0 Why Are So Many People Moving From New York To Florida?

Posted on November 23, 2020 by Sean Greco

Florida has long been a favorite winter retreat for New Yorkers, giving them a warm, relaxing place to escape the bitter and bustling New York winters. Recently, it seems that permanently moving from New York to Florida is becoming a more common occurrence.

According to Bloomberg’s analysis, Florida is reeling in new residents—and their wealth. In fact, Florida came out on top in this study, attracting $17.2 billion more than it lost. Florida was the recipient of a “wealth exodus” from many states, including New York, which contributed about $8 billion to Florida’s income. So why are people making the move?

Tax Benefits of Moving from New York to Florida

One of the big reasons to move from New York to Florida is the tax benefits. Florida is one of seven U.S. states with no state income tax. New York has income tax rates exceeding 8% with additional income taxes levied within New York City. Florida’s corporate tax rate is also 5.5%, compared with 6.5% in New York.

Taxpayers can recoup some of these losses from state income taxes by filing a State and Local Tax (SALT) deduction on their federal forms. However, in 2018, the Tax Cuts and Jobs Act (TCJA) limited that deduction to $10,000 annually until 2025. While this does not affect the majority of tax payers, the tax implications for higher-income individuals are substantial.

This makes relocation from New York to Florida especially appealing to affluent New Yorkers, such as Carl Ichan. The moves equates to major savings for this billionaire, just like it did for other prominent billionaires that relocated from New York to Florida – David Tepper, Paul Tudor Jones and Eddie Lampert.

Changing Relocation Timelines Due to COVID-19

The existing motivation for moving from New York to Florida has taken on increased urgency and importance due to COVID-19. “Everybody who was on the fence to move for tax reasons now seems to be moving,” said Danny Hertzberg, an agent with the Jills Zeder Group at Coldwell Banker in Miami Beach. “We hear over and over, ‘My tax attorney spoke to me,’ or ‘I spoke to my accountant.’ People are thinking about establishing residency.”

There may be something else to it, too. The world is changing rapidly in the midst of COVID-19, and businesses have had to adapt to virtual, remote work. A lot of people are asking themselves, do I really need to physically reside near my company? Do I really have to be in New York anymore to do the work I need to do?

For many, there is an added incentive to relocate right now due to the current housing market. Inventory is low in many areas of New York, which puts prospective sellers in a great position. It also happens to be a great time for those same sellers to consider buying (in say, Florida) to take advantage of some truly great interest rates. Due to differences in cost of living, New Yorkers have substantial buying power in Florida, which can allow them to really find their dream home when moving from New York to Florida.

Moving from New York to Florida During an Election Year

Some of the recent financial urgency may also be based on uncertainty revolving around the election. According to Florida Realtors, “Lloyd Abramowitz’s high-net-worth clients at Cerity Partners are asking more often about the financial wisdom of moving to Florida. They’re concerned about New York City’s rising crime rate, and a higher federal tax burden should a Democrat win the presidency, said Abramowitz, a New York-based partner at the firm.”

With it’s temperate climate, the sunshine state is an appealing location to people across the nation. The lifestyle is hard to beat, and the tax breaks are substantial. If you are considering relocating to Florida, reach out today!

0 Miami Real Estate Market Forecast: 2020 Looks Promising In Miami Beach

Posted on February 25, 2020 by Sean Greco

For many, 2020 has brought with it a feeling of potential. Like a deep breath of fresh, crisp air at the beginning of a new adventure. I suppose every new year is like that, in a way. Bringing with it the promise of a new chapter, a fresh start. But this one has admittedly felt more powerful. The energy is palpable and catching. Have you felt it in your life?

Surely, I am not going to advise you to invest in Miami real estate simply because the energy of a fresh decade holds promise. But with any fresh start comes a time for fresh ideas and opportunities. If you are considering investing in real estate this year, you should really look at Miami, paying special attention to the submarkets. Miami Beach is looking good, as are several other key submarkets.

Miami Real Estate Market Forecast Is Promising as Population and Income Growth Continue

Population and income growth are great leading indicators of real estate investment potential. Miami has seen strong growth in both of these areas, a trend that is expected to continue. In fact, SmartAssets just listed Miami as one of the top 10 “boomtowns” in the country. Boomtowns are cities where rapid economic growth is creating jobs and attracting new residents. Americans are flocking to these cities because “business is booming, jobs are plentiful and salaries are rising”.

Miami population grew by 9.43% from 2014 to 2018. The Bureau of Economics and Business Research, Florida Population Studies has predicted Miami population could grow by another 13% from 2020 to 2030, ending at close to 3.5 million people.

Income growth in itself is a sometimes forgotten metric that has a huge impact on the state of the housing market long-term. Miami household income grew by a whopping 31% from 2014 to 2018. This rapid income growth helped Miami achieve the rank of second-fastest-growing large city in America in a recent study. The study compared 515 U.S. cities across 17 key factors ranging from population growth to college-educated population growth and unemployment rate decrease.

Miami’s population and income growth can be directly correlated to growth in the housing market. According to a Comprehensive Housing Market Analysis by the U.S. Department of Housing and Urban Development, during the 12 months ending February 2019, new and existing home sales increased 7% in Miami-Miami Beach-Kendall, Florida.

