This was supposed to be the year that homebuyers regained leverage in the housing market. So far it isn’t playing out that way.
Sales and prices rose across Broward and Palm Beach counties in July, local Realtor boards said Thursday. A dearth of homes for sale continues to favor sellers, as properties go under contract in days or weeks, often at or above asking price.
Broward’s median price for existing single-family homes last month was $312,000, up 10 percent from a year ago, the Greater Fort Lauderdale Realtors said Thursday. The July figure was the highest since 2008.
Closed sales were strong but fell short of the blistering sales pace from June, the busiest month since at least 1993. There were 1,683 transactions in July, an 11 percent increase from a year earlier.
In Palm Beach County, the median price rose 3 percent to $289,250, according the Realtors Association of the Palm Beaches. Sales jumped 20 percent, to 1,810 from 1,515 a year earlier. As in Broward, Palm Beach County sales fell compared with June.
“The underlying fundamentals are good, and that’s helping the market,” said Selma Hepp, chief economist for Trulia.com, a real estate website. “What’s not helping the market is the lack of inventory.”
Broward had 6,233 single-family listings at the end of July, down slightly from a year ago. In Palm Beach County, there were 6,761 listings, off 7 percent.
Both counties had less than a five-month supply of homes for sale, meaning it would take that long to sell all of the homes if no more were listed. A six-month supply is considered ideal.
More homeowners were expected to test the market in 2015, giving buyers a better selection and ultimately a boost in negotiations. For the most part, though, buyers remain frustrated.
Some owners are holding off putting their homes on the market because they’re afraid they won’t be able to buy another place fast enough, Hepp said. The tight market is pushing prices higher, prompting concerns about affordability.
But John Tuccillo, chief economist for Florida Realtors, said in a statement that “we’re not in any great danger of a runaway market because mortgages are still difficult to get for most households.”
Agents say homes not priced appropriately will sit on the market. In some neighborhoods, though, buyers think they have little choice but to pay the higher asking prices — only to discover that the homes don’t appraise for as much.
“It’s a seller’s market,” said Wendy Newman-Scheppke, an agent in Broward and Palm Beach counties. “Sellers are asking for what they need versus what the value is.”
Carrie Hazen, an agent who also sells in both counties, said some buyers haven’t yet accepted the fact that housing is hot and sellers are in control. They don’t want to pay what the market bears or they’re holding out for a better deal.
“You’re not going to get a 2,500-square-foot house for $250,000 in the perfect neighborhood,” Hazen said. “People have to tweak their wish lists.”
The existing condominium market also is thriving, with sales up in Broward and Palm Beach from July 2014.
During the housing bust, median condo prices plunged below $100,000, but those bargains are long gone. The median price in Broward rose 7 percent in July to $137,000, while Palm Beach County saw a 13 percent increase to $145,000.
The median price means half of the properties sold for more and half for less. A higher median doesn’t necessarily reflect rising values across the county.
Powers@SunSentinel.com, 561-243-6529 or Twitter @paulowers
There’s good news and bad when it comes to Chinese interest in U.S. real estate investing.
The good news is that wealthy Chinese have jumped at the chance to pump up to $1 million into U.S. businesses if it’ll buy them a visa
and a chance at U.S. citizenship. They’ve far outpaced every other nationality, snagging nearly 85 percent of the 10,000
entrepreneurship visas available last year through the EB-5 program that grants green cards to investors.
Technically, program rules designed to maintain a fair distribution limit a country’s allotment to 7 percent of available green cards, but
no other country came close to that threshold.
Fueled by Chinese economic growth and the end of a similar investment path in Canada, Chinese applicants scooped up more than
8,300 U.S. visas in 2014, up exponentially from a decade earlier when they accounted for about 13 percent of the allotment.
The money will help finance major real estate projects such as downtown Miami’s proposed $430 million Skyrise tower, earmarked for
$270 million in foreign capital.
But here’s the rub: The steady influx has clogged the system, delaying processing and putting in limbo billions of dollars earmarked for
real estate and other U.S. ventures as immigrant financiers await answers on pending applications.
“One of the effects of retrogression is that Chinese investors might want later release of their money,” said Rogelio “Roy” Carrasquillo, a
partner in Akerman’s corporate practice group in New York.
