Statements like ‘the market is going down’ or ‘we’re seeing a market slowdown’ make us wonder about a future crisis but is realty effectively like this?
At the moment the market in Miami is just stable, it’s not collapsing. The volume of sales has decreased but not drastically, I would say that it has just cooled off and it is also considered a sign of solidity.
In the last 15 years the market has gone thru cycles of depression and growth. In Miami we have experienced a great boom over the past 5 years so it’s normal and healthy to go thru a slowdown. The real estate market is more sustainable that way.
The market is shifting from a seller’s market to a buyer’s market which means that the buyer has more negotiation power that in the previous boom cycle. This means that sellers have to review their price expectations. In this kind of market, sellers have to work harder to generate interest in their properties. At the same time, buyers have choices and they can negotiate reduced prices while having the option to pick and choose houses in excellent conditions. During this phase, realtors are on the spot because buyers expectations and sellers dreams are far away from each other. Closing a deal becomes more puzzling.
As a matter of fact, closings in 2016 have decreased. During the second quarter of 2016 the number of home and condo sales fell 25 percent in Miami Beach and 12,5% in Miami. However, let’s underline that the prices rose 7.7% in Miami and 2.4% in Miami Beach. For example in the Murano Grande the volume of sales decrease of 33% but prices were up 3%.
There is a wider range of inventory on the market and properties take more time to sell. This situation arises from the competition of new construction and from economic perspectives. Developers are extensively building in certain areas. Bear in mind that these projects are already 60-70% sold before the start of the construction. Economically the dollar is very high compared to European, South American and Canadian currencies which were the heart of Miami’s buyers. Nowadays their weak currency make a real estate investment in Miami so much more expensive.
To conclude, it’s important to understand that a real estate stability is healthy and the only way to move forward in this type of economy is to find new strategies to attract buyers and turn a slowdown into an opportunity.