I saw a post from Carlos Ruiz de Quevedo, AIA who gave me food for thought and I would like to share and invite comments from other parties regarding South Florida Real Estate.
I am very optimistic about Real Estate in South Florida and the trends, weather and location are in our favor, however, besides the oversupply that might take years to absorb we have other problems that our politicians are not approaching correctly:
1. Property Taxes
They are a lot higher than in sunshine states like Georgia and the Carolinas. Also Florida has a lot higher insurance costs. We are trying to address this and we need to vote in January to move closer to a solution.
2. Public Transportation
Miami and Fort Lauderdale are lively cities with great energy and a ton of things to do, but both counties have very poor public transportation systems and neither county is addressing this problem very well.
3. Public Projects
When we built a great project like the Carnival Center of the Performing Arts which was way over budget, why didn’t we build parking for it? Why did we not build it a in a place like the Miami Arena with Water Views?
We lost a great opportunity to built “the Opera House of Sidney” in Miami that after several decades of being built it is still an amazing structure in the right place. The over budget thing does not bother me as much as the poor location and lack of parking.
4. Foreign Nationals
Did you know that a foreign national can’t stay in the country more than 120 days (if he/she stays several years in a row?). And who are the big investors in this area? Foreigners
If a foreign national stays more than the alloted time and the IRS finds out, the IRS will make them US residents for tax purposes and tax them on their world wide income. Let them stay as long as they want – they pay higher property taxes than we do and they consume and keep our economy going. If we want to charge them for staying, many will gladly pay a fee to stay as long as they want.
5. Financing Foreign Nationals
And talking about foreign nationals, the financial institutions are now requiring a lot higher down payments than for locals and I would bet $100 that there are less foreclosures from foreign nationals than from residents / citizens.
The more I travel the more appreciate how wonderful Miami is. There are few places in the world that offer the climate , the diversity , the amount of restaurants with cuisine from all over the world including the “cafe cubano” (that I miss when I travel). But we have a way to go to become the New York, Chicago and the LA that we want to compare ourselves with.
We have done a lot of improvements but we still do not have the economy of these other cities. And with all the greed that allowed our developers to build we still do not have Broadway type area. Midtown or Biscayne Landing would have been the perfect choices for theatre locations, but the decision makers sometimes lack the long term vision to make Miami the numero 1 destination in the US and in the world.
We all have to become more involved in the political process to elect the right officials and to demand from them to get the things we are still lacking.
Meanwhile, we as Realtors can do our part to improve the business by advising our clients on how to price their properties in this market and by not taking over priced listings that show an oversupply of inventory with seller’s are not serious about selling.
Every day when I look at my areas Aventura, Sunny Isles & Bal Harbour I see still more units coming into the market than going pending and everyday you see over 25% of those properties are over priced from day one.
When working with a Buyer today I tell them it is a great time to buy because of the willingness to some sellers to negotiate. Many like to wait because they see and hear about the high inventory. They do not want to believe that many sellers are very stubborn and won’t sell unless they get a specific target and as long as they do not have the need to sell they will set the prices at artificially high levels.
Yes the inventory is huge but the people willing to sell at 2,003 / 2,004 prices are not that many. Unless potential sellers are not able to afford their properties any more, the amount of great deals is limited, but it is there today. I wish we could know what tomorrow will bring but if I have the right credit, ability to pay and desire to own, I would not wait too long. We are probably not at the bottom of the market but there is pent time demand accumulated and when we reach it, it will not be a bottom for a long time.
For example, we have a unit in One Bal Harbour that we bought as an investment with a partner. We wanted to sell it because the partner does not want to close. There are 63 apartments for sale in the same building but only 5 units are listed for less than $1.3Million. 3 of the listings are below the bridge and have obstructed view, so for somebody wanted to buy a smaller apartment (2,000 sft) in this Luxury Building at a good price there are really only two options- my unit in the 9th floor and a competing unit 2 floors down.
The other people that have contracts on similar units are not willing to sell at their cost 4.5 years ago, they are looking to make $100,000 or more. So a potential buyer things there are great opportunities to buy, when in reality there are just two opportunities and once they are gone maybe they will be a third one but maybe not.
Just some food for thought!
Jose Klahr
EWM Aventura