Current  Real  Estate  Trends    Focus  South-­‐Florida  Residential  Market,  Q4  2011    

 

     

 

South-Florida Residential Real Estate

Miami – Is the Golden Market back?

In recent newsletters, we have indicated the bottoming of the real estate market especially in South-Florida. We even came to the conclusion that certain markets had clearly rebounded from their recent lows and showed signs of a moderate recovery. Turns out, the South-Florida real estate market exceeded even our most optimistic expectations in 2011. This market, once proclaimed as ground zero of the real estate boom and bust, has once again become a golden market, as it outperformed the nation and the recovery faster and stronger than any other domestic market. International buyers have flooded the market with cash at a time when banks are still reluctant to underwrite sound real estate transactions. The result? Record sales, rapid absorption of excess housing inventory and rising home prices, which are now projected to appreciate on a double digit pace throughout 2012. As a consequence of these fast paced sales and the shrinking inventory, developers have applied for permits to construct at least 29 new condo towers in South Florida over the next 2-5 years.

The overall statistics of the current market clearly demonstrate the resurgence of South-Florida real estate. Most significantly, total Miami sales in 2011 exceeded the number of transactions that closed in 2005 at the height of the real estate boom when plenty of financ-ing alternatives were available. Total 2011 sales in Miami-Dade County, including both con-dominiums and single-family homes, were 24,929, up 4% from the 24,025 in 2005 and 46% from 17,068 in 2010. Closed sales of condominiums surged 54%, from 9,760 in 2010 to 15,009 in 2011. Total single-family home sales increased 36% from 7,308 in 2010 to 9,920 in 2011.

Excess housing inventory locally has been absorbed at a record pace, years faster than pre-dicted, resulting in a limited supply and for now a healthy and balanced marketplace which is quickly shifting from a buyer’s to a seller’s market. With the current trend of shrinking inven-tory and new projects coming to the market earliest at the end of 2013, a housing shortage is very possible in the near future, likely resulting in continued real estate price increases.

During 2011, average sales price for single-family homes in Miami-Dade County increased 8.3% in December, from $302,098 in 2010 to $327,060. The average sales prices for condo-miniums jumped 21.5%, from $223,962 to $272,186. In the wake of Miami-Dade’s record sales, Broward County also enjoyed an exceptional year which indicates that the bottom has been surpassed. Sales have increased 9% and prices of single family homes have risen 7% year over year.

The inventory of residential listings in Miami-Dade County dropped 39% to 14,087 over the last year, and 35% in Broward County to 12,997.

 

     

 

While few million dollar homes or condos traded at the height of the financial crisis, 2011 broke records in the ultra-luxurious sector. Penthouse A in the renowned Setai fetched a sales price of $21.5 million, the highest condo price ever to be paid in Miami. The 20 most-expensive Miami real estate sales in 2011 fetched a total of $244,539,495, averaging an un-believable $12.2 million per property.

It is difficult to predict the future of lending in this market, but with these numbers, one can only assume that lending will increase over the next year’s, fueling an already impressive market.

International buyers and investors from worldwide markets are fuel-ing this remarkable strengthening as the following chart clearly dis-plays. South Florida is increasing-ly the top market in the nation for foreign buyers from traditional and emerging markets, as Miami highlights and promotes its stra-tegic location between Latin

America and Europe, combined with amazing weather, cultural diversity and an enviable and ex-citing lifestyle. Record affordabil-ity, strong returns, and strong foreign currencies further en-hance investments in this market. Miami has emerged as a global market player and a 24-hour city where nearly anything is accessi-ble at any time. News coverage of the South Florida Market is now on par with New York and has reached Europe, Asia, the Middle East and Latin America, spiking an unprecedented interest in foreign buyers.

PAMERA Conclusion

It is apparent that every real estate cycle is exaggerated, both the booming markets as well as the receding markets. “So called experts” usually don’t see an end to the demand at the height of the market and the same experts claim there is no end of the downturn in sight at the bottom of the market. For a better part of 2 years, we have tried to make sense of mar-

 

     

 

ket news and trends and have early on believed in a recovery, as outlined in past newsletters. We strongly believe that inves-tors and buyers should now focus on acquiring real estate in this unique market before prices quickly advance to the next market heights. It is however important for investors and buyers to understand that the time for substantial discounts, which was commonplace during the height of the financial crisis, is all but over. Exceptional deals are hard to come by these days and on-ly last days if not hours in this market. Buyers believing they can acquire assets at 30%-50% discounts to current market prices will likely experience utter frustration. Inflation adjusted, cur-rent prices still reflect the best buying opportunity of the past 15 years. If you seek assistance in buying real estate in this unique market, we would welcome the opportunity to support you throughout the entire acquisition process from initial sourc-ing to final closing.

RESOURCES: PAMERA Real Estate Partners LLC \ S&P/Case-Shiller \ Jones Lang LaSalle Market Reports New York, Boston, Washington D.C. \ Marcus Millichap Special Assets Outlook Reports \ Cushman & Wakefield Marketbeat and Office Reports \ Sun-Sentinel.com \ Realtytrac.com \ Realpoint Research \ Preston Research \ Focus.de \ Foresight Analytics \ National & Miami Associations of Realtors \ US Census Bureau, 2010 \ Bureau of Labor Statistics \ Bureau of Economic Analysis \ CondoVultures \ Zil-low.com \ Bankrate.com \ Freddie Mac \ Mortgage Bankers Association

About the Author

Marc Tetzner is Managing Director of PAMERA Real Estate Partners GmbH and PAMERA Real Es-tate Partners LLC. He is responsible for the groups business activities in the USA.

A graduate in real estate economics (ebs), he has lived and worked in the USA for over ten years. He

brings to the table a high level of expertise in initiating and carrying out investments in real estate in the USA on behalf of German inves-tors. Marc Tetzner worked previously for Taurus Investment Holding and as an independent consultant.

About PAMERA Real Estate Partners

PAMERA Real Estate Partners GmbH is an independent, owner-managed investment and consultancy firm specializing in the manage-ment of real estate assets for family offices, endowments and affluent private investors. On behalf of our clients, we develop business plans for existing properties, outline strategic investment plans for new and

 

     

 

existing portfolios and resume all aspects of owner representation. Transparency and absolute discre-tion are inherent to our business approach.

As PAMERA Real Estate Partners GmbH is part of the PAMERA Real Estate Group, we can support our clients with expertise in all key aspects of asset management and project development. Through our associate company PAMERA Real Estate Partners LLC, we are also able to offer clients our full range of services in the USA.

PAMERA Real Estate Partners GmbH Christoph Zapp, zapp@pamera.de Maximilianstraße 15a

80539 München Telefon +49 89 210 256 13 Telefax +49 89 210 256 20

PAMERA Real Estate Partners LLC Marc Tetzner, tetzner@pamera.com 5550 Glades Road, Suite 413 Boca Raton, FL 33431 - USA Telefon +1 561 314 29 87 Telefax +1 561 314 29 70

www.pamera.com