This article by Newsweek, via MSNBC discusses the phenomenon that your favorite blogger has been noticing in Miami, Florida’s real estate market. Right now there is a real dichotomy between Internationally populated, metropolitan cities, and primarily domestic markets. The business centers are maintaining recent gains from boom times, and even continuing to grow against expectations, especially in market segments that are in high demand and fixed supply.
The suburban markets have shifted from moderate to high wealth areas into the fastest growing and largest residential areas for poverty stricken Americans! Right now, we are seeing a dramatic rise in foreclosure rates in Broward County (Fort Lauderdale and surrounding suburbs) and that the foreclosure rates in West Palm Beach are still above those in Miami-Dade County. This is a direct result of the primarily suburban character of the Broward Area, as it serves the Metropolitan areas to the east and south, as well as the urban east corridor to the north in Boca Raton and West Palm Beach. What it means to the real estate investor is that the Broward market is now lined with pitfalls! Prices didn’t even move as high as those in Miami-Dade, and all of my appraisal reports indicate dropping prices, up to 20%!
Usually, we would recommend a buy when there is that type of bargain in the area, but unfortunately, we don’t see the rise of rents to be strong enough to offset the property expenses. Partly, this negative outlook is due to Broward County’s “tax em to the penny” property tax appraiser’s office (their figures are usually up to the penny of market, or even higher than True Market Value sometimes), which is comparatively agressive compared to surrounding area’s assessments of value, which typically lag by 10-20% of TMV to account for depreciation. The other negative for Broward’s and the less metropolitan sub-region’s outlook is the vast open spaces in West Palm Beach county which are still cheap enough to get newer housing stock, and were previously not desirable, that are now being occupied. We are seeing commuters from places like Greenacres, Fl. (yes, it’s the place to be, I guess) and other small Turnpike towns in remote locations that were previously shunned as too far from the action. That housing stock availability is the factor that kept Miami-Dade’s prices in the dumps for a 20 year period preceding the recent boom and re-making of Miami as a truly international city. Broward will stabilize eventually, but won’t see price appreciation unless interest rates fall sharply, and gas prices as well . . . . . .
That leads us to this months ratings with changes in red, this time, we will revise to include a Miami-Dade County Update and Regional:
Miami-Dade County:
Commercial/Industrial: Buy (Investor and Owner Occupied)
Commercial Multi-Family: Strong Buy (Investor and Owner Occupied)
Commercial Office Condominium: Buy (Owner Occupied) Neutral (Investor)
Residential Single Family Homes (under $500,000): Buy (Owner Occupied) Buy (Investor)
Residential Single Family Homes (over $500,000): Hold/Improving (Investor and Owner Occupied)
Low-Rise/Micro-Condo (under 20 units): Buy (Owner Occupied) Hold/Neutral (Investor)
Mid to High Rise Condo / Large Low Rise Condominium Projects: Hold/Negative New Buying (Investor) Buy Low from Investors Dumping, if you can . . . . (Owner Occupied)
Regional:
Commercial/Industrial: Buy (Investor and Owner Occupied)
Commercial Multi-Family: Strong Buy (Investor and Owner Occupied)
Commercial Office Condominium: Buy (Owner Occupied) Neutral (Investor)
Residential Single Family Homes (under $500,000): Hold (Owner Occupied) Weak Buy / Sell with minor sales concessions (Investor)
Residential Single Family Homes (over $500,000): Hold (Investor and Owner Occupied)
Low-Rise/Micro-Condo (under 20 units): Buy (Owner Occupied) Buy with Positive Cash Flow (Investor)
Mid to High Rise Condo / Large Low Rise Condominium Projects: Buy (Second Homes or Owner Occupied) Sell (Investor)