First Quarter of the Miami Real Estate Market

Miami is one of the most thriving real estate markets in the country, and waves of domestic and international investors are flooding the market looking to get a profit on their dollar, but also experience the culture of this popular location.

The first quarter of 2015 has been looking strong as there has been growth in almost every sector of the Miami real estate market. Median sales prices rose almost 20%, inventory being listed was up over 20%, and sales increased over 10%. Prices seem like they are going to continue to increase as the inventory of re-sales is decreasing was is the cheaper, non-luxury inventory.

The rise in sales was caused by low inventory compounded with high demand. The more luxurious inventory, which Miami is gaining more of from all of the new development, experienced a spurt as well. The median sales prices are getting increasingly more expensive as the new development units are being priced very high with such high demand.

There are worries that the Miami market is being overtaken by the large number of new condominiums being built and that it is going to change the dynamic of the market. Even with all of the new development being built, the developers are making sure that there is enough demand and profit to be made before starting these projects.

Pre-construction Takeover

Prices are very high in the Miami real estate market right now, and a big part of it is because of all of the pre-construction projects that are being built by developers in such a booming market. Miami has more pre-construction projects than ever being built by developers looking to make huge profits in such a thriving marker. The developers are selling apartment and condominium units that have not even been created yet. The buyers of these units buy them at a great, low price, and then once the developers finish the project the buyers will sell their now more expensive apartment at a large profit. In order for all of these new projects to continue to be sold, there needs to be a large demand from foreign buyers. They are going to sustain the market and need to come to Miami to invest. It seems as if their might be some overbuilding going on with hoped os making huge profits, but developers are relying heavily on foreign buyers coming to Miami to invest. We will see in the near future if developers will be getting wealthy or if there will be a lot of vacant units.

How Did I Get Here?

As the days approach closer and closer to the beginning of my first career, I have thought a lot lately about the road that I took to get here and what inspired me to want to make real estate a part of my life. All of the events leading up to me choosing real estate as my career and securing a job seemed to happen so quickly and consecutively. When I think back to the first exposure I had with the real estate world, I began to be inspired:

The way that I got into the field of residential real estate was very serendipitous, and inspired me to make it my career. It began when I interned at Prudential Real Estate my sophomore year of college with one of the top real estate agents in Long Island, New York after cold calling many firms. After a few weeks I still wasn’t sure if I wanted to go into this field so I asked the agent what he gets out of the job. He told me that he gains a lot of satisfaction out of helping people make a large emotional decision and that he can be the helping hand who assists them in their decision. This really stuck with me as I always wanted to help people, but did not want to go into the medical field or any other occupation with a foundation of science. Real estate seemed like a way that I could achieve my desire of helping others and making them happy. My other form of motivation came from a family member who went from living on the street to owning his own multi-million dollar real estate firm in just over 20 years. If that wasn’t enough motivation for me, after he abruptly and prematurely passed away, I got to talk to people who were associated with him and every single person said how he touched their lives in such a special and unique way that no one had before. I would love to be able to have the same affect on others’ lives through my work. Other reasons why I chose this field come from the many benefits that it offers. Although I will have to be on call at all hours of the day, I will have the ability to have a flexible schedule and choose how much or how little I want to work since I will be working off of commission and get to choose my work volume. This will allow me to gain a work-life balance of my comfortability and will never feel like my job is taking over my life. Being able to be mobile during my day on the job is very important to me as well. I never wanted to work a job where I felt trapped in a cubicle or an office, so being able to go to different residencies and show them to clients will keep me at ease. This will also break up the monotony of a normal eight hour day job. Because I will will be working with numerous different clients, showing different houses, and having every sales condition be different, I will never feel like I am trapped in the same work cycle everyday and will keep my job interesting. The location that I will be working in, Miami, is also a motivation for me to work in real estate. I always wanted Miami to be my destination out of college after living in New York my whole life. The Miami real estate market is currently one of the most thriving markets in the country and has great opportunity for me to be successful. The median sales price for residencies in Miami as of the end of 2014 was $224,000 which represents an increase of 10% compared to the prior year and 29%, 5 years before that. There were 3,200 sales of homes in Miami last year which is an increase of 600 dating back to the end of 2009. The market is continuing to grow and become more lucrative and is becoming more of a desired destination for people to live with a 5.8% increase in population in the past five years. A lot of this desire comes from international buyers. Most of these homes that they are purchasing are luxury condominiums which is going to be my specific field that I am working in. These international investors from countries such as Brazil, Russia, and Argentina account for the majority of the luxury condominium sales in Miami. Many of these purchases are the buyers third or fourth investment and are sometimes left vacated and only invested in only to make a profit when the market rises, especially in pre-construction buildings where the price per square foot is less expensive. Opportunity for advancement is also one of the reasons that I chose this industry. I have the ability to become a broker after only two years of being an active sales associate and this gives me the ability to control my own firm.

