Forbes magazine recently published an interview with Don Peebles where he described the South Florida market:
"Forbes: Do you see big differences in regions of the country where you think some are harder hit than others, or some may come back quicker than others in this thing?"
"Peebles: Yeah, I do. I see we're actually in two markets that I think are probably the worst two markets for residential, for sure, and that is Las Vegas and South Florida. South Florida was overbuilt. And you take Miami, for example, on the condo side: In downtown Miami alone, almost 50,000 new units were built during this market cycle. And that's not a center of employment. I think it's their values have plummeted, 60%, 70%."
"Forbes: Wow."
"Peebles: And then they have a bigger problem: that many of these condo buildings, the owners who are in foreclosure, or the banks who have them, are not paying condo fees. And so you have this small number of people in the buildings that are having to carry the operation of the whole building. And so the building's getting a little bit more run-down and has greater financial problems. So buyers are even more reluctant to buy, so that pushes value down. I think that market doesn't recover for five to seven years, maybe even a bit longer."
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6 comments:
While some people think that real estate always goes up, some are still very afraid that it is too expensive and is about to fall. But for a speculative bubble to develop, everyone has to believe that this is the sure path to riches just like people believed about stocks in 1998-2000. A bubble as when prices become un tethered from fundamentals. Right now, real estate fundamentals, as measured by the amount of rent you can collect on a property versus its value, are fine.
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Aiyna
Link Building
"Right now, real estate fundamentals, as measured by the amount of rent you can collect on a property versus its value, are fine."
They are? In South Florida? When you include inflated tax and insurance costs?
I don't know what market you've been paying attention to, but we're still far from reaching proper rent versus buy ratios. Prices could still drop another 30% and most properties would still not be cash-flow positive.
The problem gets worse because rental prices are dropping like a rock. I have never seen a market more flooded by rental properties.
There are different types of real estate, so when you talk about Miami real estate in general it really doesn't apply to Bal Harbour real estate or South Beach real estate. Not all real estate has equally gone down. Some oceanfront luxury properties have gone up in value. South Beach condos like Apogee South Beach, Continuum South Beach, Continuum Two South Beach, Icon South Beach. Despite all the horoble prognosys, South Florida real estate is still very popular and desirable.
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