Florida Real Estate Experts Weigh in on 2007 Housing Market

Every year at this time, the South Florida Sun-Sentinel polls real estate industry professionals who are experts in different segments of the Florida housing market. They’re asked to predict what the industry will do in the coming year.

Here are their responses:

Ron Berger, first vice president, Industrial Brokerage Division, of CB Richard Ellis Inc. in Miami: “The industrial sales and leasing market is on fire and has been for the past year. Based on limited supply and a very large demand, 2007 will be a repeat of 2006. The vacancy factor is under 4 percent across the board and will stay at that number for the better part of 2007.

Sales prices have reached their peak, but will maintain today’s prices throughout 2007. Owners are still reeling from the massive increase in property insurance that took place this year. Many see a light at the end of the tunnel for insurance reform. Watch out — that light could be a freight train carrying no property insurance relief.”

Angelo J. Bianco, senior vice president of Crocker Partners LLC in Boca Raton: “In 2007, South Florida will continue to see positive net absorption in all office product types. In many submarkets, however, the high price of new construction coupled with the anemic existing development pipeline will dramatically reduce their leasing capacity.

As a result, the lack of supply and increased tenant demand will cause an unprecedented spike in rental rates. It will be the first time since the late 1990s that landlords will find themselves in the stronger bargaining position.”

Eli Dreszer, partner, MFM Construction Corp. in Miami: “There’s a substantial shortage of middle-market housing that enables buyers [and Florida mortgage applicants] to live within close proximity to where they work. It is our estimate that the middle-income residential market will grow at a 15 percent rate, with the supporting retail sector growing at an even higher rate of 25 percent. The demand for middle-income housing is clearly there.”

David Dweck, a real estate agent with Re/Max Professionals in Coral Springs and president of the Boca Real Estate Investment Club: “The resale market will hit bottom in 2007, and it will remain a buyers’ and renters’ market. If insurance and taxes are not dealt with, we will have continued challenges that will affect sales.

Foreclosures will continue to increase to perhaps record levels from Miami-Dade through Port St. Lucie. Many real estate agents and title companies will be history since the party is over. Finally, investors will be in a great position to buy at prices significantly below market.”

Jay Jacobson, South Florida development partner of Wood Partners in Boca Raton: “There will be a resurgence in the apartment market in 2007-2008. Given land prices and construction costs, 99 percent of the product that’s going to be delivered will be Class A or A+. To justify the new investment that is going to be coming, rental rates have to increase significantly.

But to justify new construction, the opening rents on a new building will actually be even higher than any 6 to 9 percent rental increase can get you to. However, when the consumer looks at the cost of renting vs. buying in South Florida, the rental proposition is going to come back into balance and make it a cheaper alternative than it used to be.”

Jeff Kahn, manager consultant of Century 21 Hansen Realty in Fort Lauderdale: “Save any unforeseen catastrophes and assuming the continued low [Florida mortgage rates], 2007 should end up being a much better year in real estate than 2006. I certainly don’t foresee any rise in the average sales price; in fact, I think we will see a continued decline for at least the first and probably the second quarter and then maybe a steadying of prices for the remainder of the year.”