Currently, major institutional grade rental apartment properties represent only about 10 percent of Miami-Dade County’s total multifamily rental housing inventory compared to 20 percent in 2000.
Q. A lot of developers have been eyeing new condominium projects in South Florida. Is the market getting ahead of itself?
It all comes back to supply and demand. At this point in time, it is too early to say that the market is getting ahead of itself in terms of fully committed new development. That is not to say that the inevitable historic cycle of ‘over-building’ will not occur; it’s more a question of when and the extent of the pain.
The ultimate controlling factor is the availability and flow of equity capital and financing. Following the once-in-a-lifetime cycle we’ve just been through with a simultaneous credit market and housing bubble burst, hopefully the next overbuilding cycle is tempered by investors and lenders keeping a sharp eye on feasibility at the project level.
Q. Which neighborhoods of Miami-Dade County are generally doing well in the recovery and which are lagging? Will the laggards likely pick up soon?
Generally, the beaches, bayfront and established upper-end inland communities such as Coral Gables, South Miami, Pinecrest and Doral are proving to be most resilient in terms of pricing and inventory depletion.
The downtown area, of course, is the most unique recovery story given the fact that the majority of existing residential inventory was built during the last development cycle with recovery driven by an international buyer market unique to Miami and the corresponding availability of housing and urban lifestyle environment attracting young working-age households employed in the downtown area as well as college and graduate students.
Neighborhoods experiencing the weakest recovery tend to be low-income areas hit hardest by employment cuts in construction, service and public sectors. The pace of recovery in these areas is not likely to pick up soon, since general recovery in employment opportunities is lagging expansion in higher paying employment sectors such as business and professional services, medical and education fields.
Q. A lot of South Florida homeowners are still underwater with their mortgages. How do you see that affecting the ongoing recovery in the local housing market?
Homeowners still underwater with their mortgages will have a relatively limited impact on the recovery of the local housing market. To the extent that most households with underwater mortgages have been able to stay current on their mortgages, the only segment of this group that impacts the market are those who wish to move or upgrade their housing but cannot do so without equity from their existing property or are not willing to accept a loss on sale of their existing property.