H OUSING N EWS R EPORT
June 2016
instead of the U.S. housing market taking down the global economy, the global economy will crater South Florida’s housing market this time, claims McCabe. “The last housing downturn was caused by the subprime loan crisis domestically that eventually turned into global recession,” said McCabe. “This time, the global recession is going to cause a U.S. recession. Here in Miami, 70 percent of the sales are to foreign nationals, most of which pay with cash. Only 10 to 15 percent of home buyers are Floridians.” With the disappearance of international buyers, McCabe worries that South Florida’s real estate market is drifting back into bubble territory. “In the upper-end condo market, we are in the ninth inning,” said McCabe, using a baseball analogy to describe the slowing Miami luxury condo market. “Sales numbers are dropping, prices are flattening, and we are starting to see the return of concessions by developers in the market such as private jet services to spur sales. South Florida is in a
buyers purchased approximately 10,600 properties, accounting for 36 percent or $6.1 billion worth of total sales volume in South Florida, according to the Realtor group. In the first quarter of 2016, the number of Miami sales declined 17.5 percent from a year earlier, while inventory jumped 15.4 percent, according to a report from appraisal firmMiller Samuel. As inventory grows and sales decline, many condo projects have been cancelled, said McCabe. Some of the problems in the South Florida real estate market stem from the retreat of foreign buyers, particularly Latin Americans, Russians, Europeans and Canadians. A strong U.S. dollar and weakening local currencies in Latin America and Europe has hindered the buying power of foreign investors. At thesame time, fallingcommodities prices, especially oil, has nearly sidelined Russian and Venezuelan buyers. In 2013, Russian buyers accounted for 23 percent of Miami’s luxury condo buyers; in 2014, they accounted for only 7 percent, according to Lana Bell, a broker with One Sotheby’s
Lisa Miller, Esq. Broker Keller Williams Elite Properties Aventura, Florida “ It’s a shifting market. We’re seeing price reductions on every listing. Prices are coming down. Not drastic. But it definitely has dropped. ”
big bubble for high-end condos. We are at the end of the expansion phase and entering the hyper-supply phase, especially in condos.” McCabe also described some anecdotal information that pointed to the slowing Miami real estate market. “Before, developers would market their properties to foreigners and international real estate brokerages,” said McCabe, who recently briefed Compass agents on the local Miami market for Dezer Development, the builder of the Porsche Design Tower in Sunny Isles Beach, Florida. “Now, developers are focusing on U.S. buyers and brokerages because they sense that foreign buyers have gone away.” In Miami, foreigners account for more than 65 percent of all condo and home sales, according to the Miami Association of Realtors. But demand from foreign buyers is weakening, as a strong U.S. dollar, rising home prices and political and economic turmoil in Argentina, Brazil and Venezuela create uncertainty among foreign home buyers. In 2015, foreign
International Realty in Sunny Isles, Florida.
Lisa Miller, a broker with Keller Williams Elite Properties in Aventura, Florida, said South Florida’s condo boom has yet to reach its zenith. Miller said the Miami condo market is still strong and not in a bubble, although prices are falling. “I think that’s an exaggeration,” said Miller, referring to a real estate bubble in Miami. “I don’t foresee that happening. Miami is a strong market. We have a lot of inventory; there are 1,577 condos in Aventura for sale right now. That’s huge. It’s a shifting market. We’re seeing price reductions on every listing. Prices are coming down. Not drastic. But it definitely has dropped.” Miller said part of the reason why condos are not moving quite as fast is that sellers haven’t adjusted to the shifting market. “Sellers still think they can get top dollar,” said Miller, who is also an attorney. “Prices are coming down, but not drastically. The only properties that are selling are the ones that are priced
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