The answer is YES!

For 81 years, Keyes has successfully navigated through the South Florida real estate waters and knows that the downturns are temporary!  In the past 38 years there have been four cycles – each bottoming in ’74, ’82, ’92 and now ’06. A positive increase in unit sales and prices follows.  Each downturn had its unique issues – interest rates, oil prices, demographics and the overall economy - but one thing was constant –

ALL OF THE SOUTH FLORIDA REAL ESTATE DOWNTURNS HAVE BEEN DUE TO OVERBUILDING!!

The construction and building of real estate is a ponderous process. It takes three years to design, approve, permit and build a high rise condominium. It is difficult to match supply with demand and as the market heats up, more builders are lured by the big profits – lenders lend, and eventually we oversupply the market. The first wave of condominiums was built in the 70’s and it took all of the 80’s to digest this supply and to reach again the 70’s price level.  

Climbing the Ladder of the Real Estate Cycles:

The cycles begin with a strong rental market – as buyers are on the sidelines during the slower market. At Keyes, our rental transactions were up 50% in 2006 over 2005!  Then, the renters begin to move into first time buyers as they see prices stabilizing.  Or, opportunistic first time buyers move to second homes. . and the market cycles up over the next 3 to 10 years, until there is a feeding frenzy on the high end! (e.g., 2005)

The Supply and Demand Equation:

In an upward cycle – inventory drops; in a downward cycle - inventory rises. We have seen inventory triple in the past two years. However, in the fourth quarter of 2006 we started to see a stabilization of inventory and even some declines in certain markets.  

Currently, 5.5 million people live under the South Florida blue and sunny skies! We are a draw to the South and Central Americans, the cold Northeasterners and Canadians, the strong Euro Europeans and the cash rich Russians. The prediction is that we will grow to a population of 9.5 million by 2030!! Therefore there is a limited supply of land with an increasing demand! 

Florida is on track to become the third most populous state, only behind Texas and California. Where California goes in real estate, Florida will follow!!

 Mike Pappas, CEO, Keyes co.