Causes Of Slower Growth In South Florida Real Estate Market

Causes Of Slower Growth In South Florida Real Estate Market


This is Roy Oppenheim, real estate
and foreclosure defense attorney. I want to talk a little bit today about what we’re seeing in
the real estate market here in South Florida. And it’s
not all roses, it’s not all great news, and I ask that you not shoot the
messenger. But one of the things we’re seeing is that a lot of the
developers who were planning on building, you know, these multi-billion-dollar
projects are pulling up stakes and not continuing with their projects, and the
reason for that is sales have been sluggish. And they’re also seeing
that some of their closings that they anticipated, where people had put 30%,
40%, 50% down and they were cash deals, many of them foreigners, may
not come in with the other 50% to close. And one would say, “Well, who would be so
crazy enough to lose that deposit?” But the answer is if, in fact, you’ve had
currency devaluations in South America like we’ve seen, and you’ll see a very
strong dollar, the conversion on the foreign currency back to
the United States is going to be so expensive for many of these people. In their minds, they’re paying
150% of what the value of these homes are. And so what’s going to happen is a lot of
homes that were built, a lot of condos particularly, that were built, that did
not get closed, but where there are 30%, 40%, 50% deposits down, won’t close. And those are going to
come back on the market, and they’re going to
create a drag on pricing. Also, the other problem is that we’re
seeing that the banks, even though interest rates have, of course, risen, are
being very, very slow in approving people who have medium-type credit, and it’s
amazing what one has to go through. It’s almost like going to a proctologist
and doing this unbelievable analysis of your entire financial world, trying to see where every penny
comes from for you deposit, your down payment, and for your cash to
close. And it just slows folks down and, in some situations, it becomes impossible
to meet those arduous standards. And so that too, is putting
a drag on the economy. And then the third thing, which I read
today inThe Wall Street Journalthat many of you’ve probably also seen, is
that many economists are suggesting that the economy itself is not growing
at the pace that we thought it would, based on what we expected this incoming
administration to be involved with, whether it was the health care reform that
hasn’t occurred, infrastructure spending, which hasn’t yet happened, and also tax
reform, which may or may not happen. So that’s also now putting a drag on
things because people’s expectations have run way ahead of what reality is. And then the final thing is, is that
income, even though jobs are being created, the income for these kinds of
jobs don’t meet the increases in the kinds of price escalation that we have
seen in the real estate market. So because people aren’t being paid
enough money and we’re not seeing enough inflation in terms of job payments, in
terms of hourly wages or salaries, folks are not able to afford many
homes. In fact, recently, I just read that teachers and policemen and other service
workers can’t even live in the major municipal areas where they’re working
because their salaries don’t meet their needs to actually be able to afford
a kind of home in that community. So I think we’re seeing here some bumps in
the road. I’m not suggesting anything that we’re going to see something
like 2008, but I am saying that we all should hold onto our wallets here and be a little bit
careful and see what goes on. In addition, and maybe it’s anecdotal,
we’re seeing a major influx in new foreclosures coming in, and I’m
not sure if it’s just a spike or if, in fact, that is a harbinger of
what is, in fact, coming our way. In any event, hope all’s well, best to
you. Roy Oppenheim, from the Trenches.

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