Inventory in Miami-Dade Down for 14th Consecutive Month

As the market continues to bounce off a rough bottom, inventory in Miami-Dade continues to drop.

For the fourteenth consecutive month, inventory of real estate available for sale in our county dropped to 25,622 units in October, 2009 from the high of 41,230 back at the peak in September, 2008 (when the bottom fell off all markets – real estate and financials). This is almost a 38% drop in inventory levels from less than a year and a half ago.

Market Activity for past 15 months - All property types

By the same token, Closed Sales county wide grew by just above 34% in the same period while Pending Sales (under contract), grew by a whopping 102% from the peak in inventory in September of 2008.

The result of this activity has been to substantially reduce the Months of Inventory available for sale (the time it takes to move the existing inventory) and rapidly increase the Absorption Rate of the existing inventory (the rate at which properties are selling every month) throughout the county.

Based on Closed Sales, we have come from 36.6 Months of Inventory with an Absorption Rate of 2.7 units in September of 2008 to 17 Months of Inventory and 5.9 units in October, 2009. This represents a major improvement county-wide.

However, it must be noted that a great majority of the inventory reduction helping all numbers are (among other things), the following facts:

1) Canceled and Expired listings.

2) New Foreclosures not yet hitting the market (though thousands are expected to hit us during the third quarters of 2010 and 2011 due to reseting of ARMs, Option ARMs and other products, creating a new wave).

3) New inventory built during the boom still being offered for rent or being sold on lease-option deals by developers struggling to make ends meet.

Of course, when FNMA (Fannie Mae) begins to rent out to delinquent borrowers who lose their homes to foreclosure the foreclosed properties back to these homeowners rather than evict them, the glut of already available inventory will be greatly noticed. Right now, these once-homeowners are being forced out of their homes and into vacant rentals. When these homeowners become tenants in their own homes, this will leave the thousands of vacant units completely stranded.

But, I digress.  I want to focus my attention in this issue on the numbers affecting the condominiums in the areas of Miami Beach (33139 & 33140), and Downtown-Brickell (33131). We can notice a very jagged Q3′08 followed by an even worse January, 2009. However, notice in the chart below that our inventory levels in this particular area,  peaked in February, 2009 at 4069 units as compared to 3394 units available for sale in October, 2009. Nearly a 17% drop in the level of available condominiums for sale in just 9 months.

Miami Beach and Brickell/Downtown areas - Condo/Townhomes

This obviously also helped create marked improvements in the Months of Inventory and Turnover Ratios. With a 10% improvement in Closed Sales between February, 2009 and October, 2009, it is the Pending Sales numbers that continues to mark the pace with a 47.7% increase between the 151 Pending units found in February and the 223 units Under Contract in October.

This has improved the area’s Months of Inventory Based on Pending Sales from almost 27 months just 9 months ago to just over 15 months in October or a 44% decrease in the time it takes to get the inventory sold. This is supported by the more than doubling of the Absorption Rate in the same 9-month period from 3.7 units to 6.6 units.

Date	2/09	3/09	4/09	5/09	6/09	7/09	8/09	9/09	10/09
For Sale	4069	4062	3891	3853	3724	3672	3556	3479	3394
New Listing	571	596	528	576	476	445	478	499	488
Sold	120	127	131	160	183	142	153	153	132
Pended	151	201	223	224	211	197	236	245	223
Months of Inventory based on Closed Sales	33.9	32.0	29.7	24.1	20.3	25.9	23.2	22.7	25.7
Months of Inventory based on Pended Sales	26.9	20.2	17.4	17.2	17.6	18.6	15.1	14.2	15.2
Absorption Rate based on Closed Sales	2.9	3.1	3.4	4.2	4.9	3.9	4.3	4.4	3.9
Absorption Rate based on Pended Sales	3.7	4.9	5.7	5.8	5.7	5.4	6.6	7.0	6.6
Avg. Active Price	748	745	741	727	724	711	710	710	709
Avg. Sld Price	373	429	357	549	401	416	433	477	385
Avg. Sq. Ft. Price	309	361	344	432	363	373	334	389	339
Sold/List Diff. %	90	89	91	85	88	91	88	89	90
Days on Market	131	128	101	151	117	135	122	138	148
Median Price	254	280	248	275	252	242	250	290	283
*All reports are published Nov. 2009, based on data available at the end of Oct. 2009. This representation is based in whole or in part on data supplied by Realtor Association of Greater Miami and the Beaches, Reltor Association of Miami-Dade County, Realtor Association of Greater Fort Lauderdale and Northwestern Dade Association of Realtors. Neither the Board or its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Board or its MLS may not reflect all real estate activity in the market.

