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How is the COVID-19 affecting Miami Real Estate?



ESCAPING THE VIRUS TO A REMOTE PLACE?

If you would have to choose, would you prefer to be locked down in a unit in Manhattan or a country home in Aspen?

Most likely you would choose the second option, just like most people looking for a place to stay during the crisis, according to the Airbnb latest data analysis.

The roles suddenly changed and places like New York and Miami, previously boom cities for Airbnb, are now having drops of 66% compared to the same period last year. The large number of COVID-19 infected cases in New York and the 60% of them located in Manhanttan are making people fly to rural cities, such as Sanibel, FL (324% short-term rentals rise) and Napa, CA (238% rise).

Urban markets are expected to keep forecasting a decrease in short-term rentals, while traditionally "holiday spots" will show positive performance.

The short-term rental market is facing a rough time with millions of dollars in losses due to the COVID-19 fear of traveling. However, there are still people using its services to find a better and less crowded place to face the pandemic crisis.



IT'S TIME FOR REAL ESTATE TO EMBRACE TECHNOLOGY

Social distancing has caused some difficulties for the ongoing real estate deals to close. For me things get a little bit trickier with the high percentage of foreign buyers and sellers. For most of the deals I close, there is one or both parties who live abroad.

For example, I had three closings this week. In every one of them whether the seller or the buyer were abroad. The first solution that pops anyone's mind is to reschedule the closing. However, this wasn't a good solution as we don't have an exact date when the situation will improve. For those sellers and buyers who were abroad, I had to ask them to go to a private notary to seal the closing documents. For those who were in town, but under voluntary quarantine, I decided to propose a mobile notary. A service that proposes a notary service at the location of your choice and at you earliest convenience. This strategy minimized the social physical contact.

Nevertheless, not only closings could be done virtually, the whole process, from a showing, to a walk-thru can be done using technology. Virtual tour videos, digital presentations with sales teams and even virtual open houses are some solutions to the Coronavirus isolation.

The problem arises for an appraisal or an inspection since both need to physically see the house or condo. As for me I do miss seeing my clients, the smile on their face, the excitement when I give them their key. Let's hope we soon find a vaccine.



HOW IS FLORIDA RANKING IN THE CORONAVIRUS BATTLE?

According to a study from WalletHub which compared the different strategies taken by the 50 states and the District of Columbia to prevent, combat and reduce the economic impact of the Coronavirus, Florida is ranking 37th overall.

The Centers for Disease Control and Prevention advised governments to legally enforced its citizens to stay home and indulge social distancing. In Miami, all the large events such as the Ultra Music Festival or the Miami Open were canceled to avoid people gathers. Other states have assured residents the COVID-19 treatment will be covered with insurance. Different techniques, but which state is getting the best results?

The WalletHub research studied 3 different prevention categories and gave certain points per state according to singular performance. The categories were: prevention, risk factors, and economic impact. The prevention (60 points) measured the number of cases and deaths per capita, epidemiology workforce per capita, among other indicators. The Risk factors (20 points) measured gauges such as the life expectancy, public hospital system quality, poverty rate, etc. Finally, for the economic impact ratio (20 points), states were leveled based on factors such as the ratio of part-time to the full-time workforce, the share of the workforce in different industries, among others.

Out of the 100 possible points, Florida received 35-40 points. Even if it ranked really low in the correct prevention of the pandemic spread, Florida did receive the best score in one of the indicators. Florida presented the lowest influenza and pneumonia death rate which was studied in the second category, risk factors, and infrastructure.



HOW WILL COVID-19 IMPACT THE HOUSING MARKET?

There has been a lot of uncertainty about what's going to happen in the housing market after this COVID-19 crisis. There is no right answer to this, but the Chief Economist of the Meyers Research, Ali Wolf, explained two different probable scenarios (one more likely than the other). Let's dig a little more on these two options.

It's important to notice that the American economy before the Coronavirus spread started, was in a really positive place. With the lowest unemployment rate in the past 50 years, rising wages, and a strong housing market, the economy was expecting a great 2020. This could mean that the crisis that we are looking on the horizon won't be as bad as other ones such as the one from 2008 when the starting point was way worse than now. In 2008 North Americans saved 3.6% of their income, before the pandemic, they saved up to 8%. People are now more prepared for a crisis than before.

Nevertheless, the housing market is already feeling the Coronavirus calamity. There is less interest from home buyers, there is also a drop in the available properties for sale due to fear and social distancing efforts. This could be seen as a good news, as the inventory will drop and there was already a shortage in housing nationwide, the prices might stay stable. This excludes luxury sales and the 55+ market, as this will clearly face a slowdown, due to economic weakening. In Miami Beach, in January and February the luxury condo sales fell -53% compared to the same period in 2019.

The two scenarios Wolf presents are, one with a short recession where the 1st quarter features a 1.5% and in the following quarter there is a -3% drop and then a fast recovery in the 3rd quarter. The second and most likely scenario is an 11-month recession with a Q1 of 1.5% and a -6% for the following one and with no recovery in the following months.



COVID-19 IMPACTS IN SOUTH FLORIDA COMMERCIAL REAL ESTATE

As part of the Coronavirus spread prevention, Miami-Dade County took a radical, and necessary, decision of shutting down entertainment-type venues such as restaurants, bars, theaters, gyms, nightclubs, etc.

Retail tenants have been forced to stop providing services until further notice, but they are still paying rent and utility bills as if they were still open to the public. Lots of complaints and call for aid asking landlords and the local government to provide a solution that could benefit everyone, by delaying or stopping the rent payments until they can reopen.

Miami is one of the cities in the U.S. who has suffered the most, as its economy mostly depends on tourism including the hospitality industry and cruise lines. For those companies not prepared for a recession with good cash flow, the closure could become permanently, as insurance normally doesn't include pandemic coverage.

But what is the government doing in response to this concerns? The U.S. government will boost a package of $200 to $300 billion investment in direct relief to small and medium businesses. In addition, in Florida, there is a new loan program that is seeking to help small businesses impacted by the virus that will provide short-term loans with zero interest, totaling $50 million.



FORECLOSURE OF THE MONTH: YACHT CLUB #2211

Price: $707,000

Views of Biscayne Bay and Ocean

1,130 sqft

2 beds / 2 baths

Maintenance fee: $1,092/month

2 Balconies

SIGHT UNSEEN

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