The EB-5 visa program dates back to 1995 but didn’t become a mainstream source of mezzanine financing until the 2008 recession,
when traditional lenders tightened their purse strings. It allows foreign lenders to invest $500,000 to $1 million in U.S. businesses that
create or save at least 10 full-time jobs over a two-year period. In exchange, investors get a path to permanent U.S. residency.
The program gave new hope to real estate and other sectors constrained by a tight domestic lending market. It raised north of $6.5
billion nationwide and supported more than 131,000 U.S. jobs from 2005 to 2013.
But for South Florida developers increasingly dependent on foreign capital as an important source of financing, the backlog could slow
construction deadlines, impact deal structures and create a need for supplemental financing—like bridge loans from traditional lenders
—to float projects as immigration processing hobbles along.
Applicants file I-526 entrepreneur petitions as the first step in the EB-5 visa program. By June 2014, nearly 10,400 petitions were
pending—thousands more than the number of visas available for entrepreneurs since investors typically also file for spouses
“The whole issue right now is not that there has been any cap that has been reached. There are plenty of visas, but the slowdown is
with Chinese investors,” said Scott Bettridge, a labor and employment attorney in Akerman’s Miami office. “Other nationalities may
continue to process without any issues.”
In May, months before the end of the fiscal year, the U.S. State Department announced it had reached the maximum number of approvals and would slow China’s dominance of the visa program to allow other nationalities to make a stronger showing.
Officials retrogressed the EB-5 China immigrant visa category for two years, setting May 1, 2013, as the cutoff date for applications set
to be processed this year. They’ll likely start reviewing applications received after that date in the next fiscal year starting Oct. 1 and
continue on a rolling schedule depending on visa availability.
Potential Back door
For some developers, like Riviera Point Development Group CEO Rodrigo Azpurua, Chinese capital is already a secondary choice.
Azpurua relied on Chinese investors in 2010 to fund half of two office projects in Miramar and Doral. But after a surge in interest from
South America and Europe, he looked outside China for more than $65 million to finance three South Florida projects with offerings
ranging from $15 million to $25 million.
Regardless of the source’s nationality, capital raised through EB-5 is relatively cheap, offered at nominal interest rates of 1 percent to 3
percent—about one third of the rates offered by conventional lenders and private equity partners who generally require a 10 percent
It’s a bargain for developers and a sign that most visa applicants see a green card as a fair return on their investment.
Most of the wealthy Chinese investors, motivated by a desire to educate their children at top U.S. universities, have already found a
strategy to beat the visa processing delay.
“The majority are applying for the second generation,” Azpurua said. “Instead of waiting to apply when the kid is 19 years old, they’re
applying when he’s 17.”
As for developers, they could continue to raise EB-5 capital, but they’ll need to target potential investors willing to wait out the delay
instead of investing in other countries, like Australia, with similar programs.
“You have to believe it’s going to have some effect, but I understand today the retrogression hasn’t had a significant effect in China,”
said Ronald Fieldstone, a partner at Arnstein& Lehr. “The Chinese market is still very vibrant. I think the philosophy right now is wait
When Fieldstone visited China in May, he found investors excited about a proposed U.S. law that would create a back door to
citizenship by allowing entrepreneurs to skip the temporary green card and apply directly for permanence residency.
Under the EB-5 program, applicants typically get a temporary green card valid for two years that allows them to migrate to the U.S.
They can then apply to adjust their status to permanent residency two years later if they fulfill the job creation and other criteria set out
in the program. But proposed legislation might allow investors to become permanent residents on the same timetable even with
The bipartisan bill by U.S. Sens. Patrick Leahy, D-Vermont, and Charles Grassley, R-Iowa, would allow applicants with approved I-526
petitions to skip temporary residency status and go straight for permanent residency once they qualify, even if retrogression prevented
them for continuing the application during the first two years of investment.
“It’s an interesting compromise to the obvious issues with retrogression,” Fieldstone said. “There’s an advantage to investing early and
getting their name in the queue.”
Joseph, Samantha. ‘How Chinese Demand For EB5 Visas Has Slowed Things Down’.Daily Business Review 2015. Web. 13 Aug. 2015.