Florida Real Estate Forecast 2008. Flattening and Recovering in these Coming Years

A new report from the Attorneys’ Title Insurance Fund Inc. finds that Florida’s housing market slowed in 2007 in nearly every county it analyzed. The report also showed that real estate markets flattened out in spring 2007, before the subprime mortgage crisis in August knocked markets down another 10 percent across the state. Since then, the state’s housing market has flattened and is expected to begin to recover during the next several years. The 2008 Fund Florida Real Estate Forecast, commissioned by Florida based Attorneys’ Title Insurance Fund’s Consumer Education Campaign, created by economist Dr. Hank Fishkind using deed data for more than 30 Florida counties. The report provides us a snapshot of the national economic outlook and 33 county specific forecasts for 2008 through 2010.

“Florida is one of the leading states for job creation and outperformed the rest of the country despite the housing market meltdown,” Fishkind says. ‘The state’s population growth also slowed, but is still nearly greater than all of the other Southeastern states put together. Florida has a very large and powerful economy that has gone through a cyclical downshift, but Florida’s economy is still outperforming compared to the rest of the nation. Florida has created a tremendous amount of wealth and despite many of the problems that loose lending practices and subprime mortgages have caused the state now has the highest level of homeownership ever. The market has had some indigestion now, but housing markets will return to normal during the next few years. The damage for some is significant, but in the aggregate, Florida still had some significant economic gains.”

Map of South East Florida Region

Florida is netting 750 new residents each day. Since November 2007, I’ve been experiencing an increase in inquiries and sales from both International and National customers. In attempting to time the bottom of the market, there may be greater risk by waiting too long with the could have, should have mentality. If you love Miami’s excitement and waterfront lifestyle today is a great time to get a bargain deal. I advise customers to have a 3 to 5 year outlook as a place to love & enjoy with family and friends. I believe there are bottom line bargains each week and promote them regularly to my direct clients.

In studying Sunny Isles real estate to South Beach real estate for the last 30 days, there have been 30 closed sales on Collins Avenue (partly because of the Holiday season). In the last 90 days there were 117 closed sales and 286 closed units in the previous 6 months. Today’s Collins Avenue inventory stands at 2172 total condos over a 15 mile stretch (Jan 8th, 2008). The condos priced in the top 1% are selling on average at 95% sales price to list price ratio. The deals are exciting as my buyer clients are saving sometimes 10 to 20% off. The seller’s I represent are pricing there’s competitively (in the top 1% range) and the luxury condos of Sunny Isles are getting serious offers accepted. In the next 18 months my forecast is a distinct separation between the mainland of Downtown Miami Dade and the Miami Beach FL real estate market. Think about this as tourists and International customers want the luxury oceanfront living the beaches of Miami offer. It’s a great big part what makes Miami so amazing! Let me know if you have any thoughts or a suggestion on this topic of Florida’s rebound occurring in the following years. I will be updating new statistics and trends after this first quarter 08. Best regards!

8 thoughts on “Florida Real Estate Forecast 2008. Flattening and Recovering in these Coming Years

  1. I am astounded that your statements are forward looking (24-48 Months) while lacking past data to test your theory. Looking back on the last Flat growth period of Fl. and then injecting cap market economic data against the same graph, we see the inflow of people following (1989-1994). At the same time, this growth took over 10 years and only then was there an increase in home owner market value The Migration of Families into Fl occurred during tax reduction periods. Counties like Miami-Dade, Hernando, and alike have been eroding the tax base for the last 2 years while increasing taxation against current population. The Down turn has just begun. Wage earners are leaving as they graduate school. The inflow has been of retirement age. Look for the Fl real estate market to continue to decline with population for the coming next five years. That’s the banking forecast, not mine.
    another area to look into is ROI on new properties. Distressed sales create long term value and allow for new employee populations to rent rather then buy into a market. A property that fails to meet 1% monthly net is over valued. Take the equation 134000 (new home acquired under stressed markets) 13400.00 down would need to rent for 1450.00 per month to be flat. Using current taxation rates, the tax roll would still be in the 5 k range or approx. 400 per month. Less loan servicing of 942.00= 1342.00 0r a measly pos cash flow of 108.00 or 13.42 times rate. This is a sure way to Shrink cap. This means a home that sold in 2006-07 market would have to shed 50% to make these numbers work.

