In part II of our predictions story, Miami real estate industry leaders weigh in on some of the outside forces affecting the market – politics, the economy, climate change and other challenges, all the while looking for that silver lining of opportunity.
Politics and the economy
What impact do you think the 2020 election will have on the economy and real estate market?
Anthony Askowitz [RE/MAX Advance Realty]: Every election period has an impact on the economy and real estate market just because of the uncertainty it brings. People are becoming more aware of the importance of making informed decisions. When there is a major election, even on the local level, consumers become wary of making important decisions, especially involving money. Within weeks after the election results are out, things seem to settle down.
Mike Pappas [Keyes Company]: The noise of the election could be a distraction for buyers next year. However, history has shown the economy is the real influencer of the real estate market.
Nancy Klock Corey [Coldwell Banker Residential Real Estate: A good consumer understands the opportunities in these markets, particularly savvy investors who utilize the hesitancy of the average buyer to move in and take advantage. There are buyers in every market; they just tend to change as the economic situation flows.
Michael Sadov [The Real Estate Club]: I think it depends on which party wins. Right now, we are benefiting from low interest rates and the deregulation of banks. I think if another party comes in they can change that and it might affect us adversely.
Christopher Zoller [Berkshire Hathaway EWM Realty]: Buyers are taking a “wait and see” attitude and only moving on a property if they feel it is properly priced.
What is being done to alleviate the affordable housing shortage in many parts of Miami? Will the city only get more expensive as it attracts new residents?
Nancy Klock Corey [Coldwell Banker Residential Real Estate: We definitely need more work here in our city to address affordable housing. While everyone enjoys the acceleration of pricing in homeownership, the leveling off of prices is what continues to keep our city healthy and attractive. There is a lot of money in our town and making sure some is reserved to preserve areas and improve areas without an acceleration of pricing is needed throughout our area and in perimeter areas closer to higher priced areas. The expansion of Metrorail and better transportation services should be a continued focus to allow for people to easily navigate traffic so they can live in more affordable areas and be able to find and commute to good work opportunities.
Michael Koval [ONE Sotheby’s International Realty: While there’s no magic answer, there are opportunity zones popping up that utilize county and state funds to renovate and upgrade areas that have been run down, bringing in new business and drawing people in. The Design District would be the upper end of that but there are other areas.
Rishi Kapoor [Location Ventures: Co-living is an increasingly popular housing solution to this problem because it gives residents the flexibility of leasing smaller units or rooms on accommodating terms, while still offering them high-quality amenities. At URBIN, we plan to offer urban dwellers the ability to live, work and seek wellness within the urban core, while keeping a higher percentage of their income in their pockets. I believe this concept will become a mainstay in the city’s desirable neighborhoods, providing a solution to high-priced living without sacrificing location or lifestyle.
Is the Miami area doing enough to defend against the threat of climate change and sea level rise? What impacts are already being felt?
Nancy Klock Corey [Coldwell Banker Residential Real Estate: The response by the cities in Miami is very strong. Every day, there is evidence of changes being made in zoning, planning and construction to adapt to the changes. We are just north of the Keys where properties have been elevated for years with the primary living area starting on a second-floor elevation. We are fortunate that strong building codes put into place after Hurricane Andrew set the stage for stronger housing built to withstand strong winds and water intrusion. There are multiple infrastructure changes with the raising of streets, pumping systems and even sensitivity to landscaping that can withstand strong storms. While sea level rise and climate change are issues for every coastal area, the focus on our ability to cohabit with our environment appears to be top of mind for our government officials and our residents which is leading to change.
Rishi Kapoor [Location Ventures: I think this is where you will see an increase of development in non-flood zones. This is definitely something we considered when selecting Coral Gables as the location for Villa Valencia.
Michael Koval [ONE Sotheby’s International Realty: I think people who have tremendous wealth don’t care. If you’re in that bracket where you have six homes, you don’t care. But if this is your primary residence and you have a family, then yes, you do care. What happens when there’s a disaster that could potentially wipe your house off the planet? Is the city prepared for a direct hit from a hurricane? I don’t think anybody can be prepared. Look at what happened when Katrina hit New Orleans dead-on. It was utter chaos. How do you protect against that? Is any [vulnerable] jurisdiction doing everything they can? No, because they can’t afford it and they don’t have the capability to defend against a direct hit.
Christopher Zoller [Berkshire Hathaway EWM Realty]: The Miami area and environs are probably not doing enough, but they show signs of concern. The public will respond by moving to higher ground; some already have.
