Investment Bank Warns Of 'Bubble Risk' For Miami Residential Real Estate
Investment Bank Warns Of 'Bubble Risk' For Miami Residential Real Estate
In this latest issue of the Miami Condo Market Intelligence Report™, we examine a report from the Switzerland-based investment bank UBS that ranks Miami as one of the riskiest markets in the world.
Volume 2024, Issue 40 (Subscribe here)
This week’s Miami Condo Market Intelligence Report™ newsletter examines a warning from the Switzerland-based investment bank UBS naming Miami as one of the riskiest residential real estate market for owner-occupied properties in the world.
In the latest UBS “Global Real Estate Bubble Index" report, Miami ranked first among 25 international cities assessed for their vulnerability to a residential real estate market correction.
The cities evaluated in the September report span the globe, ranging from Sao Paulo to Toronto, New York to Hong Kong.
“Miami now shows the highest bubble risk among the cities in this study,” according to the report.
UBS defines a bubble as “a substantial and sustained mispricing of an asset, the existence of which cannot be proved unless it bursts.”
The “Global Real Estate Bubble Index” report makes clear that it “does not predict whether and when a correction will set in” but rather identifies the areas that could be most vulnerable to a price drop.
As for what causes a bubble to deflate, the report states that it is often “a change in macroeconomic momentum, a shift in investor sentiment or a major supply increase.”
In ranking Miami No. 1 in 2024, the report points out that the region is facing “challenges on the horizon” due to several factors, including “significantly higher” mortgage rates, property prices that have “strongly decoupled” from income growth and the looming 2025 Florida Condo Association Financial Cliff.
As the Federal Reserve moves to cut interest rates in hopes of achieving a “soft landing” for the U.S. economy, the report states this strategy “will likely bring significantly more existing inventory to market and potentially lead to some price erosion.“
Added to this, environmental concerns - ranging from sea-level rise to stronger hurricanes - are putting “the future of Miami’s price levels into question.”
It is against this backdrop that the Florida condo market is inching closer to new funding requirements in 2025.
In the aftermath of the June 24, 2021 collapse of the Champlain Towers South in the town of Surfside on the barrier island of Miami-Dade County, everyone from residents to building inspectors, politicians to bankers understand better than ever the importance of ensuring that no Florida condo building ever collapses again.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida Legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until now, the state’s measures were being implemented slowly but that all changes in less than 60 days when a key funding requirement takes effect.
Beginning in January, condo associations in Florida will be required to start collecting money from unit owners to place into reserve accounts - based on the results of Structural Integrity Reserve Studies (SIRS) conducted by experts - that will be used exclusively to fix, maintain and improve the structural integrity of residential buildings that are at least three-stories tall.
People are dubbing this moment as the 2025 Florida Condo Association Financial Cliff as it is expected to result in significantly higher costs for unit owners. News reports are already chronicling condo owners selling their units at deep discounts ahead of the 2025 deadline.
It is a lot of information but we are confident our reports will assist you to better understand current market conditions in South Florida.
It is worth noting that we are sharing a portion of our research for free with subscribers to our newsletter and readers of MiamiCondo.Club.
If you want access to all of our published information and charts, we would encourage you to join the Miami Condo Market Investing Club™.
The objective of the Club is to create a community that shares realtime, actionable information on the latest real estate trends, opportunities and service providers in South Florida.
The Club is ideally suited for Do-It-Yourself (DIY) condo buyers who can rely on our latest statistics, expert opinions and access to consulting services.
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As a reminder, we are always available for consulting, expert witness work and buyside brokerage services just as we have been since 2006.
If you are seeking information on condo resales in South Florida, please visit CondoVulturesRealty.com or call the office at 305.865.5859.
— Peter Zalewski, Founder of the Miami Condo Market Investing Club™
Story 1
Miami Tops Global List Of Bubble Markets For Residential Real Estate
The Switzerland-based investment bank UBS has released its 2024 "Global Real Estate Bubble Index" report that compares 25 residential markets around the world. It is not good for Miami.
Story 2
What Is A Real Estate Bubble?
The Switzerland-based investment bank UBS defines the term in its newly released 2024 "Global Real Estate Bubble Index" Report that compares 25 residential markets around the world.
Story 3
Watch: 2024 UBS ‘Global Real Estate Bubble Index’ Report
The Switzerland-based investment bank UBS has released its 2024 "Global Real Estate Bubble Index" that compares 25 residential markets around the world.
Story 4
Florida 60 Days Away From 2025 Condo Association Financial Cliff
In anticipation of the looming deadline, expert Peter Zalewski of the Miami Condo Market Investing Club™ will host a 75-minute online meeting on Wednesday, Nov. 13, 2024.
Story 5
Expert Peter Zalewski Talks Vintage Condos At American Society Of Appraisers Meeting
Peter Zalewski of the Miami Condo Market Investing Club™ was the keynote speaker at the October 2024 quarterly meeting of the ASA’s South Florida Atlantic Chapter.
This information is provided for general informational purposes only, based on research, personal experience and interviews. It should not be considered legal advice, as we are not attorneys. While believed to be accurate and complete, this information is provided "as is" without warranty or guarantee of any kind.
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