Here is where it gets interesting. Did you notice the Median Price of condominiums during the same period? Can you see what is happening to prices? Yes. That’s right.  They’re starting to edge up from $254,000 in February bouncing off the bottom to show four consecutive months of price increases to the current high of $283,000 in October, 2009.

Although the Fed has continued to support the current interest rates at the expense of a weak dollar, foreign nationals are finally noticing Miami, Miami Beach, Downtown and Brickel once more.

Remember though that, a 1% increase in interest rates will roughly eat up about $10,000 in purchasing power from buyers. This means that buyers on the fence looking for prices to bottom out…may be shooting themselves in the foot if they get caught waiting for that ever-illusive bottom while suddenly finding that the Fed, will no longer support low interest rates but begin to raise it once more in order to avoid inflationary or other pressures.

Sellers should also note that, Days on Market continues to be erratic at best, bouncing between 131 days in February to 148 days today.  Sellers must remember that each 30-day period their property does not sell represents another mortgage, property tax, insurance, maintenance and utility payment, eating away at their bottom line.

Pricing today is more important than ever. Pricing in today’s market accounts for about 80% of the marketing effort your professional agent is able to apply in your favor. Buyers know that today’s market is muddied with difficult Short Sale and REO negotiations, multiple-offer situations, legal issues encountered in many properties, difficult lenders and even when buying cash, city issues that can stop a sale.

Smart buyers today waste no time in hiring a qualified professional to help them navigate these turbulent waters. The professionals representing them know the market (as many buyers do because of the amount of information available online today), and these professionals show buyers ‘bargains’ (or in the case of many – steals), before they show any overpriced listing.

If you are a seller looking to get what you paid for your property, you may be in this for the long haul. In fact, you may soon join the ranks of the frustrated sellers that ended up in the Canceled or Expired properties list.

Another risk to sellers is that the rosy picture of improved Median Prices, greater Absorption Rates and shorter Months of Inventory and Days on Market may turn really ugly, real quick if (or when, rather), the number of foreclosures begins to materialize again (as many experts predict for 2010/2011), distressed homeowners become tenants of their own homes leaving other properties vacant and interest rates begin to rise, further eroding the ability for new buyers to obtain financing or force the few that can, to buy cash.

Cash buyers however, are not likely to pay top-dollar for your property. They expect a discount for the added assurance that the transaction will close on their end (barring other issues), and your property condition.

Remember as well, we are at a Price War and Beauty Contest never seen before. Sellers best listen to the advise of experts on staging, Feng Shui, and even home programming on cable if they want to ensure a sale in this market.

Buyers, whether foreign or domestic, must understand that a shift in Fed policy could gravely affect your ability to buy, making it imperative to decide to buy today and even have some frosting with the cake when tax time comes along and you are also able to receive your credit.

How quickly is inventory moving? What does it mean for me?

These are awesome questions asked more and more by the most sophisticated buyers and sellers.

Typically, when buyers and sellers want to know, how quickly is inventory moving, they are typically questioning what the “absorption rate” is and how many months of inventory is there at a particular time and within a particular price range or even property type.

In other words, how fast is the current inventory being absorbed by buyers and how long would it take to clear that inventory if the same pace is kept and no other new property came to market?

Notice the caveat of no new inventory coming to market being an assumption. An impossible assumption since inventory is in constant movement. This however, is akin to looking at a Balance Sheet for a corporation, knowing full well that money continues to flow in and out of their books throughout the day. It is simply, a market “snapshot” of where we are and where might we be if we keep the pace, or like a single frame from a movie film.

