Florida Real Estate Bubble Won’t Burst In 2018 According To Survey

With the national stock market reaching all-time highs in the past year, many real estate experts have indicated that the U.S. real estate market is bound for a bubble burst. That isn’t the case in South Florida, however, according to a new survey released by Berger Singerman. Results from the Florida real estate survey reveal that, thanks to e-commerce advancements, continued foreign investment and the newly signed tax bill, professionals expect South Florida’s real estate growth to continue in 2018.

The e-commerce boom is expected to make big waves in 2018 as 33 percent of survey respondents believe the warehouse/industrial sector will have the highest returns this year, and 48 percent believe that retail will have the lowest returns.

The expected industrial growth is consistent with the enormous activity insiders are currently seeing in the e-commerce marketplace. There is a greater need for warehouses to store products that people purchase online with expectations that they will be delivered in two days (or less). In addition to companies needing warehouse space for storage, real estate groups have seen many businesses purchasing industrial space instead of leasing it, and converting the space into open offices.

Results from the survey show that 31 percent of local real estate professionals expect 2018 will be even more successful than 2017. However, optimism was higher last year with more than half of respondents expecting 2017 to be more fruitful than 2016. Confidence in the market for 2018 was sparked by the improvements in the U.S. economy with 42 of respondents citing it as the primary reason.

The new tax law is expected to be positive for the real estate market. Local developers are upbeat about the new law and its benefits for real estate developers, as well as the anticipation that it will bring back more funds to the U.S. and potentially bring new residents to the sunshine state.

While overall results reinforce confidence, the survey reveals there is still concern over the uncertainty of governmental policies and oversupply, as a noteworthy 62 percent reported those two matters as the most pressing issues facing the South Florida real estate market.

Other key findings include:

  • 69 percent of respondents believe foreign investment in South Florida will remain at 2017 levels or increase, which is up from 63 percent last year despite the new administration’s trade and immigration policies.
  • 61 percent of respondents indicate that the biggest impact of hurricanes are increased building costs.
  • 51 percent of respondents describe the 2018 South Florida real estate market as “competitive”, while 34 percent would use the term “cautious.”

To learn more about investing in Florida real estate and the state of the current real estate market, contact a member of the 9 Core Realty team today!

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