All of these prior experiences and benefits have motivated me and inspired me to venture into the world of real estate and I could not be happier with my decision. I believe that it is truly a great fit for me and I get to live in the place that I’ve wanted to since I was a kid. I couldn’t be more excited for the future.

What it Takes to be a Real Estate Agent

I have talked a lot about what is going on in the real estate world in Miami, but have not talked much about what it TAKES to be a realtor in Miami. I wanted to examine what traits and skills I would need to possess, and this is why I have found.

The competencies that are demanded of a real estate agent do not only come from just skills and abilities, but from personal character as well. As a real estate agent, I will be acting as a facilitator when I am representing either a buyer or a seller. As a buyer’s agent I will be meeting with clients to understand what exactly they are looking for in a home, and in what price range. As a seller’s agent I will meet with clients to assist them in deciding on how much to ask for for their property and to convince them that I can find a qualified buyer to meet their demands. My more specific duties vary among many different categories. I will be giving clients information about prices, payment options, and the conditions of the market that are all going to factor into their final decision. In order to determine the market price for a residency, I will have to compare properties in the area and evaluate all of the criteria of each home. I will then have to promote these properties through different advertisements, open houses and listing services in order to sell the property as quickly as possible to the most appropriate buyer. I will have to show the residencies to prospective buyers and inform them on the aspects of the house that they deem most important. Once a buyer makes an offer on the house, I will present that information to the sellers to consider and then act as an intermediary for negotiation between the buyer and seller. Once they come to an agreement I will write the unique sales contract and finalize the transaction.

The skills that are required for these include adaptive and effective communication to a number of clients. Active listening, the most important to me, is also a requirement. It is more important to listen to what the buyer wants and then use that criteria to guide the sales transaction than to give them unnecessary information. Time management and multitasking will be of much importance as I will be working on multiple listings at once and will need to coordinate all of my duties effectively. This takes self motivation which is important because I am choosing how much I am going to work and want to push myself as far as possible.

Aside from skills that I will need to be successful, the character traits that I possess are equally, if not more important, because people are going to have to trust me on my information that I give them and the promises that I make for them when I tell them that I am going to do something. The three most important character traits that you can possess as a real estate agent are honesty, integrity and dependability. With these three traits, clients will take you seriously and feel safe using you to help them buy or sell their home.

Asian Buyers are Filling the Gap of Latin American & European Buyers in Miami

With weakening dollars for many international countries, less European and Latin American buyers are investing in Miami condos, but Asian and domestic buyers are investing.

Even as the number of pre-construction units, sale prices and rental prices increase, Miami’s real estate market is destabilizing itself. The condo market is reaching the point where supply is catching up with demand, as sales from Latin American investors are leveling out and construction costs are increasing.

Foreign investment fueled most of Miami’s condo market revival as foreign buyers are financing 50 percent or more of sales prices by the time the building was complete. However, weakened currencies in Europe and Latin America are causing many international buyers to withhold purchasing real estate, decreasing sales in Miami as they are negatively affected by the strengthening U.S. dollar. With China’s currency becoming stronger with the U.S dollar, Chinese investors will become a larger portion of Miami’s real estate market.

While fewer Latin American investors are purchasing real estate in Miami, a strengthening U.S. economy is allowing more domestic buyers to enter the market.  Buyers from cities like New York, and Chicago make up about 10 percent of the current domestic buyers. Buyers from the West Coast are also looking in Miami in search of cheaper homes, mostly those whoa re older looking for retirement homes.

This market equilibrium will motivate those who are developing new construction to targeting domestic investors more as the international investors are less willing to come to Miami.

What Will Make Me Content in My Career

As I am approaching graduation and ready to begin my real estate career in Miami, FL, I have my excitements but also fears. Although Miami is a top destination for many young people, does that mean that I am going to enjoy it there. Being from New York, will I be happy living so far away from my family? Will I be able to start fresh and create a whole new life for myself? Will I be happy there? These are continuing questions I have as the day of graduation approaches, and I have been talking to many friends and family about my decision. All of my friends say the same thing: that it is impossible for me not to be happy in Miami because of the weather and how beautiful it is there. That is true and it is one of the main reasons I wanted to move there, but I can’t be happy there unless I enjoy working there. I thought about what would make me happy in my career and it came down to four criteria.