In short, Months of Inventory is the number of months it would take for all active listings to sell, if no new properties came on the market and considering the current absorption rate or selling pace, based on the number of closed sales in the prior month (we can do this per week or per month – I’ll be looking at monthly figures).

Through a fairly simple formula, one can determine absorption rate. But, before you pull your calculator, you must keep in mind that this rate is as typical to a city, county or state as there are cities, counties and states. In other words, it is a very local number. So local in fact that, if you live in a heavy condo market area (such as South Beach or Manhattan), this number can be as different for each building as there are buildings in the area.

In short, the absorption rate for Miami-Dade county can then be broken down by city, building and even by property types and/or price ranges, giving us a wide array of possible numbers specific to the needs of the person seeking the information.

The other caveat is that, this number can be very different if calculated based on “closed” transactions as it is based on “pending” sales. Some believe that looking at pending sales provides a better indication of market activity because it lets us know where and which properties are being actively pursued by buyers since pending sales reflect contract offers made on available properties and hints on buyer preferences and tendencies.

Closed sales however, provide a solid indication of which areas and which properties are actually changing hands. The problem with closed sales is the amount of time they may be taking to go from offer tendered and accepted to keys exchanged, specially when a short sale is involved.

Both are equally important since in combination, they indicate past performance and possible trends.

Therefore, I’m only going to generalize on this number based on a few generic criteria for our County (Miami-Dade), in order to give you an indication of where we are as far as moving the inventory is concerned.

Therefore, I will provide the numbers for pending and for closed sales and will consider condo and detached single family homes in order to drive the point further.

Please remember that these statistics ( absorption rate and months of inventory) are  flawed by their very nature since they only take into consideration recent past performance at a given point in time and they mostly look backwards (past-dependent). Based on these numbers, we can only guesstimate future performance. Therefore, use this statistic carefully when evaluating your real estate opportunities since they only provide guidance for you to form an educated guess.

These number however, do have significant meaning for buyers, investors and sellers.

For buyers/investors – higher months of inventory number means inventory is rising and that your chances of getting a “deal” increases.

For sellers – a higher number typically means more competition from other sellers and that you better make sure your marketing strategy (which includes pricing among other things), is in line with market conditions (specially if you are in a ‘buyer’s market’), or else, you may be helping your neighbor sell first!

So now, to the nuts & bolts. The chart below reflects the numbers for September/08, which we will compare with September/09, as well as August/09 to compare with last month’s numbers (09/09).

Note below the one month and year-over-year changes in active, sold and pending transactions.

1 month                                                            1 year

Aug 09             Sep 09            % Change        Sep 08             Sep 09             % Change

For Sale                27083              26296              -2.9%            41230              26296              -36.2%

Sold                          1702                1535                -9.8%            1126                1535                  36.3%

Pended                   2762                2949                  6.8%           1458                2949                102.3%

Now, let’s drill down a bit more and notice the absorption rate and the months of inventory changes for the same time periods in Miami-Dade County.

	9/08	8/09	9/09
or Sale	41230	27083	26296
New Listing	6053	4466	4659
Sold	1126	1702	1535
Pended	1458	2762	2949
Months of Inventory based on Closed Sales	36.6	15.9	17.1
Months of Inventory based on Pended Sales	28.3	9.8	8.9
Absorption Rate based on Closed Sales	2.7	6.3	5.8
Absorption Rate based on Pended Sales	3.5	10.2	11.2
Days on Market	119	113	111
Median Price	230	155	160

Notice as well that county-wide, Median Prices have dropped almost 44% from a year ago, even though we can see a 3% increase from August, 2009 to September 2009.

This significant drop in price year-over-year is certainly stimulating (albeit any tax incentives our government is throwing into the mix), buyers to come out, causing the rate of absorption to increase from 3.5 properties per month in September/08 to 11.2 per month in September/09 or over 300% faster pace of absorption.

This in turn, has caused our months of inventory for our county to drop from 28.3 a year ago to 8.9 months in September/09 or an almost equally impressive 300% decrease in the amount of time it takes to clear the inventory.