According to a 2019 Knight Frank Wealth Report, Miami takes the title of #1 fastest growing luxury real estate market in the US, and #5 fastest growing luxury real estate market in the world after Madrid, Berlin, Paris and Cape Town.

Miami Housing Demand to Surpass Development Growth

There has been a large amount of development in Miami and Miami Beach in recent years. So much so that it has even slightly outpaced population growth, leading to a surplus in real estate supply. Some of these developments are still under construction with closings expected throughout the year, but the flow of new inventory is slowing. A forward-focused eye can see that this is likely to level out in the investor’s favor.

Far fewer new Miami developments are slated to break ground than there were several years ago. With population growth predicted to continue at a healthy pace, supply will fall off as the inventory is absorbed. This presents an opportunity to secure an investment now when the competition is less fierce and sellers more motivated due to properties languishing on the market. Eventually, the seller will need to sell. So, buy right, then the fundamentals will take over from there. You truly ‘make your money’ on the buy-side in Real Estate. Especially if you follow the fundamentals and truly understand the sub-markets.

While there has been excess demand in several sub-markets, Miami Beach is a sub-market with good fundamentals that has been somewhat stagnant in the past several years. With sound fundamentals and reduced competition, Miami Beach is worth a good look. The State of Florida has so much momentum right now. Miami Beach is positioned extremely well and will continue to be a key piece of the puzzle.

Savvy Investments Continue in Miami

The slowing of new development is a natural thing that allows the market’s supply and demand to re-balance. However, new development has not fallen off of a cliff entirely. Continued investments from experienced investors offer another positive sign for Miami’s real estate market forecast.

Moishe Mana, who owns a major redevelopment project in Wynwood, has put together a growing portfolio of roughly 45 buildings in Miami since 2014. According to an article by Forbes, in October, the Mana Group unveiled a timeline for the redevelopment of his downtown Miami properties, including 11 buildings between Southeast First Street and North Miami Avenue that would be delivered between the first quarter of 2021 and the fourth quarter of 2024.

As all good investors know, the key to making a sound investment is looking closely at the fundamentals when identifying the potential for growth. In Miami Beach, the fundamentals are as good as ever. Interest rates are low, tax advantages are large, and demand is slated to grow. Miami is a buyer’s market now, and a seller’s market to come. That makes it the perfect time to get in on a sound real estate investment in Miami. As Warren Buffet would say, “be greedy when others are fearful”.

0 Capitalism Feasts on Miami Real Estate Market, Consumers Suffer

Posted on January 29, 2020 by Sean Greco

Let’s face it, the Miami real estate market is oversaturated with under-qualified agents and over-promising vendors. A slew of agents with a severe lack of experience and dedication are fed leads from automated systems daily. Overwhelmed with the noise, many customers inadvertently do themselves a disservice by working with the first agent they speak to. And the vendors – oh, the vendors. They prey on the real estate industry because it’s a big, lucrative, easy target. They offer forward-looking solutions, but what value are they adding to the end customer?

Miami Real Estate Market – Fastest Growing Luxury Market in the US

When you look at the sheer size of the Miami real estate market, this oversaturation starts to make sense. According to Knight Frank Wealth Report, Miami takes the title of #1 fastest growing luxury real estate market in the US, and #5 fastest growing luxury real estate market in the world after Madrid, Berlin, Paris and Cape Town.

Total sales volume for Miami in Q2 2019 topped $3.6 billion dollars. And the beast is still growing. Median home prices have increased for 30 consecutive quarters in Miami, a streak spanning 7.5 years while short sales and foreclosures have decreased heavily over time.

Miami Real Estate Market Foreclosures Over Time –

Lucrative Real Estate Markets Create Opportunities for Vendors

Any industry of this size is bound to have an influx of opportunistic vendors and agents, all grabbing for their piece of the pie. A great example of this is Zillow. About 70% of Zillow’s revenue comes from the company’s “Premier Agents” who pay for placements on Zillow to generate leads. It’s reported that Zillow brought in $300 million in revenue in Q1 2018 alone, which equates to over $200 million in revenue from agents paying to be connected to customers in one single quarter.

What is the consumer getting when they are connected to a Zillow “premier agent”? Literally just someone who has paid a fee to Zillow. That’s it. Not a trusted provider or anyone with any sort of guaranteed experience. This is a perfect example of the type of thing that exists to falsely build confidence and ultimately creates confusion.

There is no shortage of agents paying the Zillow’s of the world, which adds to the noise for the consumer. The chance that a consumer gets paired with an inexperienced agent while shopping around online is quite high. In fact, a 2014 NAR study reported 87% of all new agents fail after five years in the industry and only 13% make it, mostly due to issues with sales volume.

Capitalism Feasts on the Real Estate Industry

Outside of property listing aggregators, there are innumerable other “top” real estate agent short-lists and certifications. Many aimed at giving agents another badge with which to attract potential customers. While perhaps well-intentioned, many of the accolades that are not backed by the NAR are not executed or regulated consistently enough to prove any real distinction or value. In this way, they only serve to offer further confusion for the consumer.

