The international media’s coverage of The Panama Papers has characterized South Florida’s real-estate market as being dominated by luxury condos owned by absentee buyers. In fact, a deeper look reveals that our housing landscape is becoming increasingly diverse as developers meet demand among actual residents, so-called “end users.”
While the perception is that our market is one-dimensional due to the sheer number of high-rise condos that have been built over the past decade, today there are thriving single-family home and apartment communities under way in neighborhoods like Doral, Weston, Pembroke Pines, and even in and around downtown Miami.
Although we have seen an uptick in condo development in the past three years, the majority of units being built this cycle are selling to owners who will spend all or part of their time here. This marks a shift from the boom-turned-bust of 2008, which was driven by condo developers, their buyers and banks over-leveraging themselves in the name of speculation.
Case in point: In downtown Miami, the center of overbuilding last cycle, 85 percent of the 3,438 condos delivering this year are pre-sold, according to the Miami Downtown Development Authority’s latest market report. The same study found that 94 percent of downtown’s existing units are occupied by full-time residents.
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South Florida’s real-estate sector has learned from its past mistakes, and today’s housing market is proving resilient despite economic volatility overseas.
Several factors are fueling this stability.
Enhanced lifestyle offerings are appealing to end users from across the U.S., Latin America, Europe, the Middle East and Asia who want to own a home here, preserve their wealth, start a business or upgrade their family’s quality of life. Our architecture has been elevated. World-class cultural and retail destinations are boosting our standing as a year-round destination. New museums are rising; our public and private schools are improving; and neighborhoods from Wynwood to Coconut Grove are being reimagined as urban and walkable.
Second, our market is on sound financial footing by comparison with past cycles. Because the vast majority of today’s home sales are all cash, developers are insulated from the risks associated with insurmountable debt. Even when lenders finance purchases, buyers are contributing 30 to 40 percent equity, a high threshold favoring residents over speculators. The days of easy-to-access loans are gone, resulting in one of the country’s most under-leveraged markets.
At the same time, we are making important investments in our infrastructure, from creating new parks and public transit options to expanding Miami International Airport and adding high-speed rail service.
Developers are doing their part to lure end-user residents by building low-density projects, prioritizing neighborhoods that foster a sense of community and offering amenities that make people feel at home.
At Grove at Grand Bay in Coconut Grove, set for completion this summer, buyers include local accountants, attorneys and doctors. More than half of the building’s owners are from the U.S., including many empty-nesters relocating from across South Florida.
Nearby, at Park Grove, we’ve sold units to New England transplants and seasonal snowbirds. One of our buyers is a middle-aged couple relocating from Connecticut after years of vacationing on a sailboat in Coconut Grove.
At Glass in Miami Beach, each of the tower’s 10 units has been purchased by an end user. Residents include a banking executive, a tech mogul, members of a powerful steel family and an Icelandic couple that divides their time between Miami Beach and New York.
Likewise, the majority of our single-family homes at Modern and NeoVita in Doral and at Botaniko in Weston are selling to existing South Florida families in search of new construction, contemporary home designs, more private space and a suburban community offering a strong quality of life.
After years of enduring criticism as a one-dimensional market overrun by absentee buyers, South Florida’s diverse housing options are increasingly appealing to end users. That’s good news for our real-estate market, our economy and our city’s newest crop of residential developments.
David Martin is president and co-founder of Terra (terragroup.com), an integrated real-estate development firm in South Florida.