If we drill down a bit more and look at single family detached homes, the months of inventory based on pending sales for these types of homes was 22.6 a year ago versus 6.8 for September/09 representing about a 323% drop while the absorption rate improved by about 330% or from 4.4 properties sold/month a year ago up to 14.8 properties per month in September/09.

Our attached single family residences (which includes condos and townhomes), reflect a 126% improvement in Pending Transactions year-over-year, in a great part caused by a drop in Median Prices from $200k down to $135k for September/09. This causes a higher level of affordability for first-time buyers since the median price for a detached single family home is $182k (down from $256k a year ago).

Therefore, the absorption rate for condos & townhomes based on Pending Transactions has gone form 2.9 units per month to 9.4 units per month, bringing the months of inventory based on pending sales down to 10.7 from 34.3 in September/08.

Although the numbers for condo/townhomes may seem less impressive than that for detached homes, this may also reflect a preference among buyers to stretch their finances a little more in order to own a detached home before selecting a condo or townhouse. A smart move by some account.

Another factor affecting condo sales is that many buildings are no longer financeable because they no longer meet FNMA or FHA lending guidelines. Buyers of these units must seek to pay cash (which many are), or seek portfolio lenders (which typically cost more).

First time buyers should do their best to get into a home if it makes financial sense to them (remember to consult a tax professional and a reputable real estate and mortgage professional when making these decisions), specially when faced with the reality that, for the next several years, rather than continuing to pay rent (to pay off someone else’s mortgage), they should think about paying themselves and take the tax deductions homeownership afford you (even if not able to close by the tax credit deadline of November 30th and depending on your tax profesional’s advise).

A last remark about Median Prices is to remember that, about 60+% of Pending and Closed transactions are distressed properties (Short Sales and REO), which keep driving prices down as buyers take advantage of these opportunities and buy real estate “on sale” (just the way we like to shop, ain’t it?). The rest are being sold by developers with unsold inventory and folks not interested in dealing with the nuances of distressed sale purchases.

Even though the above may seem like the worst is behind us, we must still keep in mind that many experts still foresee an increase in foreclosure inventory coming for 2010 and 2011 following resets associated with ARM (Adjustable Rate Mortgages), and Option ARMs sold 3-5 years ago.

For buyers, this means additional opportunities. For sellers, this may mean that the time it would take to get that price they seek (at 2005, 2006 or 2007 numbers), may be much longer away than they might think. Not working with the right professionals could cost these sellers thousands if they choose to wait.

If you wish to know what the absorption rate or months of inventory is for your specific area and how to use this date to fit your specific needs and goals, contact me and I will gladly help you.

—

Your comments welcomed!

Date	7/08	8/08	9/08	10/08	11/08	12/08	1/09	2/09	3/09	4/09	5/09	6/09	7/09	8/09	9/09
For Sale	41794	41101	41230	39965	39240	37625	36418	35744	34123	32280	31159	29408	28059	27083	26296
New Listing	6509	5914	6053	5683	4757	4761	5561	4875	5303	4738	4550	4529	4331	4466	4659
Sold	1171	1122	1126	1277	1069	1449	1199	1251	1625	1671	1722	1981	1870	1702	1535
Pended	1473	1547	1458	1663	1360	1595	1781	1923	2480	2533	2491	2658	2635	2762	2949
Months of Inventory based on Closed Sales	35.7	36.6	36.6	31.3	36.7	26.0	30.4	28.6	21.0	19.3	18.1	14.8	15.0	15.9	17.1
Months of Inventory based on Pended Sales	28.4	26.6	28.3	24.0	28.9	23.6	20.4	18.6	13.8	12.7	12.5	11.1	10.6	9.8	8.9
Absorption Rate based on Closed Sales	2.8	2.7	2.7	3.2	2.7	3.9	3.3	3.5	4.8	5.2	5.5	6.7	6.7	6.3	5.8
Absorption Rate based on Pended Sales	3.5	3.8	3.5	4.2	3.5	4.2	4.9	5.4	7.3	7.8	8.0	9.0	9.4	10.2	11.2
Avg. Active Price	510	505	505	504	512	515	519	525	533	543	548	547	545	549	552
Avg. Sld Price	454	391	341	323	292	301	264	240	265	229	269	281	253	258	293
Avg. Sq. Ft. Price	250	229	213	192	176	185	168	152	162	150	164	171	158	159	179
Sold/List Diff. %	91	91	91	90	89	89	89	90	90	89	89	89	90	90	88
Days on Market	127	122	119	113	101	108	106	114	114	107	113	117	114	113	111
Median Price	272	235	230	210	190	188	164	161	165	145	154	160	155	155	160