According to statista.com, in 2016, agents and brokers’ ad spending amounted to 9.3 billion U.S. dollars. There are so many agents out there that don’t produce, yet they throw money at whatever hot new thing they think will make them rich and it skews and distorts the industry as a whole. And then 87% of these agents are gone in 5 years, largely because they weren’t able to generate enough business to remain profitable.

Investments in technology amidst the changing landscape also come into play. “According to PitchBook, an analysis firm owned by Morningstar, the amount of venture capital invested in real estate technology companies was up to $1.2 billion in 2017 from just $31 million in 2012.” But what technology is helping the consumer, and what technology is just designed to increase transaction volume for real estate agents?

When It Comes to Picking An Agent – Be Picky

Consumers in the real estate industry are still too trusting. In general, they are not taking the time to vet their agents. NAR found that an estimated 72% of customers do business with the first agent they talk to. This is a recipe for disaster, leading to over 26% of people stating that they would not use their agent again, and so many more not knowing what they were missing.

Our advice to all consumers in the real estate industry: Break the trend. Take the time to vet your real estate agent. This is hard to do amidst the noise from vendors and inexperienced agents, but we promise it’s worth your time. Do this for yourself before paying an agent thousands of dollars to sell one of your most valuable assets, or signing a mortgage for hundreds of thousands of dollars that spans the next 30 years of your life.

Don’t just go with the first person you hear from. The automation that likely drove the speediness of that response will not replace the real value of an experienced real estate agent. The real value comes from the years of experience that are used to guide you through the real estate transaction process and maximize the potential of your investment.

The Limitations of Automation in Real Estate

Automation can sometimes be used to the consumer’s benefit, but the process itself is so complicated, granular, local, and personal. We’re not even close to tying all of the pieces together effectively in an automated way. Automation is still largely insufficient given the large amounts of money at stake and the magnitude of the decisions.

You need to know if the area in which you’ll live, vacation or invest will increase in value over time. This process can be so granular that two neighboring buildings can have vastly different property values and sales hurdles based on factors that an algorithm may never consider – such as frequency of maintenance, zoning, and whether or not they have a doorman and a secure lobby. The process is complicated. There is still a human element to real estate that can’t be relegated to an algorithm.

A good real estate agent focuses on the quality of their customer’s experience over the number of their leads. They make their customers feel comfortable and heard as they guide them through the process. Speaking to a knowledgeable real estate agent about the market, the pros and cons of the decisions to be made, and what to expect along the way provides a level of comfort that no amount of automation can replace. No automation can really take you through that complicated process in an informed way. Neither can a hyped-up vendor or a bad or inexperienced agent.

In Conclusion

The growth in the Miami real estate market has created an opportunity for vendors and entrepreneurs to make money. Unfortunately, that doesn’t correlate to sustainable businesses that help consumers. Instead, a landscape has emerged where vendors prey on real estate agents and the consumers ultimately suffer through a lack of personalization and clarity. Vendors should exist to service-producing real estate agents, allowing those agents to add value to the end customer. Agents should leverage the available products and technology to the consumer’s ultimate advantage. The real estate industry has a ways to go to achieve a more symbiotic relationship between all parties.

0 Owning a Vacation Rental in Miami Beach

Posted on September 5, 2019 by Sean Greco

Owning a vacation rental can be quite lucrative, especially in popular destinations such as Miami Beach. If you are considering entering into the Miami Beach short term rental market, it is important to have a good understanding of the legal and financial implications, particularly in the wake of the settlement between Miami Beach and Airbnb.

The Future of Airbnb in Miami Beach

The vacation rental market in Miami Beach has been making headlines for quite some time, and not just due to the amazing beaches and nightlife. Miami Beach has been involved in a lawsuit with Airbnb since January, when Airbnb filed suit against the city alleging Miami Beach’s rules concerning short term rentals violated federal law. This suit was settled in early August, bringing clarity to the future of vacation rentals in Miami Beach.

So what was the lawsuit all about? Much of it revolved around a Miami Beach ordinance that required companies such as Airbnb to verify and display a city business tax receipt and a resort tax certification alongside listings. These are required in order to avoid fines of up to $20k for noncomplying homeowners. Miami Beach placed the onus for this compliance on home-sharing websites in response to a loophole in which tenants were renting out and subletting rooms and then sticking the property owners with the fines.

According to the complaint, “The burden to Airbnb of reviewing third-party content to alter, prohibit, or remove listings… would be an ongoing and expanding burden. In the normal course of business, hosts can add new listings, change the status of listings, and deactivate listings every day, at any time. Airbnb then, too, would have to monitor for every change constantly…[which] would cause a significant disruption to Airbnb’s operations and impose substantial personnel and other costs”

The lawsuit between Airbnb Inc. and the city of Miami Beach was dismissed after mediation proceedings produced a settlement between the two parties. As a result of the settlement, Airbnb will no longer be expected to verify the validity of the business tax receipt number and resort tax number for each property listing. Airbnb will provide the mandatory fields for hosts to fill out while the city will verify validity. In addition, Airbnb paid Miami Beach $380,000 to be used at their discretion “including to educate residents about home-sharing rules and/or for the enforcement”.

