By Robyn A. Friedman | December 5, 2016 | Home & Real Estate
The Magic City real estate scene remains as hot as the weather and the people it thrives on, proving this is still the place to be.
The pool at Hyde Beach House in Hollywood fronts the Intracoastal.
We’ve all seen the headlines: the Zika virus, looming hurricanes, falling real estate sales, declining prices. There’s no question that there’s been a lot of dark news threatening the Greater Miami real estate market lately. But what about the good news? Consider this: In September, the Miami Association of Realtors (MAR) reported that the Miami single-family home market enjoyed its best August in history, with both transaction volume and median prices posting double-digit gains. It also reported that distressed sales declined 39.9 percent year over year from August 2015 to August 2016.
“This helps to bolster real values,” says Ron Shuffield, president of EWM Realty International. “You’re not dealing with lenders who are marking prices down to move inventory out of their REO portfolios.” In September, Florida Realtors reported that the state’s housing market had more closed sales, higher median prices, more new listings, and fewer all-cash closed sales in August. According to the Miami Downtown Development Authority, the city’s downtown population has grown by 150 percent since 2000. Income levels are rising, with average household income ($110,000) in downtown Miami nearly double that of national averages.
That’s a lot of spending power, proving it’s not just all about the beach. And there’s more. Ocean Drive spoke with 13 of the area’s top brokers and developers to seek out all that’s good with the Miami real estate market. Here’s what we found...
A view from the infinity pool at the designer-branded Missoni Baia in Edgewater.
INTEREST RATES ARE LOW.
Rates remain at historical lows, giving home buyers more purchasing power than they had in the past.
MIAMI REAL ESTATE IS UNDERVALUED.
According to The Wealth Report 2016 by Knight Frank, $1 million will buy only 17 square meters in Monaco, 27 square meters in New York, 57 square meters in Paris, or 65 square meters in Los Angeles. But it will buy 77 square meters—about 829 square feet—in Miami. “That’s a tremendous opportunity to still capitalize on a market that is grossly undervalued as compared to other major metropolitan markets around the world,” says Jay Parker, chief executive officer of Douglas Elliman’s Florida brokerage.
THERE’S PENT-UP DEMAND.
Most brokers will tell you that a lot of potential buyers remain on the sidelines, waiting to see if prices will drop before jumping into the market. That translates into a lot of cash to spend. “I believe we have more pent-up demand from luxury buyers than we’ve ever had,” says Shuffield. “There is so much cash in the market—more than I remember—that wants to be spent on luxury housing in our community.”
Palazzo Del Sol on Miami’s exclusive Fisher Island is attracting buyers with resort-style amenities.
INVENTORY IS LOW.
Despite rising inventory levels and new-construction projects coming online, we aren’t likely to experience the same oversupply issues that we did during the financial crisis of 2008. That’s due to tougher requirements by banks providing construction financing. “Financing is only available if somebody can gain 50 percent sales with 50 percent deposits, give or take,” says Richard LeFrak, chairman and CEO of the LeFrak Organization. “So you’re not going to see a massive buildup of inventory.”
INTERNATIONAL BUYERS ARE INTERESTED.
Fewer buyers are coming from Latin America, but other countries are making up the difference. “Last year alone, we sold close to 3,000 condos to 92 different nationalities,” says Carlos Rosso, president of the Condominium Development Division at The Related Group. Easier access by air to Miami is now attracting buyers from Turkey and other countries. Some currencies are also strengthening against the dollar, giving international buyers more purchasing power. David Martin, president of Terra, says that international investors have slowed, but relocations from Latin American end-users are on the upswing. Ugo Colombo, founder of CMC Group and the developer of Brickell Flatiron, says he’s seeing buyers from Latin America, Europe, Turkey, and even Kazakhstan.
SELLERS ARE DROPPING PRICES.
This is a good thing. Jill Hertzberg, who with her partner Jill Eber makes up “The Jills” team at Coldwell Banker, advises sellers to price “close to the market.” “Sellers have finally realized that it’s time to bring prices down to reality,” says Eddy Martinez, CEO of Worldwide Properties. “Sales have been produced as a result.”
Jade Signature in Sunny Isles Beach is seeing year-round sales.
PRICES ARE NEGOTIABLE.
"We are transitioning to a buyer’s market," says Dora Puig, broker/owner of Luxe Living Realty in Miami Beach. “It’s a great time for buyers to buy something beautiful,” she says. “The inventory is fantastic, and prices are more negotiable across the board.”
CONSTRUCTION COSTS ARE DOWN.
Ryan Shear, a principal of PMG, says that pricing of construction hard costs is coming down significantly—and he predicts it will go even lower. “That benefits the buyer because we’re able to sell for less,” he says.
Hyde Midtown Suites & Residences in Midtown Miami will include a full-service spa.
SALES ARE OCCURRING YEAR-ROUND.
Edgardo Defortuna of Fortune International Group, the developer of Jade Signature in Sunny Isles Beach, says he sold six units there over the summer, all at prices of over $5 million. “It was non-season,” he says. “So I am very, very optimistic about the season in Miami.”
The best thing about the Miami real estate market is Miami itself. People from around the world still want to dine here, visit here, shop here, and live here. “There is no other place like Miami, and therefore it is always going to be a desirable place to live, work, and raise a family,” says Vladislav Doronin, chairman of OKO Group, the developer of Missoni Baia in Edgewater. “I have owned a home in Miami for many years and have enjoyed watching it grow into a world-class city. The weather and the lifestyle cannot be matched.”
PHOTOGRAPHY BY MARTIN RUETSCHI