Virtual tours? A buyers’ market later? How coronavirus is affecting South Florida real estate.
The interior and view from an apartment at Miami luxury residential tower Paramount WorldCenter, developed by Dan Kodsi, CEO of Royal Palm Companies.(Craig Denis Creative; Craig Denis/Courtesy Craig Denis)
Jonathan Tripp sat outside of a title agency in his truck as he gave his signed documents to masked and gloved agents. He rolled his window back up before they went into the office and returned with his copy of the paperwork.
And with that, his two-bedroom, two-bathroom home in Fort Lauderdale was sold for $290,000, a process Tripp says was done about 80% electronically in the midst of the coronavirus pandemic. He and his fiancée are now under contract to buy a three-bed, two-bath house in Coconut Creek for $340,000.
While much of the world is on hold due to the stay-at-home orders and quarantine recommendations that accompany the COVID-19 outbreak, the real estate market in South Florida keeps moving. It’s just moving slower.
Carl Marzola, president of Atlantic Properties International, last week showed an $850,000 four-bedroom colonial home in Fort Lauderdale’s Pointsettia Heights to a large family and had a client accept an offer on a three-bedroom corner unit in a building on the ocean. Wesley Ulloa, broker owner of LUXE Properties, lists a $560,000 condo in Coral Gables and a $300,000 townhouse in Miami Lakes among her recent closings. Saddy Abaunza, vice president of ONE Sotheby’s International Realty, has had wealthy clients rent local luxury homes to spend their time for the duration of the pandemic.
“Has the market slowed down? Yes. Yes, it has,” said Marzola, who also reports several closings in the last two weeks on properties that were shown before the pandemic. “But it hasn’t stopped.”
Tripp, who worked with LoKation Real Estate Realtor DJ Pierre, was concerned his sale wouldn’t close because it kept getting pushed back. He listed the home before coronavirus truly broke out in America and found a buyer as concerns were slowly growing more serious, causing several delays. Luckily, it all culminated in a closing last week.
Coronavirus’ effect on the economy has sent shock waves through the population, but a widespread belief among Realtors is that, while forced to spend much of their time at home, people are placing greater importance on where they live.
“Everybody, right now, is probably valuing their home more than anything in the world, considering that’s where they are right now," said Dan Kodsi, the developer behind Miami’s Legacy tower and Paramount WorldCenter.
Jonathan Tripp poses in front of a house in Coconut Creek he is under contract for after closing on his sale for his previous house in Fort Lauderdale following multiple delays during the coronavirus pandemic.(Jonathan Tripp / Courtesy/Jonathan Tripp / Courtesy)
While Tripp was able to tour his soon-to-be home in person, greeted at the door by the owner with hand sanitizer, there are fewer showings. Because not as many people have been touring homes in person since the outbreak of COVID-19 in South Florida, technology and virtual tours are keeping the business active.
Abaunza sees prospective buyers taking virtual showings very seriously, dissecting video and checking for intricate details they would look for if inspecting the home in person. Nonetheless, many still feel the need to see a home with their own eyes rather than through the lens of a mobile device in order to commit, and closings are down.
“You don’t see it, you don’t fall in love with it,” said Abaunza. “It’s an emotional purchase, so if you’re not getting them in there, the market suffers a little bit.”
Another holdup comes in the home-inspection process. While home inspectors are among those deemed essential and exempt from stay-at-home orders, there are obstacles.
“Home inspectors need to crawl all over the home,” said Anthony Graziano, CEO of Integra Realty Resources. “The difficulty is: No. 1, there’s not a ton of transactions happening, so they don’t have a lot of work; No. 2, where they have inspection requirements, the seller has to be really motivated to let somebody or two or three people from the home inspection company come in for three hours and crawl all over the house.”
With a decrease in transactions and the number of U.S. unemployment claims reaching 26 million on Thursday, theories vary on how the market will react once a sense of normalcy is restored.
Kodsi, who is CEO of Royal Palm Companies, doesn’t see the current economic climate swinging the market toward buyers or sellers.
“The world’s on a temporary standstill,” Kodsi said. “I don’t think there’s any impact on the real estate market other than, just right now, people are not doing anything. If anything, they’re probably home looking at real estate thinking about what their next move is.”
Graziano described the market as “confused” and in “wait-and-see mode.”
He sees a buyers’ market eventually developing because many of them are going to hold off during the pandemic.
“As things resume, there’s going to be good opportunities for buyers to buy because there’s going to be fewer of them,” Graziano said. “There are people out there, that when all this started, they were actively looking for a home, and they didn’t get to buy one. Some of those people are going to fall out, say, ‘You know, with all this stuff going on, I sold the house. I got all the cash in the bank. Let’s just rent for a year.”
Graziano believes it will be a pent-up demand that brews.
Ulloa already sees that notion coming to fruition after an initial stall.
“We had an adjustment phase where the first two weeks, three weeks we were figuring it all out. It was a big pause,” Ulloa said. “I see a lot of buyers coming back into searching again, getting used to this.
“We’re starting to see increased demand — not overall from where we were a month ago — but we’re starting to see an adjustment and people are getting used to the situation."
It’s also dependent on how sellers react. Those who have to sell imminently may have to do so at a discount, and those who aren’t pressed to sell now probably won’t budge on their price.
“Most folks probably decide to hold because I think they’re going to be concerned that there’s going to be fewer buyers and the pricing’s not going to hold up,” Graziano said. Said Abaunza: “A lot of people who don’t need to sell are calling and saying, ‘Take it off the market. Why am I going to have my house on the market in this time? It’s not what I want for my property. I don’t have to sell it.’
"There’s going to be a ripple effect on the people that don’t need to sell. They’re going to wash off, and the people that really need to sell are going to stay on board and they’re probably going to sell at somewhat of a discount.”
Said Tripp of his purchase: "I was able to negotiate a few more things out of [the seller], and I think it’s due to what’s going on. I’m sure it’s a hard market to sell in right now.”
Despite the difficulties, Kodsi doesn’t see anything similar to the foreclosure crisis during the 2008 recession developing.
“There’s a significant difference in how much equity people have in their homes,” said Kodsi, noting back then the average mortgage on a home was 94% and it’s 64% today.
Regardless, banks will proceed with caution lending money and lending at the same interest rates despite having the federal interest rate cut, according to Graziano.
Real estate can be affected less in South Florida because of the year-round activity. It could hurt more in the north, because summer brings prime months in those markets, which have been dry since last summer and may lose the upcoming season.
South Florida, which has most of tourist season behind it, may not only mitigate the damage but possibly thrive. “Trouble up north is good for the south,” Kodsi said.
The transplanted New Yorker living in South Florida has long been a well-known trend.
Kodsi believes the pandemic’s larger effect on New York could provide another spike with the current situation delivering the ultimate impetus for someone who already was contemplating a move.
“I can’t tell you how many people are being withheld from coming to Miami that are up in the Northeast right now that are dying to come down here,” Kodsi said. “There was already an influx of northeasterners — specifically New York for tax purposes, looking at Miami — but I can’t tell you how many friends I got from New York saying, ‘You know what? I think it’s time for me to start [a move].’”
Abaunza agrees New York will soon bring an flurry of buyers, even hosting someone this week who flew in just to view a property, but she also sees that notion extending internationally, such as Italians and other Europeans with the means and desire to move to South Florida.
Brokers describe those most aggressively pursuing real estate transactions at this time as a combination of people who have a need to move in the near future or who are looking to score a deal if they can find one at a time when much of people’s time is being spent in their abode.
Said Ulloa, “Home is more important than ever right now."