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Thursday, November 15, 2012
Realtors association CEO discusses South Florida market
By Martha Brannigan The Miami Herald
Leading the largest local Realtors association in the nation, Teresa King Kinney has some insights into Miami’s residential real estate market.
As CEO of the Miami Association of Realtors, Teresa King Kinney has a keen vantage point on South Florida’s real estate market.
She oversees the largest local group of real estate agents in the country, more than 26,000. Her association provides an array of services and resources for members to help them hone their professional and selling skills, including some 1,600 seminars a year, large and small.
But perhaps the group’s most significant event of the year in terms of impact is the Miami International Real Estate Congress, which started Sunday and continues through Wednesday at the Biltmore Hotel in Coral Gables. The group, which focuses heavily on building international awareness of Miami real estate, is hosting agents from across the globe.
Immediately after the event, the National Association of Realtors is gathering in Orlando Friday to Nov. 12th.
Business Monday sat down in an interview with King Kinney, who later responded by email to questions about her association and the local market.
Q. The Miami Association of Realtors is hosting the Miami International Real Estate Congress, which started Sunday and runs through Wednesday. What trends are you seeing in international interest in Miami properties? What has your group done to build relationships with brokers in other countries to build Miami’s image?
International buyers continue to play a pivotal role in the local market, fueling a recovery unlike any other in the U.S. The Miami Association of Realtors has more than 100 partner associations worldwide. These relationships and the association’s international outreach programs continue to boost our market and result in Miami’s all-time sales record in 2011 and subsequent significant price appreciation.
International demand for Miami properties continues to grow. While Florida’s market share of international buying activity in the U.S. declined over the last year, Miami’s grew by more than 10 percent. Nearly one-third of all international transactions in Florida take place in Miami.Q. Where is most of the foreign buyer interest in South Florida real estate coming from these days? Are you seeing growing interest from some nations and less from others?
While Miami is undoubtedly attracting demand from buyers and investors worldwide, it remains a hotspot for Latin American buyers. In Miami, 70 percent of international sales are to Latin American buyers, followed by Western Europeans, who account for 18 percent of local international sales. Miami also attracts buyers from North America, Eastern Europe, Asia, Africa, and Australia.
Latin Americans, not even including top markets of Brazil and Venezuela, prefer Miami over any other market in Florida by a significant margin of 65.8 percent. No other market even comes close.
Not surprisingly, Venezuelan buyers also greatly favor Miami, with 67.4 percent of Venezuelans choosing Miami followed by Fort Lauderdale with 16.3 percent, for a total of 83.7 percent.
Miami is also the top choice for Brazilian buyers, who are nine percent of international buyers in Florida. Nearly 50 percent of Brazilian buyers choose Miami, followed by Fort Lauderdale at 18.6 percent, for a total of 68.6 percent.Q. What obstacles or bumps in the road do you see to the continued recovery of the Miami residential market? In other words, what are some of the key challenges? Are you concerned about access to mortgages? How about the possibility of another cycle of overbuilding of condominiums?
Unnecessarily restrictive underwriting standards continue to prevent many qualified buyers from obtaining mortgages. While standards were not strict enough during the subprime mortgage crisis, now the pendulum has swung too far. Eliminating or reducing excessive restrictions would further boost our market and provide much needed mortgage financing to our residents.
Miami’s position as a global city, combined with its strategic location, its role in international banking and as an international corporate hub, and its multicultural affinity will continue to attract both U.S. and international buyers and investors long into the future.
Demand for housing is evident. We have a strong rental market, nearly 100 percent residential occupancy rates in downtown Miami, and a growing population. Also the dynamics of our market are very different from those of the last boom in terms of the capital being used to fund new projects. Many new projects are being funded by much heavier deposits from purchasers. Miami’s ability to absorb high levels of inventory is unparalleled. New construction which is within our increased acceptable ranges will have no problem.Q. Do you think that banks will be able to sell off their distressed residential holdings without disrupting the broader market? That is, do you expect the shadow inventory to be absorbed without major upheaval to the recovery in South Florida housing?
We don’t expect shadow inventory to significantly impact our market in the future, because it will be absorbed as soon as it hits the market as buyers, investors and the market are waiting for and need more inventory — as we have seen, and was confirmed by the chief economist for the National Association of Realtors.
Also, research by Florida Realtors indicates that concern over shadow inventory in Florida is probably highly overrated, because shadow inventory is easing while sufficient demand absorbs supply.
Distressed sales have declined 12 percent in Miami-Dade County compared to year-ago levels, and there continues to be great demand for distressed properties. Further, in many cases one same property generated more than one lis pendens [notice of foreclosure], erroneously indicating much higher shadow inventory than the reality.