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2015 Predictions

by Jason Porterfield

MARKET DEMAND
AND INVENTORY

What do you see happening to housing market demand over the next 12 months?

Jill Hertzberg: The people in the marketplace who kind of lost out were the Millennials. They got out of college, they have debt, they’re deferring their first homes and a lot of them are staying in that rental position because prices have gone up. Homeownership is what fuels this whole nation. Everything goes from the bottom up. Millennials should be entering the marketplace, but their jobs need to be secure and interest rates may be stable so that they can enter the market and buy their first home. That fuels everything. It’s getting people to buy lumber and work in secure jobs. The housing market fuels everything. When that machine stops, it affects so many different facets of the marketplace. If we have a steady, reasonable increase in the market – I think we’ve had a pause because we’ve been creeping, creeping, creeping – in our marketplace, the luxury marketplace, we have those very special properties, those Mona Lisas, and we’ll tell you what people are going to pay from year to year and what they aren’t. But if you have something really special, like a house with an amazing view and the best location, those pieces will fly out of the market and way above what is normal. For the most part the market hopefully stays stable and everyone stays sane.

Chris Leavitt: I think that it’s going to be robust. In Miami, the housing market in South Beach is tight There’s very limited product available and very limited good product. I think downtown Miami will probably not see any. It’s a bit oversaturated down there. The buildings that are being built are really good buildings. They’re not like junky, crappy ones. They’re really high end and well-finished ones. Nationwide, from what I’ve seen in all the different parts of the country, things are going really fast. It’s sub pricing. The problem is, in a really good market, sellers tend to get a little overconfident and have their prices too high and then they sit. As long as people are realistic about the pricing, things should continue to move well and move quickly. Sometimes there’s stagnation on the market because of greed. If a house is worth a million to me, I may feel overconfident and ask 1.4 and that’s not a realistic selling price.

How will inventory move? What will buyer/seller markets be like next year?

Liza Mendez: For the majority of 2014 we have experienced a balanced market between buyers and sellers for condominiums and townhouses and sellers market for single-family homes. Based on the current level of sales, we expect similar conditions in 2015.

At the current sales pace, there is a 5.8-month supply of single-family homes, an increase of 10.4 percent from 5.2 months in October 2013, and an 8.2-month supply of condominiums, up from 6.5 months in October 2013, an increase of 26 percent. A balanced market between buyers and sellers offers between six and nine months supply of inventory.

Another factor to consider is the new construction projects coming on the market, which is impacting the sales of existing condominiums as buyers are drawn to newly built product.

Strong sales in the coastal new construction condominium Miami market (east of I-95) continue to reflect significant demand for new properties, according to the latest New Construction Market Status Report released today by Cranespotters.com and MIAMI.

At the end of October, there were nine (9) towers that had been completed in 2014 in Miami-Dade County east of I-95, 54 under construction, and 62 are planned but have not begun development. There are also 66 towers that have been announced but not approved.

Jill Eber: The well-priced inventory is definitely going to move, and there’s inventory that’s missed on the market. I think a lot of homeowners want to wait and they don’t have an urgency to sell. They want to wait it out and see if the market is going up and getting to their price. I think you have more and more, the buyers out there are very educated today. But again, even though they don’t like overpaying for a property, many of them if they see something and want it, they’re going to go and buy it.

Home price increases this year have been considerable in several parts of the country, like California, Florida and Texas, often outpacing 2013. What is going to keep homes from becoming overvalued in 2015?

Claudio Stivelman, S2 Development: Because of Miami being a big city where you can buy more square feet for your dollar, I think that there’s no overvaluing. What can happen is we get to a point where there is a bubble, when supply cannot be matched by demand, when supply is more than demand. The problem would not be the supply but the diminishing of the speed of sales, the variety of sales at commendation prices and leaving discounts there for people who couldn’t sell their wealth yet. Then the consequence would be a diminishing demand to match the supply again.

Agustin Cantens, PalmCorp Development: Realistically, I don’t see Miami as an overvalued market. I think we’ve been undervalued for such a long time. We’re seeing price increases, but we’re still affordable. When you compare Miami to other large metropolitan areas around the country where you have international influence and not just global economies, look at Los Angeles or New York. It’s practically free to live in Miami compared to some of those places. In Miami, an average family can buy a three-bedroom, two-bath house for $150,000 to $300,000. A nice house. Some of those markets, $300,000 doesn’t buy you much. You’d be buying a tool shed. Or what happens in Los Angeles, and you live two hours away and it’s still too expensive. In Miami we still have that affordability where you can live within reason.

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