The first is the balance I am going to have between work and everyday life. I never wanted to be the type of person who spent the majority or their day working without enjoying my personal life. Starting fresh in Miami, I wan to be able to make new friends outside of work, be able to date, enjoy the extravagant social and night life that Miami has to offer and really just be able to benefit from my hard work and create a life for myself that I am happy about. I want to be able to continue with my other hobbies including staying active by playing sports and fitness activities.

The relationship that I am going to have with my employer is also something that will determine me being content in my new job. The company that I will be working with is a small company with only about 10 employees, and I have one main employer, my broker, who I will be dealing with and communicating with on an everyday basis. He will serve as my mentor and guide me throughout my career as a real estate agent. It is important to me that we have a good relationship and I enjoy woking for him instead of dreading coming to work everyday and not enjoying who I am working for.

The amount of money I am going to make is not the most important aspect of my job, but definitely a factor that will make me happier the more I make. The reasons I wanted to venture into real estate were’t because of how wealthy I can become, but I think that creating a better lifestyle for myself and giving myself more opportunity to do the things I want will make me happier overall. The benefit of working in real estate for me is going to come from helping people make a large emotional decision in their lives. But, I would like to see my work pay off and have and be able to enjoy what Miami offers.

The last is the company culture that I am going to be involved in. I want to work for a company with integrity and that wants to work their absolute hardest for their clients. Working for a company that has values that shadow my own is very important to me and I want to be proud to be a part of an organization  and feel good about what I do. This will allow me to enjoy coming to work everyday as I will be a part of something that enhances the area and people that I am around.

I believe that if all of these criteria are met, that I will be very happy in my career. I am glad that I realize these things, so if I ever become unhappy or dissatisfied with my job I will know why and know how to make the appropriate changes. I am going into this with a positive mindset and look forward to the journey.

Miami a Hotspot for Cheaper Luxury Living for New Yorkers

Being from New York with plans of moving to Miami after graduating from HPU in May, I was interested to see if it was a common trend for other New Yorkers to do the same. All I hear from everyone in New York is how expensive it is to live there, especially when it comes to taxes. On Long Island, my hometown, many young people move away from there homes in search of a less expensive location to live and start their post-college lives. Also, those who live in the luxurious places in New York City such as Manhattan can’t seem to afford the lifestyle there anymore and search elsewhere for “cheaper” luxury real estate.

After a bit of research, I found that 13% of luxury residential property sales last year in Miami were bought by people from New York! This surely indicates that Miami is a hotspot for people searching for cheaper luxury living to migrate to, and it is quite simple why. Taxes in New York can be up to 12% where they are much less in Miami, and New Yorkers are paying almost the same price per square footage. Moving away from the hectic city environment to oceanfront condominium properties is looking like a bargain and more and more people are realizing it.

I always had aspirations when I was younger of someday living in New York City because it amazed me every time that I would visit. There seemed to be so much opportunity there and really just seemed like a fun place to live. This was before I even began thinking about the financial aspect of living there, and now that I made the decision to live in Miami, I think that I am making a better choice that will allow me to have a better lifestyle in the long run.

Foreign Investor Gap in Miami Condo Market

It has only been a recent fact that international investors have been the largest revenue gain for the condominium market in Miami. However, it has been becoming much more costly for them to live there. The main reason behind why it is becoming more expensive is the strengthening of the U.S dollar. This accompanied with a current “boom” in the Miami real estate ,market, it is becoming difficult for foreign investors to find worth in purchasing property overseas. Countries such as Argentina and Brazil, which are recurring buyers for Miami real estate, have seen their currency decrease and have been affected negatively. The same has gone for Chinese investors, but they have become immune to the strengthening of the US dollar and are continuing to invest in Miami.

To put this in better perspective, it is easier to look at the Miami real estate market as two separate markets: the resale market and the reconstruction market. In the resale market the average price for a condo is $350/sqft which is nearly double from only about 5 years ago during Miami’s real estate disaster. Because of this increase in price, about 1,500 units went into contract last year which was a few hundred less than the year before. Even though there are less transactions, owners are having difficulty reducing their condo prices. Because of this there is an over-supply of condos. The average market has about 6 months of inventory available, but for these condos there were 8 months available.

On the other hand, the reconstruction market in Miami contributes to the over-supply of condo units. The average price of one of the 15,000 units to be built is $770/sqft. This requires foreign buyers to enter contracts putting down deposits of at least 50%. This makes it easier and offers more availability to foreign investors because most domestic purchasers would not want to put down over about 30%.

