Leer en Español
By Emilio J. López
Inflation and rising interest rates will affect the South Florida real estate market in 2023, but it will still remain strong thanks in part to foreign buyers, mainly from Latin America, who were number one in 2022, according to specialists consulted by EFE.
“The generalized rise in prices, a lower flow of money and mortgages at 6.5% slow down a bit the real estate boom that was experienced during the pandemic, but the sector “will still be strong in 2023 and many people from the US, Latin America and Europe will want to keep coming,” Jennifer Wollmann, of real estate firm Berkshier Hathaway, told EWR Realty this Friday to Efe.
Housing inventory in South Florida remains tight, but price increases for single-family homes, townhouses and condominiums (apartments) are slowing.
“It’s not that prices are going down, but that they are leveling off,” due in part, Wollmann said, to the fact that “the offers” for home purchases have slackened, that is, “if before there were 10 offers at the same time to buy the same home, now there are 2 or 3,” he clarified.
South Florida will continue to be a real estate hotspot
“But the market is not going to slow down. People are still buying,” especially in the luxury real estate sector (from $1 million and up), where interest rates do not matter because they pay in cash, without asking for a mortgage,” he said.
In addition, he adds, the wave of left-wing populist governments in Latin America and the situation of crisis and instability in the region continue to encourage the outflow of capital and investment in South Florida.
In its report on foreign buyers in 2022, the Miami Association of Realtors highlights that they bought $6.8 billion worth of residential properties, up 34% over 2021 ($5.1 billion).
Argentines, with 16 % of purchases made by foreigners, Colombians (13 %), Peruvians (8 %), on a par with Canadians), Venezuelans, Mexicans, Chileans and Brazilians (6 % each) and French and Italians (3 % each), were the largest buyers this year.
For Stephen Bittel, general manager of the agency Terranova Corporation, the year 2023 “will be the story of two cities: Miami and Austin (Texas)”, cities that will continue to outgrow the nation, while New York, Chicago and San Francisco will continue to suffer an exodus of population and companies.
While not a challenge unique to South Florida, the influx of new residents to this region puts increasing pressure on affordable housing.
Need for affordable housing
To solve this serious problem “effective solutions and manpower are needed,” something that “represents an opportunity for the public and private sector to work together,” said Tere Blanca, founder of Blanca Commercial Real Estate.
Blanca, like Bittel, warned of a possible “recession next year,” with “construction coming to a standstill” due to rising interest rates and “rising construction costs.”
In a likely 2023 scenario, experts agree that buyers and sellers will find a “more stable market” with “better financing conditions and a slight increase in inventory” of housing.
While Wollmann mentioned Miami, Palm Beach, and Broward, in addition to Orlando and Tampa, as the South Florida areas that most entice buyers, Tomas Sulichin, president of Related ISG Realty’s Commercial Division, noted that the North Miami, Hallandale Beach, Hollywood, and Little Havana areas “will be in the spotlight as the major metropolises become more overcrowded.”
Craig Studnicky, CEO of the firm ISG World, finds it unlikely that the recession will affect real estate in South Florida in 2023, which is driven by “the steady influx of new residents” and companies.
Influx of thousands of new residents to South Florida
In 2021, 122 companies moved their headquarters to Miami or opened offices in this coastal city, resulting in the arrival of thousands of new residents seeking housing, “a trend that is likely to continue in 2023,” Studnicky said.
Experts agree that the market shows no signs of cooling, despite rising mortgage rates. Home prices are not falling, especially as the population in South Florida continues to grow fast and fast.
In the view of Michael Taylor, president of construction firm Current Builders, Florida “will still be a real estate hotspot” in 2023, with a sector that “has been booming since the pandemic” and “will not experience a slowdown” at the rate of other states.
“High demand continues, as does the influx of new residents” to the state of Florida, “the opposite of what is happening nationally,” Taylor said.