South Florida’s real estate industry saw profit shrink from 2013 to 2017, study says

South Florida’s real estate industry earnings for those selling and leasing commercial and residential spaces shrank in recent years, according to a study by LeadMD.

But some local real estate pioneers say their experiences tell a different story.

The Arizona-based revenue performance consultancy studied the real estate industry earnings for both professionals leasing and selling spaces, including lessors, property managers and real estate appraisers. Based on Census data, it found that industry earnings in the Miami, Fort Lauderdale and West Palm Beach metro area in 2017 were $3.46 million, down from $4.1 million in 2013.

That accounts for a 15.6% drop in payroll, making the leasing industry the second-worst payroll decline behind the mining, oil and gas industry, which had a 46.44% drop in payroll.

LeadMD partnered with Washington-based marketing firm Go Fish Daily to analyze the change in employment numbers and average salary in industries across the country.

With such a broad overview, it’s hard to pin down what areas within real estate led to this drop, said George C. Jalil, a certified appraiser and broker president of Real Living First Service Realty ERA Powered.

“I didn’t see any appraisers affected,” Jalil said.

Despite technology growing between 2013 and 2017, Jalil said, “There is a lot of technology to give you data, but an appraiser is needed to give an opinion on what the market is saying.”

Others in the residential market saw their revenue increase, including Mike Pappas, president and CEO of the Keyes Company.

“From 2013 to 2017, there were more homes being sold and for higher values,” Pappas said. “We had more revenue coming in on gross commission.”

Some companies did experience a drop in sales. “Everything we do is based on commission sales,” said Ron Shuffield of Berkshire Hathaway HomeServices EWM Realty. “It depends on the company. Miami-Dade industry sales were not as great in 2017 as prior years.”

Shuffield said total sales of Miami-Dade single-family homes sold through the Multiple Listing Service was 13,617 single-family homes in 2017, down from 13,993 single-family homes in 2013. Total sales of condos in Miami-Dade were 14,135 in 2017, down from 18,920 condos in 2013.

Millennial professionals care about obtaining a good job in a market that allows them to have a comfortable lifestyle, Devon Cameron, a content associate for Go Fish Daily, said.

The cause of the decline has yet to be determined. “It can be a number of factors,” said Cameron. “It gave us a snapshot of the health of the industry. [But] it’s difficult for us to estimate the causation.”

The dip in industry earnings may dissuade real estate professionals from moving to the South Florida market, said Cameron. “There is a bit of a decline on what people take home,” she said, “but the takeaway could be you would go to Miami if you’re the type of person who wants to get experience, but you might look elsewhere if you want to be in a strong market where you would earn more.”

“We don’t seem to have as many sales people in the industry because total sales are trending down nationally,” Shuffield said.

The reason why sales are trending down, Shuffield said, is because more homegrown buyers are being priced out of the mid-market. “Median salaries in Miami-Dade County are not keeping up with median-priced homes.”

Miamians, Shuffield has seen, are also competing with buyers that don’t work in the local market. He said, “Median prices of homes have been increasing.”

According to the Miami Association of Realtors October 2019 report, single-family home prices in Miami-Dade County rose by 6.8% year-over-year, from $350,000 to $365,000. Condos had a 5.1% median price increase, from $235,000 to $247,000.

Median home prices increased in Broward by 2% increase in single-family home prices, from $355,000 to $362,000. Condos increased by 7% from $157,000 to $168,000.

Still, the study has a silver lining for South Florida’s real estate industry.

The region ranked 46, within the bottom 10 cities, with real estate industry losses. The Connecticut metro areas Hartford, West Hartford and East Hartford topped the list at a 80.88% industry earning loss change, Ohio’s Columbus came in second with a 77.68% change and Wisconsin’s Milwaukee, Waukesha and West Allis came in third with a 74.02% earnings change.

This story was originally published November 29, 2019 at 4:30 AM.