Airbnb sees this settlement as a positive breakthrough, noting that the settlement is “a win-win for Airbnb and our Miami Beach hosts as we move towards a constructive and collaborative working relationship with the city. It is a win for our hosts who will have certainty as to the rules and a win for the city when it comes to having a regulatory framework that will work.”

The clarity gained from this lawsuit by the largest player in the home-sharing industry should bring comfort to those who are in, or considering entering the vacation rental market in Miami Beach. It paves a clear path forward for the industry and should allow it to continue growing, within the guidelines set forth.

Practice Safe Renting: How to Avoid Potential Fines

Homeowners who participate in short term rentals in Miami Beach without following the Miami Beach ordinances can face huge fines of up to $20,000. If you are considering entering the vacation rental market in Miami Beach, it is important to make sure that you have the necessary approval.

The City of Miami Beach Land Development Regulations (Chapter 142, Article IV, Division 3, Sec. 142-1111) prohibit short term rentals for periods of six months or less for homes located in certain areas of the City. Miamibeachfl.gov provides an easy way to verify that the property that you intend to rent is permitted. Enter your property address here to find out – or reference the zoning map.

In addition to the zoning requirements, there are slews of other licenses, certificates, and receipts that homeowners who intend to rent a property on a short term basis must have. This includes:

Obtain Florida state Department of Business and Professional Regulation (DPBR) business license
Register with the Florida Department of Revenue
Obtain a Miami-Dade Certificate of Use
Obtain a Resort Tax Registration Certificate if in the City of Miami Beach
Obtain a Business Tax Receipt from the City of Miami Beach

Other requirements may also pertain to your dwelling. Within Miami-Dade county, if a home is part of a condominium or homeowner’s association, one must obtain written authorization from the relevant association regarding the operation of their short term rental. Additionally, swimming pool safety requirements are in place within Miami-Dade county. Vacation rental homes with swimming pools can not permit children under the age of 6 to stay unless the pool has a safety barrier, safety cover, pool alarm, or door latch/alarm.

Understanding A Vacation Rental’s Investment Potential

Vacation rentals in Miami Beach can truly be great investments, but it is important to have an accurate understanding of the revenue that your investment could be expected to drive. To arrive at this figure, you must have a firm gauge on the income your investment will drive, as well as the expected costs you will incur through fees and maintenance.

To arrive at your potential income figure, you need an understanding of the nightly rate that you can charge, and the occupancy rate that you can expect to achieve. Location, amenities, home size, and seasonality are all factors in determining this figure. Working with an experienced real estate firm is invaluable in gaining confidence in this estimation. Don’t trust blanket advertising figures that promise a certain percentage increase for short term rentals in comparison to renting to an annual tenant. This figure can vary widely.

Prospective investors must also have an understanding of the fees and expenses their investment will incur. This includes an understanding of the depreciation that the property will face as a result of additional wear and tear, and what the maintenance and cleaning plan will entail. In Miami Beach, rentals for periods of less than 180-days are subject to a resort tax, which is 4% on the rent of the dwelling. To calculate your potential resort tax, use this form.

In order to make sure that your Miami Beach vacation rental investment is going to work in your favor for years to come, you need to be informed. Working with an experienced real estate agent who has an abundance of market knowledge empowers you to make the best decision for your lifestyle, considering your financial goals. Your agent can help you understand the power of your investment in light of location, market trends, and the current legal landscape. Reach out to an agent at RE/MAX Paradise today if you are considering purchasing a vacation rental in Miami Beach to get a thorough understanding of your investment landscape.

0 How To Choose A Real Estate Agent

Posted on July 31, 2019 by Sean Greco

Where are all of the good real estate agents hiding?

Well, they aren’t hiding, really. But it can feel that way. The push for immediacy along with a saturated real estate industry can lead to those in need of an agent being inundated with options without any clear direction on how to choose a real estate agent who is right for them.

Automation is common these days, which means that many agents will be quick to ‘respond’ to submitted inquiries for properties across the web. Still, the fact of the matter remains that the first agent to reach out may not be the right agent for you.

An agent’s experience level matters. An agent’s market knowledge matters. An agent’s access to marketing platforms matters a ton!

A home is a huge asset – it takes time to find the best partner to guide a buyer or seller through the real estate transaction.

Let’s Look at the Numbers

There are over 187,000 Realtors in the state of Florida. There are over 55,000 agents that belong to the Miami Association of Realtors. However, Florida Realtors reports that there were just shy of 395,000 condo and single-family home sales in Florida in 2018. In Miami, that number falls to less than 91,000. In the core Miami Beach markets, it falls to just shy of 2,500. Assuming that there are two transaction sides to each sale, these numbers can tell us a few things:

The average number of homes sold in Miami per Miami Association of Realtors member in 2018 was only 3.3 homes. This low number shows the saturation of less experienced real estate agents in the market, as experienced agents have no problem far exceeding this number.

Less than 3% of Florida Realtors closed a sale in the core Miami markets in 2018.
9% of Miami Association of Realtor members closed a sale in the core Miami markets in 2018.

Despite the fact that a home is often a person’s largest asset, National Association of Realtors statistics says that there is a 72% chance the customer will do business with the first agent they talk to. Combine this with the fact that there are many less experienced agents readily available, you don’t always have a recipe for success. Only 69% of sellers and 74% of buyers would use their agent again. That’s 26% – 31% of people who feel some level of regret for the partner they chose to help handle their largest asset!