Sellers miss out, as buyers find opportunities

Yep! The market has changed! Actually, it is still changing as I type!

First, there were complaints about buyers being on the fence and not committing to making an offer.  Any offer!

Now, we find that buyers are searching through limited inventory -”Limited inventory?! Are you kidding?!” you say?

Well, when one considers the properly priced and properly handled inventory available…one may argue buyers are in fact, searching among a very limited inventory since the rest, is not even being considered!

Where are the discrepancies these days? It seems, everyone is a bit to blame.

Lenders: slow to approve short sales. Some argue they may even be looking forward to a foreclosure. I’ve heard that some lenders are looking to get what they can, write off the shortage or pursue the borrowers in court, all the while seeking to collect from insurance companies, re-collateralizing to a new borrower post-foreclosure in the hopes of recovering most of their original investment or losses over the life of the new loan, and even by selling the deficiency judgment or new note to investors. Those who feel there is an underground conspiracy by lenders to hold back since they know they have these and maybe other options, feel this is a peculiar aspect of our market today. Then again…pure speculation – until proven otherwise true.

Realtors: Professional Realtors (members of the National Association of Realtors who adhere to a strict Code of Ethics), who are also additionally trained in handling distressed property sales like CDPEs, who are able to handle the process for sellers, buyers and investors continue to be punished by the perception stemming from those who are not able to properly service buyers/investors or sellers of distressed properties. Too may of today’s agents are still in “avoidance mode”, still wondering why their offers on short sales or REOs are not being accepted. The same can be said for those who attempt to help the seller and submit improperly completed packages to the lenders for approval and wonder “what’s taking so long?!”

Attorneys: Often, even attorneys get caught up in the moment and attempt to chew more than they can swallow. By heavily promoting themselves looking for volume, they just find ways to stretch the inevitable for sellers who later face a madder than mad lender. After all that time, legal hoops and all the expenses, when they end up taking the property back, they often end up costing these home owners more than they bargained for. Attorneys who are fair will typically work to help their client, and make a nice living along the way. These attorneys will actually seek to mediate the case, seek a modification (voluntary/friendly or otherwise, depending on the result of a forensic review of the borrower’s documents to see if there were any violations by the lender), and even have a few good Realtors in their team who can help sell the property (via short sale). All this while seeking to avoid foreclosure, bankruptcy and even a deficiency judgment against the borrower whenever possible. If the latter three cannot be avoided, the ultimate goal of foreclosure avoidance should be sought, allowing the borrower to move on with the least amount of damage and scars possible, while still generating fees or even billable hours, depending on the complexity of the case.

CPA: Sellers often fail to also consult a good tax magician. Not one who is going to get them in further trouble, but one who understands the different ways available to a home seller who cannot avoid receiving a 1099C for the “phantom income” they must report as a result from the forgiveness of the balance due on the original debt. Having a tax professional who understands how the sale of the property and the resulting 1099 will impact you and how to massage your income and expenses so that you can avoid paying taxes (notice I said “avoid” NOT “evade”), is paramount in the process.

Sellers: Ah! The sellers. Herein lies one of the ultimate culprits in today’s market. 70% of those who end up in foreclosure often do so because they failed to consult with the proper professionals or even with any professional at all. A good attorney and CPA are of utmost importance in a seller’s team if he/she wants to avoid further problems after the sale. Listening to their qualified Realtor is also important. Handling a short sale can be complex even for the trained professional, an unsurmountable task for the untrained agent. Listening to a Realtor who has the training and tools to get your property sold and help you minimize the damage is most certainly worth his/her weight in gold. Typically, all costs associated with the sale of the property, are also picked up by the seller’s lender. This means that these sellers have nothing more to loose when they seek a consultation and hiring of the right professional for the job of selling their home. So, why are so many avoiding this critical affiliation? Beats me!