  2. Hi Steven,

    I appreciate you taking the time to write to my blog and admire your analytical approach. You have a valid comment, strong position with a likely outcome for west Miami Dade County where something may sell for $134,000. Along the ocean, we see approximately 25% depreciation since 2006! Business has been very good since November 2007 and by specializing along the Dade Beaches, I’m finally capable of replacing negative media coverage with positive news and honest feedback. Just today I sold a 3 bedroom in Trump Palace. In January, Three high sales occurred in South Beach at a price per square foot of $862 (Fisher Island), $973 (Icon) and $1220 (Continuum). In December, two high sales closed at $1,445 (Il Villaggio) and $1,680 (Setai) per square foot. My opinion holds as a future demand and value separation when comparing Miami Dade Oceanfront to the Miami Dade mainland. In the last 60 days, Downtown Miami had one luxury sale at $913 per square foot at Millennium Tower (Brickell).

    The market differences allow today’s buyer a great selection and leverage. There’s no more room to build after 2008 with new oceanfront condos like Trump Towers and Jade being completed and filling the last Dade County oceanfront parcels. This oceanfront demand has been pent up and thank the Lord for historically low interest rates fueling Sunny Isles and Miami Beach (and the weak dollar fueling International sales). When were interest rates in the double digits… 1980’s & 90’s right?

    The most recent buyer I represented, managed a good return by paying cash…ie.) $350K sale price with monthly rental at $2,650 (Ocean Drive). Monthly Taxes are approximately $550 with a maintenance fee of $500. $1,050 Costs with $1,600 Monthly Net. Tax benefits, Write offs, Pride of Ownership (Ocean Drive South Beach) and a long term outlook with patient money is what this investor was after!

    Have a great month and check back for new updates!

  3. Interesting Note..
    The housing market is not having a “going out of business” sale. While some sellers are cutting their prices, others are not. In fact, FAR statistics show just a 5 percent statewide decline in home prices and a 3 percent decrease in condo prices over the past year. Historically, a rapid jump in home prices has been followed by a period of stability, not decline. “In Florida, residential prices shoot up quickly and then stabilize,” says economist Hank Fishkind, Ph.D. of Fishkind & Associates, Inc., Orlando. “Even when there is excess supply, prices don’t tend to come down.”

    Here along the Beaches in Dade County we see approximately 25% decline since the boom. I do in fact see stability and although inventory is high, prices are closing on average at 91% of list price! Buyer’s should buy right and hold while the market is still favorable and interest rates low. Trump Towers and Jade will have excellent deals in the coming months!

  4. Hi Anthony,
    Interesting question but I would have to say very accurate. A large territory from Pompano Beach/Ft. Lauderdale to Coral Gables/Grove. They are scouting for leads with this “proprientary tool” but for a vulture, it might be useful. A cool tool to see worst case scenarios. They sure don’t show the address/photos which would be nice to see…
    The average depreciation for oceanfront is 25% since the peak of 2005. In high price revision examples such as the Sunny Isles location, we see only 31 out of 1366 total condos on the market (down from 1600 last month). There are 31 in Sunny Isles with around 114 major price revisions in Miami Beach (out of 1968 Miami Bch condos on market).
    My guess to these major drops may be all or a combo of 1) Buying at the peak 2) Finacial crisis 3) high hopes, false expectations from both seller/realtor with a great deal of smoke & mirrors leading the sellers into a major price repositioning (highest SI revision at 59%).
    It seems as a better management of time to contact an honest agent for the best deals based on individual needs and wants. ie.) If there are 40 condos for sale in a building there are usually 2-5 “good deals” for that building/area with one to two seller’s who are very motivated and willing to negotiate. 89% sale to list price is market average with the potential for more with cash purchases and a good negotiator. There are also many condos still selling at 98-100% when priced aggressively.
    Have a great day & Thank you for visiting.

  5. Your key phrase is “price-aggressively”, which should translate into “price-correctly”. Unfortunately many sellers are so far out of touch with reality, which I guess is OK for them, if they can afford to hold on to their properties. The market soared far too high and needs to adjust accurately. Good luck to you, I don’t see much hope until at least 2010.