Anyone who wants to avoid this type of regret needs to feel comfortable spending a bit of time finding the right agent, and they need to know what to look for.

How To Choose A Real Estate Agent

Market Knowledge

Look for an agent that knows the market like the back of their hand. Some markets can be quite volatile, so a high level of market knowledge is required to make sure that you are on the receiving end of a great deal. The Miami market, for example, is quite unique. It is full of international investors, vacation home buyers, and neighborhoods with vastly different vibes and price tags. A great real estate agent knows not only how to navigate this, but how to leverage it.

Marketing Capabilities

Home sellers need to make sure that they are partnering with an agency that can get their property in front of buyers. An agency’s marketing capabilities is endlessly important. Sellers should ask the prospective agent what marketing tools they have at their disposal, and they should validate if these tools are working by getting an idea of their average days-to-sale. RE/MAX agencies such as RE/MAX Paradise often have access to more robust marketing opportunities than some others.

Range of Experience

Don’t be afraid to ask about your agent’s experience. Don’t be afraid to ask questions in general! You should interview at least 3 agents before making your final decision. Some questions to consider asking:

- How long have you been selling real estate?
- What is your ratio of sellers to buyers?
- What is your average number of clients?
- What are your core markets?

References & Customer Reviews

One of the best ways to vet your prospective agent or agency is to hear from people who have worked with them in the past. Ask for references, and check into them. Look for additional reviews from people they have worked with in the past. How were their experiences? Overall, was it glowing, mediocre, or is there something concerning in there?

Hospitality

This is about more than just finding an agent who is courteous. You are going to be spending a lot of time with your real estate agent throughout the home buying or selling process. It is important to find someone who you are comfortable with and who you enjoy being around. Look for someone you like working with, whom you feel you could grow to trust. Trust will be an important part of this relationship.

In a quickly-changing, international market full of investors, where demand is based upon the interaction of international economies and shifting currency exchange rates, having a knowledgeable agent that you trust is a must. If you are looking to buy or sell a home in Miami, reach out so that we can pair you with the agent that best suits your needs.

0 Properties & Paradise: Real Estate For Sale in Miami Beach FL

Posted on July 31, 2017 by Sean Greco

Miami Beach Coast, Florida (Photo by Hoberman Collection/UIG via Getty Images)

Properties & Paradise is a top-rated real estate agency in Miami Beach Florida. Our agents are trained professionals representing real estate for sale in Miami Beach and surrounding areas. Whether you are looking for a luxurious beachfront condo, an affordable loft, a first home, or an upgrade for your family, we can help get you into your dream home in Miami Beach.

Search For Real Estate For Sale in Miami Beach

At Properties & Paradise, we represent all types of real estate for sale in Miami. We have luxury real estate listings for all of the well known high-end buildings in Miami and Miami Beach. We also always have some exclusive properties, as well as a feature that lets you search listings by neighborhoods. If you are looking to rent, our site has a rental section to help you find what you need. Otherwise, use our search feature to hone in on the exact property you are looking for.

In addition to our team’s expansive knowledge and experience in residential real estate for sale in Miami Beach, we are also skilled in handling commercial real estate transactions in Miami. Our seasoned Commercial Practitioners’ local market knowledge is unparalleled. Check out our current commercial listings. We look forward to the opportunity to partner with your business, or with you personally as an investor. Our agents can help make the process easy for you. They are skilled in navigating the maze of commercial real estate regulations.

The Properties & Paradise Team

At Properties &Paradise, we only hire the best agents. Our agents are trained professionals in many different types of real estate transactions. If you are looking to buy, sell, or rent real estate in Miami Beach Florida, look no further than the team at Properties & Paradise. You will be in great hands with any one of our agents. They are trained to get you a great deal while making the process as easy as possible!

Why Properties & Paradise?

When you choose to work with a Properties & Paradise agent, you are choosing to have a dedicated helper on your real estate journey. Unlike with the large real estate sites like Zillow or Trulia, if you contact us with an inquiry on property value for real estate for sale in Miami Beach, we have knowledgeable agent’s ready to make a personalized estimate based on years of experience and real, up-to-date market knowledge. We don’t leave it up to a robot to make those recommendations, we use what we know and we know this market like the back of our hands. Don’t leave it up to chance by contacting a random agent. Check out our market data now to start on the road of making a more informed real estate transaction, and then contact an agent from a team that you can trust.

Contact Us Today

Miami is not just a city, it is lifestyle. The agents at Properties & Paradise understand that, and they know this market forward and backward. When you work with Properties & Paradise you get the advantages of an international organization while still benefiting from the local knowledge of a successful Miami real estate agency. Whether you are looking to buy, sell, or rent in Miami Beach or the surrounding areas, look no further than the Properties & Paradise team and contact us today. Properties & Paradise – outstanding agents, outstanding results.

