In the last fifteen years top Florida architects has been going through an amazing transformation that is still in full swing today. The once crime ridden city, mostly home to retirees from northern US areas, is today one of the top world tourist destinations with its 10 million visitors every year. The “magic” city saw a urban transformation that is making it today the new business gateway to the Latin American markets, with over 1,500 companies that selected Miami to be the headquarter for their South American operations. In addition to being the number one destination for cruises in the US , Miami has also established itself has one of the two larger commercial ports in the United States , thriving on the high volume import and export business. Furthermore, Miami has become the second most important banking pole in the East Coast of the US , second only to New York , the banking capital of the world
Along with this evolution, inevitably came the transformation of the city skyline and the redevelopment of many areas that were neglected before, as well as the development of new areas of the city. Today Miami Beach is seeing the completion of its amazing renaissance with several new real estate projects under way, and Miami as a whole is continuing its transformation into becoming a full fledge worldwide metropolis with 5 million people living in its larger urban area (which include Miami-Dade, Broward and Palm Beach County).
Since 2001 the evolution of the real estate market in Miami has reflected this historical transformation of the City, with prices of properties finally starting to catch up with those of the other main urban metropolis in the US. One major and fairly unique element that characterizes the Miami real estate market is that almost half of the residential properties sold are second homes to a vast array of international and domestic owners, attracted by the wonderful weather and beaches as well as the unique nightlife and cosmopolitan flavor that characterize Miami. This has been a stabilizing factor in today’s market, which in the last year and a half has been taking a pause to adjust to some of the excesses that inevitably came during this unprecedented time of real estate growth.
As it is often the case, along with the strong growth in the real estate market came an overly optimistic view of how many new units could that market absorb, with the result that an excessive number of residential properties, especially condominiums, were planned to be built by developers around town. A second issue was that many pre-construction units were sold by developers to investors, who did not have the traditional view of renting the property while owning it to benefit from its long term appreciation, but rather to “flip” it to a second buyer before the unit was completed, therefore making a substantial return on their initial investment without ever having to close on the unit.
This trick has been working in many cases during the boom years, but in recent times, with the market coming back to a more normalized pace, it has created a situation where several buyers are faced with the necessity to close on properties they did not plan to ultimately buy. A third factor has to do with the psychology of investing: in time of uncertainty, people defer their purchases taking a “wait and see” approach, not knowing if the time to buy is now or later on. Two more reasons of concern have finally been the soaring insurance costs for homeowners, which hit a peak after the busy 2005 hurricane season, and the level of property taxes which have been increasing in the last few years along with property values.
All these factors led to a situation where sales of residential units in Miami slowed down considerably compared to the previous years, although the total volume of sales was still of the highest from an historical point of view, reflecting once more the permanent transformation of the City and its new demographics. The slowdown in the Miami real estate market also came as part of the overall adjustments that took place in the major US as well as international property markets after several years of strong growth.