Mike Pappas, CEO, Keyes

In an interview with Invest:, Mike Pappas, CEO of Keyes, discussed the firm’s recent milestones, Miami’s evolving real estate market, and the impact of new industry regulations. “We’ve maintained our market leadership, selling more properties in South Florida than any other firm.”

What have been some significant milestones for Keyes over the last 12 to 18 months?

We’re in our 99th year, having been founded in Miami, and we’ll be celebrating our 100th next year. As part of that, we undertook a full refresh and rebrand, giving the company a completely new look and feel. That included a logo and color change, as well as an overhaul of our messaging. The transformation has been overwhelmingly positive.

On the growth front, we’ve also made key acquisitions. We merged with Coral Shores Realty, which had 300 agents in Broward County. Additionally, we brought in two strong teams, a $100 million group and another one that produces around $50 million.

Our expansion continues across multiple brands. In Northern Palm Beach, we operate under Illustrated Properties, while in South Florida, we go by Keyes. More importantly, we’ve maintained our market leadership, selling more properties in South Florida than any other firm.

How would you describe the current real estate landscape, and what trends are shaping the market?

Real estate is always cyclical. Historically, it follows a pattern: first, a strong rental market due to affordability constraints; then, movement into first-time home buying, followed by second-time buyers; and finally, a surge in the luxury market.

In our 99 years, we’ve seen multiple cycles in South Florida. I’ve been with the company for 45 years and have personally witnessed four or five major market shifts. Right now, we’re building a new foundation for the next phase.

For context, 2021 was an exceptionally strong year due to a post-COVID influx of buyers from across the country. That boom was fueled by historically low mortgage rates, with many homeowners securing 30-year fixed loans below 4%. When inflation hit, rates started climbing in 2022, leading to what’s now called an “interest rate lock” — many homeowners are reluctant to sell because they’re holding onto low rates.

As a result, transaction volume has declined. Many who might have moved in 2022 or 2023 already acted during the 2021 boom, effectively pulling future sales forward. Nationwide and locally, we’ve seen fewer transactions, with 2023 and 2024 marking some of the lowest sales figures in decades. However, despite lower sales volume, home prices — particularly for single-family properties — continue to appreciate.

What factors are driving demand in Miami’s real estate market?

Land scarcity is playing a major role, especially in Miami-Dade. The last significant area for new development is in Homestead, where we’re seeing a boom in single-family home construction. With rising costs, townhomes are becoming the new entry-level option — they’re more affordable than single-family homes while still offering homeownership opportunities.

At the same time, Miami is experiencing an unprecedented luxury boom, largely driven by wealth migration. Major financial firms like Citadel have relocated here, bringing significant capital from New York, Chicago, and Los Angeles. As a result, high-end waterfront properties and exclusive communities like Pinecrest — where homes once topped out at $3 million to $4 million — are now seeing new construction in the $7 million to $15 million range. We’re even witnessing record-breaking sales exceeding $100 million, positioning Miami as a true competitor to cities like New York, Los Angeles, and San Francisco.

Luxury condo developments are also reshaping the skyline. Projects like the Mandarin Residences on Key Biscayne — set to be completed in 2027-28, with units starting at $4 million — reflect Miami’s transformation into a modern, global city. Over the last decade, we’ve essentially built an urban center, reminiscent of Singapore or Hong Kong.

How are new regulations impacting the condo market?

The Surfside condo collapse led to stricter regulations in Florida. Now, all condominiums must maintain financial reserves, and buildings over 30 years old and taller than four stories are required to undergo structural inspections and make necessary repairs. These mandates have resulted in significant assessments and increasing costs for owners. Some homeowners, unable to handle these expenses, are selling, which has put price pressure on older buildings.

However, there’s a long-term benefit. Historically, Florida condos struggled to qualify for financing due to a lack of reserves, meaning buyers had to put down at least 20%. With these new requirements in place, financing should improve, potentially allowing buyers to purchase condos with as little as 3% to 5% down — similar to single-family home financing. While there’s short-term pain, these changes will ultimately stabilize and strengthen the condo market.

How are recent industry changes impacting the relationship between brokers and their clients?

There was a significant shift in the industry last year due to a major lawsuit against the National Association of Realtors (NAR) and several large brokerages. The lawsuit led to billion-dollar settlements and changed how brokers interact with their clients.

One key outcome is the introduction of a buyer-broker agreement, which increases transparency regarding commissions. Now, buyers must sign an agreement with their brokerage that clearly defines the fee arrangement. While sellers may still compensate the buyer’s broker, the payment structure is evolving. In some cases, sellers may pay the cooperating broker directly rather than through a shared commission model.

This change alters the traditional dynamics of real estate transactions, but exclusive listings and MLS exposure remain essential. The industry is adjusting, and while the overall impact is still unfolding, it marks a major moment in brokerage-client relationships.

How is the real estate market evolving in response to shifting economic and affordability factors?

Over the past five years, home prices have surged by 50% or more, with some areas seeing even greater appreciation. However, that rapid growth is now slowing. Inventory levels are rising as more homeowners enter the market due to life changes — divorces, relocations, and financial needs. As inventory increases, price appreciation naturally cools, creating a more balanced market.

In the condo sector, we’re already seeing a buyer’s market, and single-family homes are approaching that territory as well. Additionally, interest rates and insurance costs — two major affordability factors — are beginning to stabilize. Recent state-level legal changes have helped curb insurance spikes, and in some cases, insurance rates are even declining.

For example, in our commercial properties, property and casualty insurance costs dropped by 20% this year after doubling just a few years ago. While rates are still elevated compared to pre-pandemic levels, the trend suggests that costs may be plateauing.

With affordability becoming a greater challenge, the pace of price increases in Miami may be reaching its limit. Interest rates, property prices, and insurance costs have all risen sharply in recent years, but as these factors level out, the market may find a more sustainable balance.