Causes Of Slower Growth In South Florida Real Estate Market
By Oppenheim Law on Deficiency Judgments, Florida Law, Foreclosure, Real Estate & Roy Oppenheim
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 in <i>The Wall Street Journal</i> that 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.