How The Miami Condominium Market Is Weathering The Housing Slump
At present, a lot of talk hovers on the worries and concerns related to the current real estate "bubble", and this seems to be on the mind of almost everyone who is part of the housing market, as well as potential buyers.
Wherever this concern arises, the state of Florida, and particularly South Florida, grabs a lot of scrutiny and attention. Although the property markets here are hit hard too, the main difference in South Florida, and basically other markets too, is the area's access to home buyers from literally all over the world.
Where Most Prospective Home Buyers Come From
Much of the housing market in the Miami area is also driven by buyers coming particularly from Latin America and Europe. The city's single-family units and condo sales are not simply dependent on local buyers, and many of the communities here, are already inhabited primarily by part-time residents, and many residents of Hispanic origin.
Currently, prices in Miami's condominium market, which is considered the poster child of the real estate boom that swept much of the country in the past few years, seems to have buckled a bit, although it looks like it would be able to weather the storm created by the housing slump.
However, the opening of a number of big complexes and other property developments has analysts predicting that the market, which is fueled by a feverish construction spree that saw a lot of cranes and heavy equipment sprouting in the skyline, may be edging closer towards a cliff.
Speculators Are To Blame For The Housing Slump Here Too
Home values in this city may be poised for a quite back-brusing tumble in the next year as thousands of units in the downtown district and Brickell banking districts are readied for residents, analysts note.
As a result of this, many speculators are circling the area like vultures looking for prey. Hedge funds and private equity pools are also busy checking on locations where they can find good buys, or snap up a considerable number of units at wonderful discounts, to help hold rentals for up to 10 years, until the market stabilizes.
Would Miami Be Able To Weather The Current Housing Slowdown?
According to futures traders on the CME Group exchange, the folks there are predicting that Miami will be the worst U.S. regional housing market over the next four years with prices falling an estimated 30 percent. Many experts too have been forecasting a slide for Florida condo prices, since the market soared in late 2005. In Miami, sales figures have been slumping for months, however prices have been resilient as sellers refuse to get shoved.
For instance, in the month of August, condo sales in Miami-Dade County dropped 44 percent while the median price rose 5 percent to $262,000, according to data from the Florida Association of Realtors. However, the number of condos on sale has risen to 25,000, which is a 36-month supply, as compared to six to 12 months in an otherwise normal market. Most market analysts and key players note that vulture funds could move on a really numb and cold market in the next year.
Some housing analysts think that the new year would be a major turning point, when pre-construction buyers are forced to shell out the full purchase price, or walk away from deposits, and speculators will feel the brunt of collecting and holding too many properties, and property developers would be forced to sell excess units at hefty discounts of 30, 40 or even 50 percent.
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Added: March 16, 2008
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