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How the Slowdown is Affecting South Florida Residential Real Estate

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Clockwise from top left: Jorge Uribe from Sotheby’s, Aida Schwartz from Compass, Edgard Defaultuna from Fortune International Group, Dan Koji from Royal Palm Companies (Kevin Lebon for Real Trading) Illustration by)

The days of open houses in South Florida, love letters to sellers, and blocklines for buyers to abandon due diligence on all cash offers are over.

The nearly two-year housing boom has been dormant due to out-of-state migration, low interest rates, and few pandemic restrictions. According to brokers, the “urgency” previously felt by potential buyers has been resolved and it is unclear when and when they will return.

Nationwide, some large brokerage firms Potential recession..

Edgardo Defortuna, CEO of Fortune International Group, developer and broker, said: “We always thought we needed to slow down the rate of demand a bit.”

Last year, housing in the three county regions totaled nearly $ 75 billion in dollars, a double-digit increase compared to 2020, according to the Miami Association of Realtors.

However, rising interest rates in the spring, historic inflation and financial market volatility have left buyers on the sidelines. By JuneThe volume of the dollar in South Florida fell from more than $ 8 billion recorded in June 2021 to $ 6.6 billion. Sales of single-family homes, condominiums and townhouses plummeted across the region, realtor reports said.

According to, the national average mortgage rate is currently around 5.7 percent Bank rateAbout twice as low as last year.

Despite the slowdown, price records are still set at the neighborhood and county levels, and agents say they are doubling their efforts to close deals during the summer. Most brokers and developers want demand to return when buyers return to the market this fall or winter. They call the area outliers and historically say the rates are still low.

Red Fin economist Taylor Marr said South Florida “doesn’t seem to be as cold as the rest of the country.”

Developer Dan Kodsi, CEO of Royal Palm Companies, said people would continue to move to Florida to “reduce their exposure to taxes” during the recession. South Florida also recovered faster than the rest of the country after the Great Recession, he added.

Signs of slowdown

Boca Raton’s agent, Aaron Buchbinder, hosted a pop-up open house earlier this year, with 40 of the more than 100 people in attendance making cash offers that exceeded the asking price without contingency. Compass agent Buchbinder said he was still receiving a full cash offer for the property, but buyers are currently doing due diligence.

Buchbinder isn’t the only one looking at market turmoil.

“At the same time last year, the sellers were indisputable. There was a bidding war,” said Chad Carroll, a compass carroll group broker. “Now they realize that the party is over.”

According to Miami Beach-based compass agent Ida Schwartz, market changes have made it easier for sellers to get funding and have returned some power to buyers.

“Previously, sellers only wanted to work with buyers who were cash. The realtors on the other side didn’t even pay attention to you if you were raising money. “She said.

Agents say sellers need to be realistic when it comes to pricing, and recognize that some cities and neighborhoods are in higher demand than others. In addition, apartment rents are still very high, so some lessors are still considering buying.

“It’s very important to have a strategy with the seller. Plan the game. Is it the real price or your” make your move “price? “Buchbinder said. “There is a certain market that is very hot [like areas of Boca Raton] Because it is out of stock. “

Some brokers are driving marketing strategies and marketing, while others are taking very necessary vacations to prepare for the coming back in the fall.

“Frankly, we’re doubling. We’re spending more money than ever before. [on marketing]”Schwartz said.

Agents generally expect international buyers to strengthen the market, Colombian, Brazilian, Chilean and Argentine buyers from a pandemic hibernation. Still, they anticipate difficult months for inexperienced agents.

“They would say,’I wish I hadn’t bought a fourth Rolex,'” said Jorge Uribe, a broker at One Sotheby’s International Realty.

Two market stories

Carroll said these buyers are sensitive to rising interest rates, so prices are likely to fall at the end of affordable prices in the market.

“We need to lower the price so that people can afford the inventory,” Carroll said.

The ultra-high-end market is another story. These buyers are less affected by the mortgage rate hike, but remain cautious due to global economic events and portfolio impacts.Both waterfront and non-waterfront properties Turned over Continue trading at record prices.Oracle co-founder and billionaire Larry Ellison’s $ 173 Million Purchase A 16-acre residential compound in Manalapan set a record for home sales in Florida. It closed in June.

Dora Puig, the owner of Luxe Living Realty, said:

Last year, luxury property sales in South Florida totaled nearly $ 4 billion, according to Uribe. Earlier this year, he said, in the high-end market, home sales of over $ 5 million reached $ 1.7 billion. Even when a potential recession is imminent, luxury brokers aren’t sweating it. Some sellers are lowering prices this summer.

“Interest rates tend to have less impact on those types of customers. They aren’t happy, but they can still afford it,” Uribe said. “It cannot remain a $ 4 billion market forever.”

Redfin economist Marr said: “Not Miami.”

Newly developed condominium pipeline

The developers have launched dozens of new condominium projects over the past year and a half, backed by strong pre-sales activities.But they are facing Some challengesIncludes increased construction costs, labor shortages, and rising rates.

Experts say inexperienced developers struggle to secure construction loans and supply is limited.

Kodsi’s Royal Palm Companies recently joined Forest Development as a joint venture partner. $ 269 Million Construction Loan From Nautilus 220, a New York-based Fortress Investment Group. The planned condominium project has two 24-story towers in the Lake Park district of Palm Beach County.

The Defortuna of Fortune doesn’t currently feel “despair” in the market, but developers warn that “we need to be more careful about launching new products.” [condo] project. “

Fortune recently resumed planned sales of boutique condominiums in Bay Harbor Islands, following previous new market developers. Handed over the project to another company, Miami-based Alta Developers. Previous developers couldn’t build the project because they couldn’t get higher construction costs and construction loans than expected.

“A year or two ago almost anything would work, and today you have to be more careful,” Defortuna said. “We are really very careful about what to start next.”

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