Crosswinds in Miami and Coral Gables Real Estate

posted on January 1st, 2010 filed under: Real Estate News

Lending standards remain tight, prices remain high relative to incomes, and renting remains abnormally cheaper than owning.  On the other hand, the federal government and Federal Reserve are flooding the economy with borrowed and newly printed money, which could lead to wage and price inflation and at least stability in real estate prices.

It seems doubtful that the nation as a whole would tolerate the inflation that would be required to bail out the most overvalued real estate markets like Miami and Coral Gables.  Incomes and rents would have to rise by 50% in Miami and Coral Gables to return the real estate market to pre-boom relationships between incomes, rents and home prices.  Any quick adjustment here would have to be part of a national hyperinflationary surge, which would be politically infeasible and economically disastrous.

Sellers in Miami are well-advised to accept reasonable offers at current market prices and not expect a return to boom-time pricing.  The best-case scenario is that prices move sideways while incomes and rents catch up.  The worst-case scenario is that prices take a final leg down when interest rates rise and government supports are removed.

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posted by // This entry was posted on Friday, January 1st, 2010 at 11:40 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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