rate," said Christopher Zoller, the 2015 residential president of the Miami Association of Realtors, in a release. "Limited supply and strong demand for single-family homes is still reflective of a seller's market. There is also strong demand for both new construction and existing condominiums, so we will continue to see price growth for residential properties in Miami-Dade."

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While condos are a concern, the single-family market seems far more healthy. Demand is strong, especially from wealthier New Yorkers looking to move their primary residence to Florida, which has no income tax. This, after New York Mayor Bill de Blasio threatened to hike taxes on higher-wage earners.

"They are willing to commute," said Patricia Delinois, president of Century 21 Premier Elite Realty in Miami. "We still have 2004 prices, so you're still getting a lot for your money."

At the current sales pace, the number of active listings represents 5.6 months of inventory for single-family homes but 8.4 for condominiums. Inventory for condos is up nearly 20 percent from a year ago, while single-family inventory is up just 0.2 percent. A balanced market between buyers and sellers is historically about a five- to six-month supply.