noticias
Experts say that Trump's mandate will boost the real estate market in South Florida.
Nov 19, 2024
Real estate experts in South Florida assert that a second term for President Donald J. Trump will provide a significant boost to the region's real estate markets, although there are some notes of caution.
South Florida has one of the most resilient real estate markets in the country, thanks to population growth, business relocations, vibrant tourism, and the absence of state income taxes. However, this year has been challenging for many developers due to high interest rates, elevated construction costs, and rising insurance fees. Meanwhile, sales of existing homes and condominiums have declined.
Craig Studnicky, CEO of the residential brokerage ISG World based in Miami, mentioned that Trump would boost the real estate market by reducing interest rates. He predicted that Trump would promote quantitative easing—a practice where the central bank buys large amounts of mortgage bonds—which should lead to lower mortgage rates. As a result, more buyers will be able to afford homes, he explained.
"Get me rates below 6% and that will be the turning point," Studnicky said. "There will be a boom year for the real estate sector."
Starting development projects in a high-rate environment has been difficult, commented Nelson Stabile, managing partner of the developer Integra Investments, based in Miami. However, he believes a Trump presidency will lead to lower rates and greater geopolitical stability, creating a very positive period for developers in South Florida.
"The last two years, between inflation and high rates, the market was waiting for a significant positive change, and Trump's presidency will be that change," affirmed Isaac Toledano, CEO of the developer BH Group based in Aventura. "Smart money will return to the real estate market."
Jeffrey Burns, CEO of Affiliated Development in Fort Lauderdale, indicated that many investors had capital waiting for the election outcome and now expect many of them to invest. A new term for Trump could generate greater optimism among both investors and banks regarding the financing of developments, he added.
"The rate environment is a big impediment to development at this moment," noted Burns, who focuses on housing for the workforce. "I imagine interest rates will improve and make more projects financially viable."
Not only could banks offer more favorable rates, but fewer regulations and lower corporate taxes under a Trump administration could benefit banks and increase their capacity to lend to developers, said J.C. de Ona, president of the Southeast Florida division of Centennial Bank.
"Businesses, corporations, and developers feel that the tax benefits under Trump will be favorable for them," commented de Ona. "The easing of banking regulations will definitely improve the lending environment. A Trump presidency is positive for banks, both in terms of corporate taxes and regulations, which is excellent for developers and borrowers of all kinds."
Additionally, Studnicky of ISG mentioned that the possibility of lower tax rates under Trump could provide a considerable boost to the luxury real estate market in South Florida, as when wealthy individuals have more disposable income, they might spend more on properties in Florida.
Real estate broker Ana Bozovic, founder of Analytics Miami, noted that the migration of wealthy individuals from high-tax states to South Florida will continue with Trump’s policies.
"Given the people he has gathered, especially Elon Musk, I believe a Trump presidency will be aligned with entrepreneurs and creators," Bozovic said. "Since South Florida is attracting taxpayers and creators, our housing market will be further boosted by an administration that fosters entrepreneurship."
Ellen Buckley, CEO of Prospera Real Estate Collective, a developer of workforce housing in Miami, expressed hope that the Trump administration would establish policies that incentivize real estate investment at all levels, especially in workforce housing. However, she is concerned that new tariffs—Trump has proposed tariffs of 60% on all products from China and 10% on other countries—will raise construction material costs, resulting in higher building costs. The construction industry heavily relies on resources from China, she added.
Many essential materials used in construction come from China, said Patrick E. Murphy, investment director of Coastal Construction and CEO of Togal.AI, a construction/AI software company. Construction is a highly fragmented industry, so most general contractors rely on subcontractors for sourcing construction materials, who may face a rise in costs due to tariffs.
Toledano of BH Group believes Trump’s rhetoric on tariffs is a negotiation tactic to obtain concessions from other countries in trade, and thus most of them are unlikely to be implemented. In fact, it could lead to increased production of goods in the United States, he added.
Stabile of Integra noted that construction materials imported to South Florida come from all over the world, including South America, Europe, and China. He believes that Trump will not impose severe tariffs on countries with good relations with the United States.
Contractors and suppliers are now better prepared to handle supply chain challenges that may arise from tariffs, commented Burns of Affiliated Development, as they have learned to diversify their sources of materials during the wave of tariffs during Trump's first term and the supply chain bottlenecks during the Covid-19 pandemic.
"At that time, we were very dependent on China for goods and materials, so the market had to adapt," Burns noted. "If tariffs are imposed, they would impact the construction market, but it is already more accustomed to making adjustments."
Murphy of Coastal Construction said that another possible consequence of a Trump presidency would be immigration policy. Trump has promised a wave of deportations of immigrants illegally in the country. According to Murphy, a mass deportation would cause a labor shortage in the construction sector in South Florida, which already has a very tight labor market.
South Florida does not have a large workforce of unionized workers or apprenticeship programs in the industry, and it is challenging to convince local youth to work outdoors in the heat, Murphy added.
"There could be an increase in construction costs," he said. "But that (deportation) could just be a political talking point and not a reality."