The real estate properties that once became the source of Florida’s economic development may experience a reversal of function, as their supply in the Florida market may well exceed the demand for these properties. The real estate market that drove Florida’s growth could also serve as a double-edged sword that could eventually lead to future widespread bankruptcy of builders and banks. However, Florida’s real estate situation may not be as bleak as it seems. There are still areas that are currently experiencing rapid property turnovers. Unfortunately, parts of South Florida may not be so lucky.
South Florida, once hailed as a real estate agent’s dream, would be the first to experience the downward trend in real estate prices and sales. Looking only at the situation in Miami, one can easily determine the cause of such a downward trend. Currently, there are already 15,080 units under construction and 28,000 are still awaiting approval. These figures contrast sharply with the 11,241 units built over the past ten years. A survey by Florida Tax Watch found that in 2005, the percentage of Miami-Dade households that could not afford even a median 2-bedroom rental came out on top with a total of 68%.
Although experts were optimistic about the outlook for commercial real estate which has seen stable and rising occupancy, they still warned of the dangers of building condos. 40% of these experts even recommended the same for single-family homes.
Overbuilding of condominium units and other properties had resulted in supply exceeding demand. In 2004, real estate agents in South Florida were able to sell a thousand-unit project in just one week. Today, properties can be on the market for several months and remain unsold.
The possible sudden drop in house prices could very well be bad news for real estate agents. However, not everyone complains about it. Speculators are now looking for unsold properties at bargain prices. The possibility of price drops on prime properties has prompted several sectors to prepare funds for these properties.
This is seen in the doubling of properties sold in the area and the decline in sales of high-priced properties. This had led some to conclude that the current trend is no longer to sell real estate in Florida. Some have speculated that this situation could continue in the coming months.
Although South Beach was supposed to be a good environment for investors due to the existence of a ready market, some areas are not so lucky. Investors have warned against investing in areas like Biscayne Boulevard in downtown Miami. They argued that the growing number of investors there could cause property prices to plummet.
According to experts from the survey recently released by the University of Florida, the future of Real Estate in Florida faces a bleak future. The first affected by this downward trend are areas like Miami in South Florida. Indeed, it may not be a good time for real estate agents, but the year is very promising for the buyer’s market.