0 Miami Real Estate Market: Correction, Not Crisis

Posted on April 23, 2017 by Sean Greco

Amidst rising inventory, political changes, and general uncertainty, there has been much speculation around whether the Miami real estate market is heading into a crisis. Looking at all of the factors at play, it is fair to say that the market is in for a price correction, but we are far from talking about a crash. As Anthony Graziano of Integra Realty Resource puts it, “ there’s no distress in the market right now. I think a lot of this pricing correction right now is really just a function of good old supply and demand — and I think that’s good for buyers.”

Influx of Inventory

So why is the price correction in order? There has been an increase in supply in both the condo sales and rental markets because of all of the new construction. There have been and will continue to be a lot of units hitting the market in the coming year as construction comes to a close.

This is particularly true for luxury condos. One of the ways to gauge the health of a real estate market is to look at the ‘months of inventory’ which is the number of months it would take to sell all of the properties currently on the market. Luxury condos in Miami-Dade are currently at a whopping 55 months of supply.

Inventory is pretty high all around with 20 months of condo inventory in Miami and 24 months of single family home inventory in Miami Beach. In some cases, the increase of inventory is leading to price decreases in the Miami real estate market as the supply and demand level back out.

Some condo owners looking to sell their properties are not willing to accept lower prices, and so they are opting to rent out their units instead. This is, in turn, adding more competition to the rental market. A report found that there are also 4,900 rental apartments under construction downtown, in addition to 1,000 that were produced last year. These two aspects combined are helping to create a very competitive landscape in the Miami real estate rental market.

There is an influx of inventory in the Miami real estate market right now, but it is not the start of another housing crash. Patricia Mazzei from miamiherald.com says that “despite the forest of cranes in downtown, the total number of condo units is far lower than during the boom prior to the Great Recession. About 12,300 new condos are expected to be completed in downtown between 2014 and 2019; between 2004 and 2009, more than 21,000 units were delivered.”

Three Reasons The Miami Real Estate Market Is NOT Heading For A Crash:

1. Banks Have Learned Their Lesson

This isn’t 2008. You can’t buy homes for 125% of the purchase price and actually get cash back rather than making a down payment. As Sep Niakan puts it on marketwatch.com, “we are past the days of lenders handing out no-documentation zero-down-payment loans.” Mortgage regulations are much more strict than that now. A 20% down payment is standard, and low 3% down payment options are reserved for qualified low-income first-time home buyers looking to build some equity.

Regulations have also changed for the pre-construction Miami real estate market. Pre-construction projects now have to sell units before they can build, and these sales are subject to the tighter lending regulations as well. According to Brian Bandell at bizjournal.com, “most of [Miami-Dade’s] condo buildings haven’t been approved for conventional Fannie Mae loan or FHA mortgage with low down payments.” This means that people have to come in with more cash down on these units. Jonathan Smoke, chief economist at Realtor.com actually expects the federal government to be more receptive in 2017 to programs that would ease credit for condo buyers.

In addition, lenders now require 50% of pre-construction units to be sold before they can start drawing on a construction loan. “They are very aware of what happened in the last cycle in 2008 and 2009. Those days are gone.”, says Taylor Collins, a partner with Two Roads Development.

2. Buyers Have Learned Their Lesson

The memory of the housing crash of 2008 is still fresh in the minds of anyone who lost from it and the whole country learned from that experience. The investors and buyers of today are in turn much more cautious. According to Robert Banting, president of appraising firm Anderson & Carr in West Palm Beach, “70 percent of the flippers are reportedly paying cash for their homes.” He goes on to say “there’s no irrational exuberance. We don’t see amateurs in the market.” Dan Kodsi, developer of Paramount Miami Worldcenter and Paramount Bay says that “you will not see a mass sellout because these are not people who can’t make their mortgage payments. You will likely see these investor buyers taking their units off the market and renting them out.”

3. Population growth

Florida is the 3rd largest state in the South East based on population. It is also the 5th fastest growing state in the entire country, and the 8th most densely populated state according to countrydigest.org. More than 1,000 people move to Florida each day.

Miami, in particular, is an important destination for international investors. It is an international melting pot with a now more established culture. Miami population grew 10.4% between 2010 and 2015 according to worldpopulationreview.com and this trend is projected to continue.

Inventory might be high right now, but Miami is a strong market with international significance. Florida, and Miami imparticular, are still growing. This means that eventually, the supply and demand will even out and prices that were affected will recover.

Despite signs of a market slowdown, there are reports that sales and median home prices are actually up year over year. As the market absorbs the new influx of inventory, there will be some degree of a price correction, but it won’t be as extreme as some are projecting. The shift will just be to more of a buyer’s market. “There is more inventory on the market [in South Florida] than a year ago and prices haven’t fully recovered so it is more of a value play for buyers than other parts of the country,” according to Smoke.

If you are looking to buy or sell in South Florida, contact one of our knowledgeable agents to get started.

0 Miami Beach Short Term Rental Law

Posted on February 15, 2017 by Sean Greco

Miami Beach short term rental law includes a series of requirements for any property in Miami Beach to be considered eligible for legal short term renting. It is estimated that 95% of buildings in Miami Beach do not allow for rentals for periods shorter than 6 months.

Miami Beach Short Term Rental Law:

miami beach short term rental zoning map

Zoning –

Short term rentals are only allowed in certain areas in Miami Beach. Many of the areas that are authorized to conduct short term rentals are commercial areas, with only a few residential area exceptions. This map shows the Miami Beach short term rental zoning requirements.

