South Florida Condo Market

[Upen Mody]

Hi BP members -- I am investor based in Broward County - South Florida and wanted to get opinion from other South Floridian's. I see new condo's being built on every little piece of land available and am concerned this will lead to over supply. I know lot of people are moving to south florida but the pace at which these units are being built out is staggering.

What are your thoughts?

[Miguel "Mike" Perez]

Welcome to BP. I love south Florida. It's a healthy mix of culture and chaos.

I think you have good instincts to be concerned, but I think south Florida has other factors that will keep demand healthy.

1) Not everyone wants to live in or own a condo. Some folks can't even touch all the fancy ones going up these days. They have their market, but not all residents are in that market.

2) You can't build west of Miami-Dade, Broward, or PBC and you can't build south or east of them either. PBC can be built up some more and so can't the others but being a limited area peninsula will keep land scarce for fore able future. If push comes to shove and the tides start rising more and more this will make land even more scarce. If sea levels rise another 3-6 inches eventually not even the Everglades will be safe from development, but it will happen slowly. Also, I'm talking 50-100 years minimum for this scenario.

3) Tourism. Broward and Miami-Dade counties aren't bringing in Disney numbers, but domestic and international tourism is quite healthy and those that benefit from it strive every day to keep it that way.

4) Retirees love warm weather and no state income tax really comes in handy when you start taking distributions from pensions and other pretax retirement vehicles.

None of those reason trump market bubbles, speculation, and volatility, but if you invest by cash flow and numbers instead of hunches and gut feelings you can mitigate a good chunk of the risk.

Hope this helps. I too am in south Florida and here to help the way other BP members have shared their guidance with me.