Jay Parker, CEO, Douglas Elliman Florida

Douglas Elliman recently released its latest quarterly market report, and we were able to ask Jay Parker, CEO of Douglas Elliman Florida, a few questions about it. 

Miami Agent (MA): Throughout Greater Miami, affordability is dwindling as home prices rise and sales decline. Does the area have an affordability problem?

Jay Parker (JP): I think major metropolitan cities such as Miami inherently present affordability issues as demand increases. In the case of Miami, the enhancement and reconstitution of our market is making affordability an even bigger issue. However, the perimeter markets surrounding metropolitan Miami present affordable options, and with initiatives such as All Aboard continuing to connect South Florida, people will be able to live outside the core metropolitan areas while still feeling a part of the city.

MA: In Miami, there is a 17-month supply of luxury single-family homes and nearly a 40-month supply of luxury condos. In Miami Beach, luxury single-family supply is at 54 months and luxury condo supply is at 52 months. Sales in both markets for both property have fallen by double digits (except for luxury single family in Miami, which fell only 2.3 percent), and average days on market have correspondingly more than doubled in both markets for both luxury property types.

Is Greater Miami’s luxury market nearing a big adjustment, or is the market fine?

JP: I disagree with the inventory representations, and I am not sure that anyone has the ability to accurately predict absorption rates, which can be qualified or verified by looking at the projections that existed in the last cycle and recognizing how quickly they were absorbed. I do not think anyone should underestimate the importance, value proposition and demand for Miami’s real estate market.

The market is, in fact, adjusting from the extraordinary growth after the recession, and I do not think that is an indication of a catastrophic change. It is very important to recognize that the markets within Miami-Dade are very different from one area to the next. You need to decouple the markets and look at them individually.

MA: What did you find as the most surprising and the most telling stats from Douglas Elliman’s Q3 report?

JP: The days on market. What we are seeing is the reflection of a number of variables that have impacted our market over a short period, such as currencies in Latin American countries and the way the media has positioned Miami as a bubble. It is not consistent with what we are seeing.

While inventory has gone up, it is important to recognize that those increases are still far lower than what we saw in the recession, and in fact, they are consistent with what we normally refer to as a healthy market. Given more time without the market imploding – the way some media outlets have suggested – people will have renewed confidence in the South Florida market.

At the same time, the increase in days on market has brought to the forefront for many of our sellers the realization that they may not be able to make as much of a gain on their real estate investment as they thought. They will have to adjust to the market and capitalize on the gains they’ve made since acquiring those properties after or during the recession.