Real estate that once became the source of economic development for Florida may experience a change in role as its supply in the Florida market could well outpace demand for these properties. The real estate market that has generated growth for Florida could also serve as a double-edged sword, possibly leading to widespread bankruptcy in the future among developers and banks. However, Florida’s real estate situation may not be as bleak as it seems. There are still areas that are currently experiencing rapid real estate turnover. Unfortunately, areas in South Florida may not be so lucky.
South Florida, once hailed as a real estate agent’s dream, is said to be the first to experience the downward trend in real estate price and sales. Looking only at the Miami situation, one can easily determine the cause of such a downward trend. Currently, there are already 15,080 units under construction plus 28,000 still awaiting approval. These numbers are a stark contrast to the 11,241 units built in the last ten years. A survey by Florida Tax Watch found that in 2005, the percentage of Miami-Dade households unable to pay even an average 2-bedroom rent ranked first with a total of 68 percent.
Although experts were optimistic about the prospects for commercial real estate that has witnessed a stable and rising occupancy rate, they warned of the danger of building condominiums. 40 percent of these experts even recommended the same for single-family homes.
The overbuilding of condominium units and other properties had led to a greater supply than demand. In 2004, real estate agents in South Florida can sell a thousand-unit project in just one week. Today, properties can be on the market for several months and still not sell.
The possible sudden drop in property prices may well be bad news for real estate agents. However, not everyone complains. Speculators are now on the hunt for unsold properties at bargain prices. The possibility of falls in the prices of the favored properties has pushed several sectors to prepare funds for these properties.
This can be seen in the doubling of properties selling in the area and lower sales in high priced properties. This led some to conclude that the current trend now is not to sell ‘real’ property in Florida. Some hypothesized that this situation could continue in the coming months.
Although it has been speculated that South Beach is a good environment for investors due to the existence of a ready market, some areas are not so fortunate. Investors have warned against investing in areas like Biscayne Boulevard in downtown Miami. They argued that the growing number of investors there could lead to a plummet in property prices.
According to experts in the recently released survey conducted by the University of Florida, the future of Florida real estate faces a bleak future. The first affected by this downward trend are areas like Miami in South Florida. In fact, it may not be a good time for real estate agents, but the year promises a lot for the buyer’s market.