Mortgage interest rates are rising, but inventory is still tight and demand is still high, which means the residential market is still humming along.
Put another way: Homes are moving and prices keep climbing, South Florida’s real estate experts told The Real Deal.
“The time to buy was probably before now, but the market shows continuing strength,” said Jay Parker, president and CEO of Douglas Elliman’s Florida operations.
Parker and his fellow brokers agree that all types of housing are doing well, with single-family and luxury condominium sales luring different groups of buyers.
Jill Hertzberg of The Jills, a team affiliated with Coldwell Banker Residential Real Estate, though, attributes the healthy numbers to a surprising synergy that has developed between single-family homes and condos: As strong as they are on their own, they’re stronger together.
Hertzberg even points out that developers are building single-family homes and condos next to each other. In Miami Beach, a cluster of towers is surrounded by houses with yards.
“There is much more cross-pollination than people think,” Hertzberg told TRD. “They need each other, feed each other.”
At the same time, both types of properties are finding success with different demographics. The people on the hunt for a condo are usually not speculators, contrary to what many outsiders might think. They want a getaway, Parker said. Many are from New York, looking to escape the Empire State’s cruel winters; others are from Latin America and Asia, and want homes in a beautiful place with a more laid-back pace.
Single-family buyers are couples looking for a primary residence to raise a family, or retirees looking to be near friends or near a country club where they can golf, swim and place tennis, he said.
All buyers have one thing in common these days, though: They’re more demanding and more aware of what they want, especially when it comes to architecture. Many are looking for Art Moderne, with “a lot of windows, a lot of glass and fine finishes,” Hertzberg said.
The tight inventory, unfortunately, means buyers sometimes have to settle for a design they like less, although Lynda Fernandez of the Miami Association of Realtors sees the days of compromise coming to an end in the next year or two.
“The boom of new construction around the corner should bring the supply we need,” she told TRD.
On the condo side, for example, Argentinian developer Alan Faena is putting up an 18-story, 47-unit luxury tower in Miami Beach, appropriately named Faena House. Ian Schrager, a Manhattan hotelier who has branched out into homes, is building the 11-story, 26-unit Residences at the Miami Beach Edition. Elliman is handling the sales for both.
Also busy with construction are single-family builders. One of Florida’s biggest, Lennar, has projects underway in Miami-Dade, Palm Beach and Broward counties.
The influx of both condos and single-family homes will bring what Fernandez characterizes as balanced growth: Supply will come closer to matching demand, slowing the rise in prices. In essence, the market will find a moderate level of sales that it can sustain over several years.
Miami-Dade County is on track for a third straight year of record sales, Fernandez says. (This year, the months of February, May and July all posted record sales numbers.) It’s all clearly a positive, but also one of the warning signs of a housing bubble.
Parker, like Fernandez, is an advocate of balanced growth, but is confident that the market is truly sound.
The law of supply and demand is driving up prices, but so are sellers who are driving hard bargains. And lenders and developers have new, stricter requirements in place for buyers. “In a market that has suffered as much as South Florida,” Parker said, “we’ve definitely learned from our mistakes.”