Is the real estate boom in South Florida here today a gone tomorrow thing, or is it here to stay awhile? All signs right now show the latter, and there are numerous reasons why.
Florida, and especially South Florida, has always been a popular place for real estate. With no state income tax, sunny weather year-round and a healthy laid back casual lifestyle, people from all over the globe have been buying real estate as second or third homes or as investments for years. But now, during this time with the pandemic raging through the states, people are leaving states like New York, New Jersey, Massachusetts, Connecticut, and Illinois not just to buy summer/winter homes but rather to purchase property in South Florida to live in permanently.
For many of the same reasons as above are still relevant. The states mentioned have some of the highest state income tax, with New York and New Jersey having over 8.5%, and all of them have winters filled with snow, sleet and ice. However, for these purchasers that are throwing down roots, they look at other factors like schools for the children, arts and culture, and restaurants. These are specific qualities they are looking for when basing their decisions on purchasing and where.
Over 80% of buyers in the market were foreign, but over 70% of sales are now domestic, with the pandemic. That is a huge difference and shows two things. First, it is harder for foreign buyers to travel, and so if they do buy properties, it is sight unseen. That does not mean that this does not happen. Two Thai billionaires bought one of the most expensive houses in South Beach. And in Palm Beach, a Russian billionaire bought a $140 million home and paid in cash. But the majority of the new bubble is homegrown.
This boom happened real fast and has caused bidding wars as soon as properties hit the market. Sales of single-family homes are the most significant part of the market right now, but that does not mean that the condominium market is wavering. Because of the limited availability of single-family homes, due to demand, many are looking at condos. A new report from Related ISG states that 90% to 100% of more recent developments are either occupied or sold and that almost 50% of all residential sales were from condo transactions, a whopping 100% increase. Smaller-sized boutique properties are in particular demand because they have fewer people, so in this time of covid, there is a much better chance of spacing in common areas like pools, spas gyms and other social outlets. But all condominiums are hot, even the ones not built yet. Pre-sales on condos that have not even begun construction are selling out 30 days after coming available.
With record-low mortgage rates, everyone working from home, millions of baby boomers and millennials looking for properties and the global pandemic, it was inevitable for this boom to have happened. And this boom is not just good for the real estate business. The influx of people moving here means an influx of money spent at businesses, thus boosting the economy for the long term. This steady stream of new buyers is also attracting big firms like Goldman Sachs and other financial companies that are planning moves to the sunshine state. This will bring new jobs and more buyers into the market. And the boom will continue.