The South Florida real estate market overcame nearly a month of stalled activity in the wake of Hurricane Irma, a sign of the market’s resilience moving into 2018, according to a joint report from ONE Sotheby’s International Realty and Integra Realty Resources.
The hurricane, which ripped through Florida in early September and left a trail of flooding and power outages in its wake, was expected to hit total transactions in the area by as much as 8% (or around one-twelfth of the year), said Daniel de la Vega, president and managing partner of ONE Sotheby’s in an interview Monday. But the year ended with sales volume up and a few key areas attracting headline-making sales.
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The report, which comes out at the end of the month, takes a deep dive into South Florida’s luxury performance—defined at the top 50% of the market—in 2017 and predicts moderate growth in 2018, aided by the income tax overhaul and a weakening dollar.
"Overall, 2017 was a very strong year—much stronger than what the experts predicted," Mr. de la Vega said. Before Irma, grim predictions also centered around President Donald Trump having a cooling effect on international demand, particularly among South Americans, in Miami and neighboring counties.
Exclusive Palm Beach and the gated golf communities of Broward County attracted a broad pool of very deep-pocketed buyers in 2017. Major transactions included hedge funder Ken Griffin picking up four acres in Palm Beach for $85 million.
In Palm Beach, sales of homes priced between $1 million and $5 million increased 5% in 2017, while sales rose 28% for homes priced between $5 million and $10 million. Sales are expected to grow a modest 1% to 3% in 2018, according to the report.
Meanwhile, Miami-Dade County continued to attract the bulk of South Florida’s international buyers.
Miami Beach logged multiple $20 million-plus sales, helping the total average sales price for single-family waterfront home jump 45% in 2017, according to the report.
Miami’s island communities—such as Key Biscayne and Venetian Islands—also saw strong price growth in 2017. Luxury average prices among Miami’s islands jumped 41%.
Meanwhile, the condo market in South Florida continued its contraction in 2017 due to an oversupply of resale units. Sales for non-waterfront condos declined 3%, while waterfront sales and average prices slipped about 2%, according to the report.
Softness in the condo segment has discouraged new development over the past couple of years. Even still, 2018 may see a few new luxury project announcements, as developers hope a weakening dollar might attract more international buyers to projects three to four years down the line, said Anthony Graziano, senior managing partner at Integra Realty Resources.
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"International inflow will come back this year and next," he predicted.
Other macro-economic trends are likely—or have already started—to benefit South Florida, he said.
Florida’s zero state income tax is drawing a widening pool of self-employed buyers, snowbirds and semi-retirees as the tax overhaul hits high-tax states like Connecticut, New Jersey and New York, he said.
From an investment perspective, Florida "is still a very safe place to be," he said.