The Miami Herald recently published a report, based on an anonymous survey of 100 of Miami’s top real estate professionals, that generally concluded there is a softening of our county’s real estate market, particularly in the all-important luxury sector. (Full disclosure: I did not participate in the survey.)
While I agreed with much of the report, as well as many of my respected colleagues who were quoted in the article, I was somewhat wary of the results. I believe the security of anonymity tilted the truth and enabled the “cheerleaders” among us to be unusually honest and direct. Saying the market is “soft”or “softening”in a survey like this really translates to “the market is very soft at the moment.” My gut feeling is that this will be a tougher year than expected as international markets find their footing and we await the results of a critical presidential election.
The important question is: How can you, the Miami real estate buyer or seller, benefit from this information? By observing history and acting boldly! As someone who has survived and thrived through many decades of Miami real estate cycles, I am confident that our market will recover sooner rather than later, but when will we bottom out on the bell curve and begin the ascent upwards? The trick is staying in front of that curve by acting accordingly.
With that in mind, here are some modest suggestions for recognizing when to “zig” when everyone else is “zagging”:
The butcher speaks: I’ll never forget the moment. In 2005, I found myself getting real estate advice from a local butcher who knew I was a Realtor, arguing which Miami neighborhood would be the next to take off. (This was at the height of the previous real estate “bubble” when home values skyrocketed, and it seemed as though everyone was making money in real estate.) Alarm bells immediately went off in my head, and I just knew the party was over. With all due respect to meat vendors everywhere, when laypeople have one foot in your industry, it’s time to — ahem — “trim the fat” and sell off your assets.
Buy at the bottom: Conversely, the bottom of a cycle — when novices are panicked and “experts” are disparaging the entire industry — is the very best time to invest in real estate, particularly in Miami. For a number of reasons (no state income taxes, weather, beaches, etc.), our market is naturally insulated from long down cycles, and values will rise with vigor, as they historically have — but the best buying opportunities are before that happens. A quick look at average Miami prices on Zillow.com bears this out. Zillow currently considers Miami to be a “cool” (mostly buyers’) market, with an average home value of $294,000… but only six years ago, at the nadir of the last down cycle, the average home value was $177,000.
Treat Miami real estate like fashion: Anyone who knows me knows how much I love basketball and the NBA. I recently saw LeBron James on TV arrive at a game in a double-breasted suit jacket and thought, “When did THOSE come back into style?” I made a mental note to remind my son never to throw away his suits. If you are considering selling in this market, you face a similar conundrum: Do you sell now to avoid further depreciation, or wait until the market eventually rebounds? (See? Love the basketball!) Obviously, I advise the latter if that is a realistic option, because, again, you want to be on the leading edge of any curve. (To continue that fashion analogy: By the time the discount stores are showing their versions of the “new and latest styles,” they are anything but.) The amount of inventory at any given time is a great indicator of where the market stands on that “bell curve.” Obviously, if a seller can wait to put a house on the market when the inventory of like properties is low, they can expect to sell sooner and higher.
It should go without saying that these decisions should be made with the guidance of a licensed real estate professional, one with experience in a particular neighborhood or project and the confidence to deliver the hard truth at all times.
Hazel Goldman is an agent with RE/MAX Advance Realty, (305) 665-7383, firstname.lastname@example.org. She is also a member of the Master Brokers Forum, an elite network of South Florida real estate professionals.