Building requirements –

Miami Beach short term rental laws require properties to meet certain building requirements. This means that properties must abide by all building, fire, and accessibility codes. Wheelchair ramps, sprinkler systems, and impact windows are just a few of the hurdles to making a property a legal short term rental. Inspections are routinely conducted by the State of Florida, Dade County, and by City of Miami Beach. After getting hit with the $20,000 fine for illegal short term rentals three consecutive times at his property on Meridian Avenue, Daniel Sehres has decided to make the necessary upgrades to turn his property into a bed and breakfast. He estimates that this venture will cost him $200,000.

Licenses and taxes –

Miami Beach short term rental law requires properties to acquire the appropriate licenses and pay the associated taxes. The property will need a transient apartment license from both the State of Florida and the City of Miami Beach. If the property is a part of a condo association, the condo doc will also need to be referenced to see if short term rentals are allowed. In addition, the owner of the short term rental will need to pay sales and resort taxes in the amount of 13% of the rental property income. A business tax receipt is also required. Go here to obtain your business tax receipt. Or take a look at the list of businesses that already have their business tax receipts.

Affidavit –

As of December, regulations on short term rentals got even tighter. Commissioners voted to require short term rental property owners to submit an affidavit to the city. This affidavit affirms that the property is in a short term rental zone, that they have obtained a business tax receipt and resort tax account, and that their condo association allows short term rentals. This process currently requires a physical notary and an in-person visit to the city hall. Commissioner Joy Malakoff, a sponsor of the ordinance defends the increased regulation saying “South Florida is the fraud capital of the country, and we just felt it was putting too much trust in every condo owner, saying, ‘Yes they are going to tell the truth. If you get an affidavit and a letter from a condo association, we as the governing body of the city feel much more comfortable that they really are allowed to do short term rentals.”

Downfalls of Miami Beach Short Term Rentals:

Miami Beach started really cracking down on short term rental violations nearly a year ago by increasing the fine to $20,000 per violations. These fines are the highest of their kind in the country, and they make illegal short term renting in Miami Beach an even bigger concern. With the rise in popularity of using short term rental properties in place of hotels for vacation accommodations, short term rentals have been put in the hot seat. This is because, in large volume, short term rental of residential properties can cause problems for many different parties.

Hotels –

The hotel industry is one of the biggest opponents of short term renting in Miami Beach. They see it as unfair competition because the hosts aren’t having to pay the local resort taxes that hotels have to pay. The increase in the popularity of sites like Airbnb has magnified this issue greatly. Airbnb, after getting fined particularly hard, has attempted to compromise with Miami officials on increased regulations for short term rentals. After the ordinance requiring the notarized affidavit was passed, Airbnb spokesman Benjamin Breit wrote in an email “It is disappointing that an opportunity to collaborate with the private sector on protecting quality of life and economically empowering the middle class is instead being used to over-regulate and punish the constituents of Miami Beach. As the commission freely admitted from the dais, the desired intent was ‘punitive’ rather than constructive and that, in our opinion, is not good policy. Unfortunately, the real losers of this measure are visitors and the constituents in Miami Beach.”

Neighbors/Community –

When properties are used as short term rentals, the neighbors and the community can suffer. People who rent out a house for a vacation are not concerned with being good neighbors, and they are not in the midst of their ordinary lives. These individuals are in vacation mode which means they are often rowdy and inconsiderate, throwing noisy parties leading to neighbors calling local police to complain. As Mayor Philip Levine says, “Our community is not in favor of short term rentals.”

Tenants –

Illegal short term rentals can also cause uncomfortable situations for the tenants. No one wants to feel unwelcome on vacation, but communities that are overwhelmed with and sick of the endless parade of vacationers invading their residential districts are not prone to be very welcoming to all short term tenants. Besides some possible tension with the neighbors, tenants risk being evicted during their vacation if the property is found to be in violation of illegally conducting short term rentals.

Property Owner –

The property owner takes on the largest risk in the case of both legal and illegal short term rentals. Even if the property meets the Miami Beach short term rental law requirements, this is not always in the best interest of the property as guests using it as a vacation party home may treat it poorly leading to quicker depreciation and more frequent repairs. If a property in Miami Beach is being used for short term renting without all of the requirements listed above, then the owner is responsible for the standard fine of $20,000 per occurrence. If an unsuspecting property owner is renting to someone who in turn rents the property out on a short term basis, the owner is still ultimately responsible for the fine, as are the legal fees associated with the eviction of their tenant. One of the reasons to hire a property manager is to have insurance against this short term rental trap. Property managers can catch tenants violating Miami Beach short term rental law and immediately evict them before they have the opportunity to cost owners tens of thousands of dollars.

0 Miami Real Estate Trends

Posted on January 2, 2017 by Sean Greco

Amidst current political and economic changes, many people are wondering what Miami real estate trends we will see in 2017. With moderately rising interest rates, low risk of a housing market crash, population growth, and a rising trend in deregulation, the outlook for Miami real estate is strong in 2017.

