DeFortuna: We Need to Combat the Negative Headlines

Located at 7880 Biscayne Boulevard, Triton Center aims to become the epicenter of the upper Biscayne Boulevard area.

MIAMI—Though still posting steady growth, Miami’s real estate market is normalizing after eight years of near-record residential sales. That’s according to market experts sharing their views at a recent Miami Association of Realtors event. What’s driving the real estate market? Several factors, including fast-sales growth of Miami mid-market properties; the high-percentage of all-cash buyers; preconstruction condo inventory in the Downtown Miami area; and South Florida’s overall population and job increases. “2013 and 2014 were extremely strong for the Miami market for fundamental reasons,” said Anthony M. Graziano , senior managing director of Integra Realty Resources . “One of the reasons was pent-up demand. When we look at our numbers today, we are getting back to normal. It’s OK that our market is not growing 15 to 20% every year. In fact, it’s a good thing. I want to grow 5% a year because at some point our wage growth can’t keep up.” In his comments, Edgardo Defortuna , president of Fortune International Realty , pointed to several unbalanced and inaccurate media articles. He said perception affects the market because perception eventually becomes reality. “We need to change the perception,” Defortuna said. “We need to combat the negative headlines because the reality of our market is completely different. When people say Miami (preconstruction condo) developers are reducing their cash deposit requirements from 50 to 30%, it’s taken totally out of context. These buildings are reducing deposit schedules because they don’t need the money anymore. They are already 80, 90% sold and close to completion.” Single-family homes priced between $200,000 and $600,000 saw a 5.8% year-over-year increase in April, growing from 685 to 725. The sector represented 63% of total Miami single-family home sales in April 2016. Meanwhile, existing condos priced between $150,000 and $300,000 saw a 2.7%-rise in sales in April, increasing from 485 transactions to 498. This sector represented 39.2% of total existing Miami condo home sales in April 2016. Miami prices compared to other top-tier cities and a lack of available land are also key factors in today’s market. For example, a 120-square meter condo in Miami-Fort Lauderdale-Miami Beach cost $149,900 on average, according to the National Association of Realtors. Prices for the same condo in London ($960,840), Hong Kong ($776,280), and New York ($1.6 million) are at least five times higher. The remainder of the 2016 will see fewer sales than last year and pricing will be hard to predict, Graziano said. Waterfront properties or other unique projects will outperform. The pricing for properties below $1 million will remain strong but inventory expansion should be watched. Overall, the average pricing remains strong in South Florida. Experts said sellers should expect to see more competition as buyers become more selective. South Florida’s economic growth and population increases will play key roles in the direction of 2016 residential pricing. “There’s lots of money out there,” Bradley Deckelbaum , developer of the Riva luxury condo now under construction on the Middle River in Fort Lauderdale, tells GlobeSt.com. “There were 76 million people born in the US between 1946 and 1964. It is estimated that 10,000 baby boomers retire each day, or 4 million annually. Collectively, this 28% of the population controls 70% of the total net worth of all American households.”