Ann Nortmann [Douglas Elliman]: From my perspective as a resident for the last 17 years, the local government’s solutions and improvements have made a positive impact. I have not seen the severe flooding during king tide and heavy rains that we saw a few years ago after the pump and drainage system was enhanced. As a real estate agent, it’s encouraging to see the building codes evolve and improve to allow for greater resilience and encourage smarter development. For example, Monad Terrace by JDS Development is the first new construction to meet and exceed the progressive building code in Miami Beach. This type of forward-thinking design is receiving a premium in our market.
Is Miami’s condo market positioned for growth or will developers struggle to deliver new projects amid a crowded market?
Michael Koval [ONE Sotheby’s International Realty: It’s the latter unfortunately. The fact is, there is still lots of inventory and prices are still astronomically high. The market is influenced a lot by what happens with foreign investment and foreign buyers have retreated significantly. That said, there are always going be people interested in property down here. Right now, supply outstrips demand and sellers have yet to acknowledge that fact.
Phil Gutman [Brown Harris Stevens]: Only a handful of very well positioned new projects will move forward in the immediate future. Developers and investors are increasingly interested in other opportunities that may yield higher returns. We’re seeing a lot of interest in the office market, for example, in areas like Coral Gables outside of the traditional Brickell and downtown markets. No one is abandoning multifamily, but smart investors are untested in diversity.
Mike Pappas [Keyes Company]: The current inventory is being absorbed and within a year or so we will be hearing about new developments.
Nancy Klock Corey [Coldwell Banker Residential Real Estate: With the slowdown in breaking ground on new projects in 2019, developers have given the market the opportunity to absorb inventory. Buyers are interested in new and the condo market in Miami is difficult to read due to the many owners of properties here that do not have an urgency to sell. It is a vacation home market, so the resale market tends to have a lot of inventory with a good percentage of the properties owned by sellers who are not highly motivated. Having a good real estate professional help guide buyers through the market for pricing, location and specific needs is a huge advantage in our condo market in Miami.
Michael Sadov [The Real Estate Club]: I think it is a young city and has a way to go. There are always ups and downs, but I think the condo market will continue to grow.
What will be the biggest challenges and opportunities for agents, lenders and brokers in 2020?
Anthony Askowitz [RE/MAX Advance Realty]: Our biggest challenges are also our biggest opportunities and they don’t seem to change very much year to year. On a company level, recruiting — and keeping — quality agents is always a challenge. The wonderful part of that is it means we have to stay on our toes in keeping up with technology, trends, legal updates and marketing. The end result is that we get better every year. On the agent level, the challenges are always finding ways to better serve the public. The agents are the company’s primary customers, where the public is the agent’s primary customer.
Nancy Klock Corey [Coldwell Banker Residential Real Estate: Real estate agents will need to continue to match the inventory to the changing tastes and needs of consumers on an ongoing basis. They can do that by staying in close touch with customers and serving their needs in the fashion they choose, with respect for the limited time we all seem to have and the constant barrage of interruptions and distractions. Cutting through the noise and adding value to the consumer while building a sustainable business will be an ongoing challenge.
Karen Elmir [The Elmir Group]: South Florida has a slew of opportunities in 2020. Emerging markets outside the typical areas of interest are opportunities for brokers. As the immediate downtown areas of Miami become crowded, there is opportunity to become experts in emerging neighborhoods such as Hallandale Beach, Sunny Isles and even Fort Lauderdale. An ongoing challenge in a crowded market will always be differentiating oneself. Social media, creative marketing events, unique broker’s open houses and strategic partnerships help our team stand out. Above all else, cultivating relationships and continuing to build strong face-to-face interactions are the best way to cut through the clutter and stand out.
Phil Gutman [Brown Harris Stevens]: A challenge all agents face at one point or another is the decision of whether to take on an overpriced listing. My advice is always don’t do it. You’ll waste time and lose marketing dollars.
Christopher Zoller [Berkshire Hathaway EWM Realty]: Challenges will be to get our luxury sellers to properly price their properties. Opportunities will come when we succeed.
Michael Sadov [The Real Estate Club]: The biggest challenge for the average real estate professional right now is to be able to find buyers and to survive through this slight downturn. There is an advantage to the top brokers who have buyers looking for great deals since there are some great opportunities out there for our customers.
Mike Pappas [Keyes Company]: As the sellers have elongated their tenure of homeownership from five years to nine years on the average over the past decade, we are fighting for inventory. Hyper-local focus and knowledge is the winning ticket for success.
Michael Koval [ONE Sotheby’s International Realty: The traditional real estate model will continue to feel the pressure of higher client expectations with lower fees. Top agents will continue to thrive by using their tools and deep networks, but everyone will have to work harder and smarter. Technology will continue to impact the experience for the client and present opportunities for those agents who are willing to adapt.