Realtor.com predicted that South Florida will see sales volume increase 4.17% and price increase 3.98% in 2017. Look for increases in investment from the northeastern United States, as well as an increase in the number of Millennials in the marketplace as potential driving factors. Foreign investment and luxury home sales could fluctuate, but no major changes are predicted from these sectors in 2017.

Foreign Investment in Miami

A little more than half of Miami-Dade County residents are foreign born. The region is a melting pot, with residents and investors from all around the globe. Foreign investment plays a huge role in the Miami real estate game. It saw a dip in 2016 in part due to the strengthening of the U.S. dollar. If the dollar is to appreciate more compared to other international currencies, it could encourage a decrease in foreign purchases and incentivize foreign investors to sell these now appreciated investments. However, the U.S. market is strong in relation to other global markets, making it a safe place for international investments. With or without currency appreciation, investment in U.S. real estate is still beneficial and desirable to international parties.

There was much uncertainty surrounding the future of the housing market as we approached the 2016 presidential election. Some people were concerned about what the election of President Trump would mean for foreign real estate investment. Thus far, the politics are not affecting the housing market as much as expected. Much of the uncertainty has dissipated and the fundamentals that make Miami an attractive investment opportunity for foreign investors remain.

Trump’s stand on immigration does not appear like it will have a large impact on Miami real estate trends either. The typical South American investor is sophisticated and not normally adversely affected by immigration policies. For those that may want to migrate to Miami, investment visas are available as an option. Congress is to extend the EB-5 investment visa program which grants permanent residency to foreign investors who back developments that create jobs. Two other things that Trump may bring to the table are lower capital gains and income taxes. If achieved, this could actually encourage more South Americans to move to the United States.

U.S. Investment in Miami

While the fluctuation of foreign investment in 2017 may be uncertain, U.S. investment in Miami, particularly from the Northeast, is expected to increase. The strength of the U.S. dollar has affected Miami real estate trends for luxury and foreign sales over the past year, but Miami holds strong investment potential within the United States. Capitalization rates and interest rates currently have a pretty wide spread. This is sending more high net worth investors from across the U.S. to Miami. Aaron Kurlansky, principal of FM Capital says, “we are seeing a lot of guys exiting properties in New York to double down and plant roots here. These people are longer term investors who want to manage their wealth. They are seeing that they can own 200 units here for the same price of 100 units there.”

Millennial Home Sales on the Rise Nationwide

As Millennials are entering their main home purchasing years, the U.S. is expecting to see increases in Millenial home sales. These increases may be more modest in South Florida where young buyers represent a smaller portion of the housing market. According to Jonathan Smoke, chief economist at Realtor.com, in 2016 buyers under age 35 accounted for 29% of home purchases in South Florida versus 38% nationally. This can be mostly attributed to the large amount of investment purchases and retirement communities in South Florida.

Nevertheless, buying is 43% cheaper than renting a home in Miami-Dade County, which is attractive for first time home buyers who are facing high rents in the Miami area. This may bring more first-time home buyers to the South Florida market than in previous years. Similar real estate trends are being seen in other large cities, leading to potential increases in first-time home buyers nationwide. Renting will also continue to be an attractive offer for Miami Millennials. As renter-focused development projects make their way down the pipeline, it may even become a little more affordable.

2017 is looking to be a stable and steady year for Miami real estate trends. When it comes time for you to make a move, make sure you consult with an expert. Our agents at RE/MAX Paradise can help get you where you need to go. Reach out to us today to get started buying, selling or renting in Miami.

0 Cultural Diversity, Miami and Real Estate

Posted on May 25, 2016 by Sean Greco

A recent article by the Miami Herald shows how much cultural diversity in South Florida helps the real estate market here. There are many ways how cultural diversity, Miami and real estate connect. Not only is South Florida including Miami diverse, this diversity is sustainable as well. 36 percent of total real estate sales in South Florida were to foreign buyers in 2015. Of this, 78.9 percent of foreign buyers in 2015 in South Florida bought in Miami-Dade. They spent a total of $4.82 bullion in the county. According to the article, over 51 percent of people living in Miami are foreign born.

“It’s this mix of cultures that positions South Florida, and Miami in particular, as an economic engine inexorably linked to the world economy,” wrote the Miami Herald.

Of the foreign buyers in Miami, 76 percent were from Latin America, 15 percent from Asia or Oceania, 3 percent from Europe, 3 percent from Canada, and other countries making up the final 3 percent. There is a great mix of cultural diversity in South Florida, especially in Miami. Clearly, much of the culture of the city comes from Latin America. This complex demographic composition will add great value to real estate. It is is sustainable and long-term. The city is growing and this increase in human and economic capital helps many aspects of it.

“While it may be boring to some, South Floridians should be excited by the region’s rich and promising demography and our likely place in the future of U.S. economic growth. We represent a diversified base of cultures, ideas and capital that drives not only strong American in-migration to the region, but serves as an international magnet to drive long-term investment and growth,” wrote the Miami Herald.

Cultural diversity is an important part of a city for many reasons. Together, cultural diversity, Miami and real estate here are in a great place. The human and economic capital mentioned before are important. However, different cultures bring new ideas, art, and more to the city. For all of these reasons and more, Miami is an amazing place to live. RE/MAX Paradise has beautiful homes all over the city, so contact us today!