Local Realtors Expect No Bubble To Burst
Written by Claudio Mendonca on August 25, 2005
By Claudio Mendonca
No real estate bubble will burst near Miami-Dade County, some local industry leaders say.
The market will continue expanding as long as people keep moving to the area, said Esslinger Wooten Maxwell Realtors President Ron Shuffield.
"What drives our real estate market is population growth," Mr. Shuffield said this week. "Miami-Dade and Broward welcome 6,000 new permanent residents a month."
He also said he expects prices of residences to keep rising.
Scarcity of land for construction combined with low interest rates and buyers from all over the world, Mr. Shuffield said, keeps prices high. In addition to buyers from around the globe, many of the 82 million baby boomers in America are interested in moving to or having a second home in South Florida.
By 2011, he said, Florida is projected to surpass New York’s population.
"With this kind of expansion," he said, "we will be needing 32,000 units [a year] to meet current population growth."
The challenge, Mr. Shuffield said, will be the ability to build affordable units with so much demand. The median price for a home in Miami-Dade County increased from an average $270,000 to $350,000 in the past year, he said.
"The challenge is to build enough affordable homes for the average wage-earner," he said.
Because of lack of land, he said, the tendency will be for Miami to become a condominium market instead of single-family homes. In 2000, Mr. Shuffield said, condominiums comprised of 46% of home sales in the county; currently that is up to 58%. In five years, he says, condos will make up 70% of the county’s homes.
President of Elite International Realty Leon Ickowicz says he thinks home prices will stabilize in the first quarter of 2006 but he doesn’t see a deflation of the so-called bubble.
"We have about 30% of the buyers out there as speculators," said Mr. Ickowicz. "That number, however, is not enough to create a bubble."
The only area in town where there might be an excess of supply, he said, might be in downtown Miami. But if Miami becomes home to the secretariat of the Free Trade Area of the Americas, he said, downtown can become a bustling community and absorb most of its projected developments.
Michael Pappas of Keyes Real Estate also says he thinks South Florida land and home prices will continue to rise.
"In the long term we will continue to see price appreciation," Mr. Pappas said. "It’s economics 101. Limited land and more demand are equal to price increase."