Local realtors are confident that opportunities await buyers and sellers alike  in South Florida’s 2013 residential real-estate market. The doldrums of the 2006-2010 recession  may finally be in the rear-view mirror. Although prices are trending upward and  inventory is shrinking, determined buyers still should be able to find property  they want and can afford, while sellers can expect to be satisfied with what  they receive.  

 “Recovery is underway,” declares Michael Light of Miami Condo Investments. He specializes in  condominiums in downtown Miami and Brickell, which he calls “the two most happening areas in the Miami market.” Over the past two years, he says, prices there have increased by 30 percent. “It’s hard to find units for people. Right now everybody wants to buy in Miami. What  we were able to find two years ago as opposed to today is a night-and-day  difference. Inventory levels are down—almost non-existent.”  

 Light defines anything less than 12 months of inventory as a seller’s market. He says the condo inventory is about six months for units priced under  $500,000, nine months in the $500,000 to $1 million range, and less than six  months above $1 million.  

 In the past five years, he says that 24,000 condos became available in downtown  Miami and Brickell. “Fewer than 1,000 are now available. In Brickell, there are three new projects—MyBrickell, BrickellHouse, and Millecento—with a total of 948 condos. As of mid-August 2012, fewer than 10 units remained  for sale between the three buildings. MyBrickell has broken ground, but the  other two haven’t yet done so.”  

 Throughout the region, the story is much the same. “In the under $300,000 market, there is less than three months of inventory  between Miami-Dade and Broward counties. Supply has been very limited since the  robo-signing scandal in October of 2010,” says Natascha Tello, a broker and operating partner at Keller Williams Realty  Partners SW in Pembroke Pines and 2013 Miami Association of Realtors board  chairman.  

 “New permits are starting to appear from developers wanting to develop condos. We  can expect to see more high-rise beachfront properties,” adds Terri Bersach, managing broker of Coldwell Banker’s Weston office and 2010 Miami Association of Realtors (MAR) board chairman.  

 Who's Buying?

 Tello says four types of buyers fuel the South Florida marketplace:  international buyers, investors seeking rental income and/or an eventual sale  at a profit, and “the regular move-up and move-down buyers.”  

 Making the region increasingly attractive is the combination of affordability  and quality-of-life appeal. “We are probably one of the most affordable markets in the world,” Bersach says, “for the quality of beachfront property, climate, and diversity. People can live  here, establish careers, and have it all— championship teams, culture, restaurants, and theater.”  

 “South Florida is still on sale,” Tello concurs. “We’ve come off our lows, but we’re still significantly below the highs of the 2002-2006 boom. There’s a lot of value to be purchased here.”  

 Light says the foreclosure rate has decreased and associations are healthier  now. “They don’t have to worry about default and receivership. We’re not trying to catch a falling knife any more. People waiting for the bottom  missed the boat two years ago. Now they’re buying on the way up.”  

 Incentives & Employment

 The high-end condo market appeals to wealthy buyers who may own several  residences. In this market segment, Light says, no incentives to buyers exist. “This is not Las Vegas or Phoenix,” he explains. “Developers are not giving away one or two years of free maintenance fees. You  pay what they want you to pay or somebody else will. You can finagle price to a  degree, but this is not like other cities. Twenty to 25 percent off does not  happen anymore.  

 “Unemployment is still high, and we don’t have a lot of high-paying jobs. A young family just getting started can’t afford to live in the area.”  

 Tello and Bersach disagree. Tello says job growth and economic opportunity drive  the market for the less affluent who rely upon steady employment to buy their  only residence. She cites the PortMiami widening project, an increase in the  region’s import-export trade, and the potential for South Florida to become a  burgeoning biotechnology and nanotechnology center.  

 “Affordability is at an all-time high. People who felt at the height of the boom  that they could not buy are now buying homes,” Bersach says.  

 For working-class buyers, “we’re seeing some down-payment assistance programs by cities, bond programs for  buyers funded by the state,” Tello says. “These depend on the specific city and program, and the income guidelines you  fall under.”  

 Financing Issues

 Despite the positive outlook overall, South Florida needs more liquidity in  mortgage financing. “In the condo and townhouse market, 79 percent were sold for cash in the second  quarter of 2012,” Tello says.  

 “The condo market is the most challenged of all markets because there are not  that many financing options unless you have a strong down payment,” Bersach says. “It’s typically 20 percent now. Ten percent would be better. If the buyer is  qualified, why not? Lenders are doing that for single-family homes. I think  they need to look at all the other qualifications a buyer has: job stability,  good credit, the ability to make payments. For a condo they also want a buyer  to have more skin in the game.”  

 Bersach says this situation favors second-home buyers and investors who can  provide bigger down payments, but a low owner-occupancy ratio correlates with  higher delinquencies and less involvement by absentee owners and renters.  Indeed, some associations won’t even allow tenants to attend meetings. “We need more end users, people who will actually live there. With a higher  owner-occupied ratio, a building is considered a safer investment with less  risk for the lenders,” Bersach says.  

 If Federal Housing Administration financing were available, buyers could pay as  little as 3.5 percent down, but “banks don’t allow that on 99 percent of area condos,” Light says. “In downtown Miami and Brickell specifically, even 20 percent is very hard to  get.  

 “Miami is still considered a declining market in the eyes of banks, not because  it is declining but because all big cities are considered to be declining.  Appraised values haven’t caught up, so the bank adds a five percent cushion for its own underwriting  guidelines, making the normal minimum 25 percent. We tell people 30 percent  just to be safe.”  

 Closing Delays

 Tello says about half of her firm’s condo and homeowners’ association closings are delayed due to waiting for an estoppel letter, a  document sent by a condo or homeowners association to the title company  providing information on liens outstanding, dues and fees owed, or violations  by an existing owner that must be cleared prior to closing.  

 Other delays arise because many associations will communicate with the seller  but not the buyer.  

 “We’re dealing at times with absentee owners or foreclosed properties, so Realtors  are doing a lot of the legwork an owner would do,” she says. For example:  

 • The association may not tell a prospect the weight limit for a dog. That  information is in the condo documents, but the prospect and Realtor may not  have ready access to it.  

 • Some associations don’t hire a management company and have limited staff and odd office hours.  

 • Some associations overcharge applicants. “An applicant pays to apply for permission to purchase or move in,” Tello says. “The Florida Statutes say the limit is $100, but some associations charge more.  Then it becomes a Catch-22 for the prospective buyer or tenant. If he cites the  statute, it may not sit well with the association.”  

 Buyer Issues

 To find a desirable South Florida condo with a minimum of effort and  aggravation, prospects should know what they want and choose a single realtor  to help them find it, Light advises.  

 “When you’re asked what your budget or price range is, please don’t answer, ‘I want a good deal,’” he says. “That does nothing for your cause. I still need to ask you to define a good deal.  Normally it’s this much of a discount, but from what? From the peak of market pricing, or  from what the value is today?”  

 Light deals primarily with out-of-state and international clients. Often he will  start to show them a unit and they will say they’ve already seen it with another realtor. “We have an open multiple listing service in Miami, so you don’t have to work with nine different realtors,” he says. “We all have access to the same database and work with the same property. New  York doesn’t have an open MLS system, so there you have to work with a number of realtors.”  

 George Leposky is a freelance writer and a frequent contributor to The South  Florida Cooperator.