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Miami Real Estate Is As Hot As Our Summers, But Not Bubbling Yet

An article by Robert Shiller in today’s New York Times concluded that though housing prices have increased by double digits, we are not in a housing bubble yet.  His conclusion was based on the result of a questionnaire he and Professor Case sent out to recent home buyers in four major cities.  Although Miami wasn’t one of cities where buyers were asked the questions, many of the answers apply here.  Most of the people that were asked:

  • did think real estate was going to appreciate more than 5% in the short term
  • did not think real estate was going to increase significantly in the long term
  • thought real estate was the best investment for long-term holders, but the percentage of respondents who believe that was down from the 2004 hype leading up to most recent bubble
  • responded that they bought in order to rent the property

After comparing this year’s answers to 2004’s answers (when we were heading into the bubble),  Professor Shiller does not think we are heading to a bubble yet.  He also does not seem convinced that “irrational exuberance” won’t happen again soon.

Based on the number of new condo projects proposed for downtown Miami (40), the fact that rental activity is starting to level off as rents increase, the U.S. government might shut down, and both hurricane and flood insurance continue to increase, I think the recent price increases are going to level off to a more historic level.