This all shows the dependency that the Miami real estate condo market has on foreign investors. Because foreign investors like to pay cash which is better for sellers in Miami, the strengthening of the U.S dollar decreases their purchasing power. This could potentially lead to foreigners pulling out of the market, and that gap will need to be filled by domestic investors.

Domestic Investors Growing the Miami Real Estate Market

The Miami real estate market is currently in somewhat of an upturn but there is definitely room for growth. It is possible for this is to be achieved if the Miami community can improve collectively by making the city more business friendly and growing the employment base. This would serve as the foundation to sustain Miami’s growth and continue to propel the Miami real estate market forward in a positive direction. A lot of people who are buying Miami real estate are wealthy overseas citizens who want to displace and invest their money out of their home country into property in the U.S to see a return on their investment.

There is a lot of room for Miami to grow and is apparent when compared to other large cities such as New York and Los Angeles which are well developed and established. Miami is a definitely a hot spot for small businesses and entrepreneurs, and gets its attractiveness from having zero income tax. It is easy for entrepreneurs to gain traction and become successful in Miami, offering the possibility to make an immediate impact.

But in order to attract more buyers from the US, and grow that portion compared to those who want to solely invest and collect rental income, you need to make the real estate more attractive. The US buyers interested in Miami real estate are very sophisticated and are interested in the design of the property being unique. The way to get this to happen is to have a well-known famous architect construct and design the building or home in order for it to have that differentiated appeal. Having an innovative work of art of an estate will attract a larger domestic crowd.

The continuance of new construction in Miami within these parameters will make it more attractive for domestic buyers to relocate to Miami and establish their businesses which will help grow the economy. Especially with rising interest rates and developers demanding a larger deposit, sometimes up to 50-60%, it will deter foreign investors since it is difficult for them to get their money out of their country. Right now Miami is being fueled by these overseas investors trying to turn a profit on their investment which can cause the market to plateau and not see higher growth. With the boom of new and unique construction currently being developed in Miami, it should help the market grow in the future.

Super High-End Real Estate in Miami is Currently Booming

The desire and quantity of Miami luxury real estate is booming in historical proportions. In the past decade the real estate market in Miami was in such a dry state that developers of new construction put a halt to building any new properties. Currently in Miami, there are almost 100 new towers that are under new construction, with three of them consisting of penthouses that are priced at $50 million or above. This is an unprecedented occurrence in this market. The only recent property that has come close to that mark was back in 2012 when a property was sold for just over $45 million, but was a 20,000 square foot house built on 2 acres of property. There hasn’t been a condominium sold for that much to date in Miami. The highest recorded condo sale was at $34 million. With these condo sales of north of $50 million being public knowledge, it is only natural that the penthouses of condominium complexes will increase because the owners of other towers believe that their unit is the best and should be price tagged at a higher amount. This $50 million mark may begin to trend into being a status symbol for the tower owners, and when their penthouse is in that bracket of $50 million and higher, it will attract these ultra high-end buyers and their unit will be in a very exclusive club.

Since this current increase of $50 million penthouses has hit the market and being the first time that this has really occurred, it raises the question of how many of these ultra luxury units can the market afford to have? Being that there were none before and there are very few now, but seem to be an upcoming trend, there is definitely room for them. But who is going to purchase these penthouses? I there enough demand of wealthy people in Florida to cover the supply of these? The answer is yes, but they are not all from Florida. Different economic, political and even climatic factors have been attracting buyers from all over the world and the Northern part of the US. Economic and political uncertainty have brought people from Brazil, Russia, Argentina, Turkey and Italy to Miami. Also climactic factors have brought many people, mostly from New York, to come simply for the reason of the winters being so harsh and they want a warmer climate. Of course these are extremely wealthy people seeking to buy these uber-expensive properties, but Miami is becoming a very attractive destination for people to live and why its market can afford to build these units without the risk of them not being sold.

Miami is slowly becoming a destination that attracts the very rich from the US and all different parts of the world. With all of the luxury real estate that it has to offer, its warm climate with beautiful beaches, and many attractions, it offers a better quality of life where paying $50 million for a single unit is worth it to its investors. Many of these properties are built by world renowned architects which gives credibility to the high price range and increases the attractiveness of the towers to high-end investors.

This is certainly a trend that may continue to increase as the real estate market in Miami stays hot, and new construction continues to increase. Month by month as more of these ultra luxury units are built and will soon to be sold, it will increase the status of the Miami market and certainly be a more attractive place to live than it already is.