It is not a surprise that the Florida’s real estate market isn’t in its best shape today. The market has been facing different barriers that haven’t allowed it to grow as the some years before. In this week’s article I will explain some of the biggest problems that the industry is trying to bear.
1. Climate Change
We have all heard rumors saying that Miami is going to flood under water in a few years. Unfortunately, we have to say, somehow it is not false.
According to the Union Concerned Scientist, in the next 30 years, 64,000 homes in Florida will be at risk of flooding. Out of these 64K, 12,000 would be homes located in Miami Beach.
This makes Florida the state presenting the highest amount of residents at risk caused by the climate change in the United States.
2. Socio-economic crisis in South America
Real estate in Miami, and Florida in general, has an incredible foreign influence, but Latin America is by far its largest client. Out of all the buyers of units over $500,000, a 50% come from Latin America. This has been great news for past years, but what happens now that a lot of these countries are facing a socio-economic crisis?
For instance, Brazil, the biggest client of real estate in Miami for years, is now having a dramatic devaluation of 40% of the Brazilian currency compared to the dollar. With the arrival of the new president, Brazilians are not able to buy at the same pace than before.
The exact same thing is happening in Venezuela, but in bigger dimensions. The investments coming from this country have almost all disappeared !
With Donald Trump in power, there are now tighter immigration controls, bringing more and more limitations for foreign buyers to invest.
All the political changes that these countries have been facing, have clearly affected the real estate market. This is causing a drop in the real estate demand, which wasn’t previewed by the developers who started building years ago and are now finishing brand new building that are still waiting for clients to come.
3. No availability in prime location
For years now, waterfront lots in South Beach and Brickell have been the best location for high end buildings, as it was what buyers were looking for.
There is a scarcity of land available on the water in those two locations so developers are now forced to expand their constructions to “new” neighborhoods such as Edgewater, Wynwood, Midtown which offers better prices.
4. Increasing prices
Even if it is not the best time for certain neighborhoods, average condo prices continue to increase in Miami Dade county area.
In the third quarter of 2018, the sold prices of condos and townhouses were 3.3% higher than 2017. It is important to know that a price is only recorded when homes are completed, which excludes pre-construction prices. Also, we need to be cautious since the luxury market represents only a small part of this market and it actually doesn’t follow the trend of the entire market.
As a conclusion we can say that it is not the best time to sell, but as the prices continue to drop, buying is now the best option!