South Florida’s residential market is strengthening at fast, consistent rates making the prospects for the future seem bright this holiday season.
During the over-leveraged, overbuilt times of 2008, most believed South Florida’s rebound would be difficult, but instead, as 2013 nears its end, we see a strong turnaround underway with limited residential resale inventory, rising prices and new construction all across town.
Comparing figures to just 5 years ago, Miami-Dade represented the largest share of South Florida’s residential resale inventory available with nearly 41,000 properties on the market. As of November 18, 2013, only 14,400 were available – with that number continuing to decrease.
New York Investors Driving Residential Boom
The condo and townhouse inventory has also decreased by nearly 65% since 2008, which most attribute to the large number of new foreign and domestic buyers. While South Florida’s condo market continues to benefit from the influx of foreign cash buyers, more recently, the market has been helped by domestic buyers from the New York area that are looking to stay away from the price hikes for New York real estate. Esslinger-Wooten-Maxwell Realtors (EWM) President Ron Shuffield estimates a 60% increase in New York buyers of South Florida residences (from 2012 to 2013) which Shuffield believes is partly due to “significant increase in value for the last three years.” ISG World principal Craig Studnicky also told The Real Deal that the pricing gap between New York City and South Florida condos is wide enough for tri-state buyers to get comfortable with the cash-heavy deposit structure that has begun to define the South Florida market, with buyers needing to put down as much as 50% of the purchase price. Under this new payment arrangement, developers are relying more on buyers’ deposits, and less on debt to fund construction, which they say puts projects on more solid footing.
New Projects Under way
As for new projects in Miami-Dade, during the Coral Gables Chamber of Commerce’s 2013 Real Estate Outlook luncheon in November, Patrick O’Connell, Senior Vice President of New Business Development for EWM, identified 41 new towers and 12,000 units planned for the downtown area between the Julia Tuttle and Rickenbacker causeways, and 23,000 units under way in other parts of the county. Though affordability is an issue being closely monitored, one expectation is that most investors (whether foreign or domestic) will choose to rent at more affordable rates, which should appeal to the almost 175 residents entering the area daily.
Declining Foreclosure Rate
Last, though certainly not least, the strengthening of South Florida’s residential market can be seen in its foreclosure rates. For the first time in nearly four years, foreclosures in the greater Miami area have fallen below 10%, which represents a decline of nearly 6% from last year at this time. There has also been a steep decline in the mortgage delinquency rate, or the share of mortgages 90 days or more past due, dropping from 22.4% to 16.2%.
Overall, South Florida’s residential markets are making a great comeback, attracting buyers across the country and world. This energy and enthusiasm should make 2014 an even better year.