South Florida Real Estate – Why I believe it is still a good investment
Categories: Real Estate News
hiI often tell people that I wish I had learned about real estate investing when I was in my twenties. I find real estate to be a relatively safe and predictable investment that follows the simple rules of supply and demand and adjusts gradually. Of course with the recent downturn in the market some people are asking me if I am still sold on real estate. Actually I am — let me tell you why.
Our country’s population is growing one person every 11 seconds or about 2.87 million persons per year – Florida is still the 3rd fastest growing State in the country – with more people come the need for more housing. The average household has decreased from about 3.7 persons per unit in the 1950’s to about 2.2 persons today and this trend may continue — fewer people per home also mean more housing needed. The demand for housing has not declined; buyers are just postponing their purchases and renting while they wait. The local economy is still strong and some major infrastructure improvement projects in the pipeline may soon replace the slowing housing construction industry.
There are about 75 million Baby Boomers (born from mid 1940’s to mid 1960’s) who are just beginning to retire — this may be one of the wealthiest generation in history. Unlike previous generations, Boomers do not believe in sitting around in a rocker watching the world go by. This is a highly mobile generation that may own two or three residences in locations that offer a variety of life styles, entertainment; access to cultural events, education and medical care; outdoor activities and easy access to national & international travel – we have all that and more.
Because of the weather, natural assets, geographical location, stable government and economy, South Florida has become a major second home market for Baby Boomers, Canadians, Europeans and South Americans. So while the housing supply in South Florida may be high right now; the pent-up demand may absorb the majority of those units faster than projected. The devaluation of the dollar actually works to our advantage, because it makes our properties more attractive and affordable to foreigners.
This week our State Legislature took one step in the right direction by passing a Tax Reform Package. When voters approve it on January 29, it will allow many of us with the protection of the Save Our Homes Amendment to sell our current homes and downsize without being penalized. However the Legislature still needs to find a way to assist first home buyers and home owners who bought recently and can’t afford the high taxes and insurance. We also need to help those first time buyers who are in trouble with exotic mortgages. The other major obstacle to overcome is transportation – our local government needs to start expanding our public transportation system with half penny tax we already approved.
Those of us who have lived in Miami for 40 – 50 years, have become accustomed to doomsday sayers. Remember “Paradise Lost”? Remember the debacle of the Savings and Loans? Remember the Marielito invasion? Remember Hurricane Andrew? I could go on and on talking about the times the media and others predicted that South Florida’s best days were over and everyone was leaving. South Florida has proven to be very resilient coming back after every predicted downfall.
As we say in real estate… location, location, location. Miami is in the perfect location and with population growth and the reduction in the size of the typical household, the demand for housing is still here. Yes, Virginia. Real Estate in South Florida is still a good investment. But more importantly, this may be your best time to buy.
Dear Carlos:
I will Blog a response to your Blog.
Blogs like yours inspire because we have to be optimistics but there are hurdles along the way to reovery and we all have to pitch in.
The Fed is doing it by cuting rates, the Insurance Comissioner by cutting Insurance Rates and we should do it by reducing the inventory. Let’s not take over priced listings because they will not sell and just show as over supply.
What should be really important is what properties are priced to sell, that is the “real” market. We all have friends that like to sell at the price that they could have recived at the top of the market, but we all know they won’t. Maybe for an extraordinary and unique property like Mar A Lago or the Versace Mantion they can still command top price but that is not the story with thousands of other properties.
So let’s stay optimist, we live in one in one of the best cities in the world, but let’s do our part to stabilize the market,
Jose Klahr
EWM Aventura
Dream on!
[...] saw a post from Carlos Ruiz de Quevedo, AIA who gave me food for thought and I like to share and invite comments from other parties [...]