Residential Magazine

Get ready for the Sun Belt markets to keep shining

By Jeff Bond

It appears that the lack of available and affordable housing is affecting every portion of the homebuying public these days — even the super wealthy. That is the word from South Florida, where there is a shortage of homes in the $25 million to $50 million range.

Larbi Benslimane, managing director of Miami-based Leste Credit, which originates and purchases loans collateralized by all types of real estate assets, says that his friends in the ultra-high-end market report that any home in the multimillion-dollar range is snapped up pretty quickly. Like many other parts of Florida, Miami is drawing new residents in droves, but the crowd on Miami Beach might be a little different than you would find anywhere else.
While Benslimane says that Miami is attracting the usual high net worth Americans from high-tax states such as California and New York, it also is a magnet for wealthy Europeans and Latin Americans who want to make Miami their base here in the U.S.

Whether it is Miami or Austin, Dallas, Memphis, Nashville or Charlotte, we are seeing similar trends.

— Larbi Benslimane, Managing director, Leste Credit
“I speak to high-end brokers quite often and they tell me they just don’t have enough $25 million homes to sell,” Benslimane says. “The demand is much greater than the supply in South Florida.”
Benslimane says that Florida is experiencing many of the issues facing other hot housing markets in the southern U.S. It is simply a case of increased demand for housing that is outstripping supply, due largely to an influx of people moving into the area. This is a recipe for higher prices.
And this isn’t only an issue for the luxury crowd. Benslimane says that price increases are impacting all levels of homes, including the midrange market. He explains that only two or three years ago, a buyer could find a nice single-family home in Miami for about $750,000. Today, it is exceptionally difficult to find one for less than $1.5 million.
“Whether it is Miami or Austin, Dallas, Memphis, Nashville or Charlotte, we are seeing similar trends,” Benslimane says. “People want to be here (in the Sun Belt states).”
Welcome to Sun Belt home shopping circa 2022. Even at a time when the dark clouds of inflation and higher mortgage rates are hanging over the nation’s housing sector, the surge across the Sun Belt appears to be continuing unabated as prospective homebuyers are eager to enjoy the warmer weather.
Housing experts once again are expecting the southern reaches of the U.S. to dominate the housing market this year. Zillow, for instance, lists only Sun Belt cities among its ranking of the top 10 housing markets for 2022. Zillow’s list is chock-full of the usual suspects, led by the Florida cities of Tampa and Jacksonville, North Carolina neighbors Raleigh and Charlotte, and San Antonio.
These locations are described as having growing populations, strong economic fundamentals and high job growth. People and businesses are flocking to Southern states, resulting in housing markets where high demand meets limited inventory. For the record, Zillow predicted New York City, Milwaukee, San Francisco and Chicago to have the slowest markets in 2022 due to slow job growth and less favorable demographics than other places.
But there may be some relief for homebuyers — at least in a few markets. Economists expect higher mortgage rates to take some of the froth off the top of the housing market. But estimates are all over the board and change regularly. forecast housing prices to rise by a skimpy 2.9% while Zillow called for home-value growth of more than 16% from December 2021 to December 2022. This would represent only a modest decrease from the 18.8% average U.S. price increase recorded by the S&P CoreLogic Case-Shiller index during the year ending this past November.
Gay Cororaton, senior economist and director of housing and commercial research for the National Association of Realtors, is somewhat more conservative with her estimates. “The home-price increases for the nation will probably be between 5% and 10% in 2022,” Cororaton says.
Unfortunately, some markets are not feeling much of a slowdown yet. For example, Phoenix (which saw housing prices go up by more than 30% in 2021, according to the S&P/CoreLogic index), is still expected to experience a rise of more than 20% in 2022, according to Zillow’s home-value forecast. It doesn’t look as if there will be much relief for Florida markets either. Zillow estimates that Tampa-area home prices will grow by more than 24% this year.
Benslimane says that the factors that keep Sun Belt home prices high are still in place. Large corporations such as Microsoft, Oracle and Tesla continue to set up operations in this region, drawing more and more people. As for the remainder of 2022, Benslimane remains cautiously optimistic that his company is making the right moves by investing in housing complexes throughout many Sun Belt strongholds.
“I’m always trying to find the counterarguments right before making an investment,” he says. “We are always challenging ourselves to find where the risks might be. But I feel comfortable with our decisions.” ●


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