By Michael Internoscia, VP Sales
Pordes Residential Sales & Marketing
Talk has been brewing in South Florida and other luxury condominium markets about a real estate “double-dip.” Already having suffered one recession, some believe markets like Miami Beach, Brickell and Sunny Isles – as well as New York, Las Vegas and other prime American markets are set for a second market fall.
In our opinion, we see nothing of the kind coming….at least not in South Florida
At Pordes Residential, we’re convinced that sound fundamentals related to correct pricing, marketing and economic forces are driving the continued and sustained market recovery.
We’re not blind to market realities. It’s still tough out there. The recovery path we’re currently on is strong – but not definitive. Yet, South Florida is different from other national markets, for a number of reasons:
Our recovery has been fueled by the same forces that historically have driven South Florida’s luxury market: Attractiveness to domestic and international buyers.
We draw from a wider audience. Europeans, Latin Americans and still buyers from the Northeast U.S. are looking for second-home or vacation properties in a multi-faceted, near year-round destination. New York, Las Vegas and California cannot begin to compare to South Florida. From climate and lifestyle, to the business community and our role as a gateway to Latin America and even Europe, no other market shares our attributes.
Pricing is stabilizing. To be sure, South Florida’s prices have dropped from what they were two years ago at over 50%. But prices recovered over last year as the markets have recovered.
Little new product is coming online and supply is getting absorbed. From the Biscayne corridor through downtown south to the the Brickell Village area, inventories are continuing to shrink. This further strengthens values and pricing. At the same time, from South Beach through Miami Beach straight up to Sunny Isles, new development has ceased. In fact, Canyon Ranch Living Miami Beach is one of the only new developer product available in quatity. Most of the inventory at Jade, Trump and some other developments have been getting absorbed over the past 12 months and are at a minimum, Everything else is resale. While we may see new product construction in 24 months or so, the economic rule of “supply and demand,” at least for the moment, is holding true in South Florida.
Bank lending is returning, in part through availability of Fannie May financing. This gives both domestic and international buyers even more incentive to shop (that said, many sales are all-cash; simply put, international buyers remain bullish on the long-term strength and value of South Florida real estate).
Peering into our crystal ball for a moment, we, too, are bullish. And deservedly so. That South Florida saw only a two-year dip during one of the worst worldwide recessions ever is testament to this market’s stability. The dollar continues to strengthen against global currencies. Political instability and economic uncertainty in various Latin American markets (like Venezuela and Argentina & Brazil, for example), make real U.S. real estate desirable as a secure, long-term investment.
For all these reasons and others, South Florida may escape the “double dip” that New York, Las Vegas and various key luxury real estate markets are expecting.