Miami’s real estate market has always been the topic of dinner table conversations – with the ebbs and flows of its success closely tied to the economy. Not surprisingly, as the economy starts to (slowly) pick itself back up, the conversations about investment and opportunity are also on the rise. Are we faring better…or worse?
Exposure to International Market is Key
Talk to most residential real estate brokers these days and their answer will almost certainly be linked to the nationality of their clientele. Recently, at the Miami International Real Estate Congress event held at the Biltmore Hotel, chief economist for the National Association of Realtors, Lawrence Yun’s assessment is that South Florida’s exposure to the international market is the key. 77% of Miami-based brokers said they worked with international buyers over the last year, as opposed to nationally, where only 27% of brokers have. Growth in India, China and Brazil has fueled real estate activity here in Miami, in addition to present buyers from Russia and Latin America.
As you might imagine, most of these buyers are smart, high net worth clients who know how to analyze investment opportunities. As a result, to make deals, brokers are realizing they need to be knowledgeable about both the Miami market and the economy of the buyer’s home country. For example, Brazilian buyers are searching for foreign investments that provide a safe haven for their cash so it does not fall victim to the same type of real estate bubble that just plagued the United States.
Distressed Properties Still Abound
Now, don’t get too excited. The flip side of this enthusiasm for foreign buyers, is the lingering consequences from Miami’s bubble pop. Non-distressed luxury properties may be hot, but distressed properties still exist and make up the vast majority of the market. According to Jonathan J. Miller, president of Miller Samuel, an appraiser who produces a quarterly report on Miami-Dade County for Douglas Eliman Florida, short sales and properties in foreclosure still make up 41% of the overall market (as tracked by Miller Samuel).
In many ways, the real estate market in Miami is emblematic of its population. Extravagance next to suffering is not new, but as we move forward, the goal will be to translate the growth to distressed properties markets so that dinner table conversations at every income bracket will be hopeful and optimistic.