The Housing Market
Lesley Deutch, Senior Vice President, John Burns Real Estate Consulting, West Palm Beach
Will Miami’s market continue its current pace toward recovery?
Yes. Overall, we expect Miami’s housing market to experience steady growth. However, lack of affordability and minimal developable land will constrain sales velocity and likely push home prices even higher. We are projecting steady price appreciation in Miami’s market – below the rapid escalation of 2013, but still in the range of 2 percent – 5 percent per year (this includes both single and multifamily homes). New home sales will increase, but remain historically low, owing to lack of developable land in the Miami housing market. We are projecting steady growth in resale sales activity.
What about nationally, and how do the two differ?
Nationally, our 2014 outlook remains optimistic. We are expecting steady job growth, rising home prices, and a stronger pace of home sales. Miami is likely to have a faster pace of new home price appreciation owing to the limited developable land, as well as the large presence of foreign buyers and investors.
How will the overall economy affect the real estate market?
We are projecting a healthy economy for 2014 which should allow the real estate market to expand steadily. Our two key assumptions behind the healthy economy forecast: job growth will be steady, but modest compared to previous recoveries. Fiscal balance sheet is the key risk, and mortgage rates will remain low – inflation is key risk the.
What are any trends you see for 2014?
“Move-up buyers” – Affluent homeowners make up a much higher percentage of activity than usual today. The more affordable locations in an area are generally weaker than the best neighborhoods, even though the price gap between good and bad locations may be near an all-time high. The median income household, which is usually the heart of the housing market, continues to struggle.
“Foreign buyers” – In Miami and some other metro areas across the country, foreign buyers are playing a significant role in price appreciation. We are tracking exchange rates (which have been very favorable for many countries), foreign economic growth, and direct airline traffic for signs that this will continue. “Boomerang buyers” – There are several million more single-family rental homes than there were several years ago.
Many of these tenants are paying more in rent than they would in mortgage and property taxes if they became homeowners. How many of them can and will return to homeownership will be a key determinant of the housing market.
Natascha Tello, 2013 Chairman of the Board, Miami Association of Realtors
Will the fees change going into 2014?
No, we don’t forecast that. We don’t expect any changes.
How will the number of agents change in 2014?
The number of agents continues to grow. We have grown over the last two and a half years, since our merge by…more than 4,000 agents, just as a result of the market.
How will the market continue its current pace toward recovery?
We feel there’s still a lot of value - there’s affordability in Miami, compared to other global cities, and we fully we feel the market will continue its track through 2014.