Real estate properties that had once became the source of economic development for Florida may experience a reversal of function as their supply in the Florida market may well overtake the demand for these properties. Real estate market that had brought about growth for Florida might also serve as a double-edged sword that can possibly lead to future widespread bankruptcy among builders and banks. However, Florida’s real estate situation may not be as bleak as it seems. There are still areas that are currently experiencing fast real estate turnovers. Unfortunately, areas in South Florida may not be as lucky.
South Florida, which was once hailed as a realtor’s dream, is said to be the first to experience the downtrend in real estate price and sales. Looking at Miami’s situation alone, one can easily determine the cause of such a downtrend. Presently, there are already 15,080 units being constructed plus 28,000 still awaiting approval. These numbers is a stark contrast to the 11,241 units constructed in the past ten years. A survey done by Florida Tax Watch found out that in 2005, Miami-Dade’s percentage of households who are unable to afford even a median 2-bedroom rental came in first with a total of 68 percent.
Although experts were optimistic about the outlook for commercial real estate that has been witnessing a stable and increasing occupancy rate, they still warned the danger of building condos. 40 percent of these experts even recommended the same thing for single-family housing.
The overconstruction of condominium units and other properties had led to a greater supply than demand. In 2004, South Florida realtors are able to sell a thousand-unit project in just a week. Today, properties can be on sale in the market for several months and still remain unsold.
The possible sudden drop in property prices may very well be bad news for realtors. However, not everybody is complaining. Speculators are now in a hunt for unsold properties at bargain prices. The possibility of price drops on favored properties has pushed several sectors to prepare funds for these properties.
This can be seen in the doubling of properties being sold in the area and lesser sales on highly priced properties. This had led some to conclude that the current trend now is not to sell ‘real’ property in Florida. Some hypothesized that this situation may just continue in the following months.
Although South Beach have been speculated to be a good environment for investors because of the existence of a ready market, some areas are not as fortunate. Investors have warned against investing in areas like Biscayne Boulevard in downtown Miami. They argued that the increasing number of investors there might lead to a plummeting of real estate prices.
According to experts in the recently released survey done by the University of Florida, the future of Florida real estate is facing a bleak future. The first ones affected by this downward trend are areas like Miami in South Florida. Indeed, it may not be a good time for realtors but the year holds much promise for the buyer’s market.