Editor's note: In his own words, John Reza Parsiani tells us about the current makeup of the Miami housing market, and how brokers should adapt to a saturated market. His words have been adapted from a Q & A and has been lightly edited for clarity and length.
You know, I think we have been a bit spoiled in the Miami market and I am not talking about the all-year sun, beaches, sports, shopping, nightlife and lifestyle as a whole. No, I am referring specifically to the volume of activity in our real estate market in the past 4 years. This year I have seen a lot of negative, doom-and-gloom articles that have come out regarding the slowdown of our market and how buyer activity is no longer the same as it has been in the past years.
Yes it is true that we are not selling at the activity we were, but which market is? We also have to look at the past activity we are using as our yard stick for comparison to today and tomorrow. There was a time [in 2015] when I did 17-transactions in 3-days. Is that "normal" for anyone in any market? I believe not. So when we get used to that level of extraordinary activity, I am not surprised that some think the market is in free fall when they compare the activity of today to yesterday. But what I see is actually happening is a "normalizing" effect.
How is development in Miami? In one word, "healthy."
There are 3 important factors contributing to the market's status as healthy:
- In the past, developers were typically requiring 10-20% deposits. Well, no more. Our developers are now typically requiring 50% deposits which cuts down on speculation and also means buyers must have liquid capital of their own to be able to take advantage of the opportunities that exist here. No more gambling with the bank's money either, so buyers are effectively voting with their pockets as to which opportunities they most believe in and which projects they wish to own.
- Assignability: Previously you could buy a pre-construction unit and months later sell to another buyer for a profit and that new buyer could -and often did- resell to another buyer, all before the building was even completed. Ownership would change hands until the price became so inflated that the last buyer saw no sense in closing once s/he realized the low chances of a gain especially considering the small deposit at stake. Today assignability is no longer accepted which means the buyer must successfully close on the product they purchased before reselling.
- Last but not least, our developers are much more aware of the demands of the particular neighborhood they are building in. They are much more responsive to market demands and no longer put a shovel in the ground to break ground unless enough buyers have voted with their pockets that the developer's vision is aligned with the buyers. This means projects that actually start have the backing they need to finish.
What has changed?
What many do not realize about the city of Miami is how much the market and the way real estate is developed, sold and purchased has changed in the past years. We are now building less units and what is being developed is not only residential units but actual neighborhoods, infrastructure, commercial, office, restaurant and retail space, which translate to jobs and sustainability.
I don't see the word "slow" accurately describing Miami in today's market. The city is alive with opportunities and potential. Having myself grown up in Sweden and moved to Miami 20 years ago, I've seen how this great city has come into its own and I personally believe all we see today to be just the tip of the iceberg, which makes it that much more exciting to have a small hand in the development and growth of such an amazing city. As recently as only 10 years ago we didn't have the Adrienne Arsht Center for the performing arts, no opera, no ballet, no theater. Amazing neighborhoods like Wynwood, Midtown, Design District wasn't on the map back then. No Jorge Perez Art Museum, no Frost Science Museum, no Miami World Center, no Brickell City Centre. Brickell was a shadow of what it is today, now as a major banking hub in the country. We have some of the best healthcare systems now and our schools are also ranked among the top in the country.