There are however, those sellers who may not qualify for a modification or short sale or that, because of their line of work, getting out from under this headache could cost them their career if their credit is affected or marked in any way. These sellers are in a tighter bind and more than any other, must actively seek field professionals who can help them through.

Mark Twain said that: Luck, Is When Preparation Meets Opportunity. There are plenty of buyers seeking opportunities and plenty of sellers missing out. Don’t let the lack of information or preparation cause you to miss out.

Remember how people who require a delicate surgery or face an uncommon illness seek the advice of doctor after doctor until they find just the right one. The same may be true of a specific electro-mechanic when faced with that difficult fix (electrical repairs being among the most difficult for most regular mechanics to detect).

Similarly, you must seek the right attorney, the right CPA and the right Realtor that can help you with your special situation.

If however, you own a property free and clear and yet, insist in selling at 2005 prices and will not listen to reason, you will only frustrate yourself out of the market. Buyers today will not find you when searching online or while working with a Realtor who has pre-qualified them and knows how much home they can afford (and yours is not it). Even if they happen to find your home while driving around, one phone call to get some basic information (including your price), and you’re crossed off the list for sure!

To avoid missing out on the opportunity to sell now however, get a second opinion, and even a third or more if you must. Whatever you do, do something! Above all, listen to the advise of professionals and make an informed decision.

Lastly, for those sellers who are hanging on, waiting for the market to recover…I have ‘not so good news’. According to an article recently published by the Miami Herald, you may not see that price you want (what you may now owe on your home), for as many as 10 years or more. Actually, many believe that, because of interest rates and resetting loans, ARMs and Option ARMs will increase the number of foreclosures for 2010-2011 beyond today’s numbers.

Then of course, one must wait for the employment situation turns positive (as in better than not loosing as many jobs or even neutral), inflation to remain tame so that buyers can continue to afford homes and interest rates also allow homeownership or refinancing and help generate a stronger consumer confidence.

All this, a balanced budget, a lower trade deficit, a stronger (or at least, not an even weaker), dollar, conflict resolution with Iran, Korea, Afghanistan, hec…even Venezuela, and we may actually enjoy a steady recovery that will allow sellers to finally brake even from their 2005-2006 high loan balances a few (10+?), years from now.

In short, I’ll say it again…missing out on today’s buyer’s market (notice it is no longer a seller’s market), may prove costlier than you think. Seek and you shall find, they say. The truth will set you free they say.

If that is the case, the sooner you seek the truth about how to help you through your situation, the sooner you will begin your own recovery, and in turn, maybe even help our national recovery.

—

Your pithy comments welcomed!

If I may, let me suggest sellers also call the Real Estate Information Hot line I have created, where you can listen to a special recording on ‘Costly Home Seller Mistakes’ at 866-520-SAYL (7295) and dial extension 9009 (calls from within the USA or Canada only).

Poll: Who’s best equiped to guide me out of foreclosure?

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Mandatory mediation has a high success rate

Mandatory mediation has a high success rate

A program being tested in a few Florida counties (including Miami-Dade), has a better than 70% success rate and may become statewide standard to mediate foreclosures between borrowers looking to save their homestead property and their lenders.

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I’m waiting until the market recovers to sell…

These words are often uttered by sellers who are frustrated about their situation in this market.

Many go as far as to believe that, if they wait long enough (in their minds, this time frame ranges from a few more months to a year or two), they will be able to sell their home and brake even.

Of course, if you believe this, a recent article published by the Miami Herald will just blow you away.

In part, the article points out an ugly, yet to be written side of the foreclosure story, many are choosing to ignore (just like those who chose to ignore the early signs of an unsustainable real estate bubble).

In the article, Cammy Clark stated in part: quote”For some, the first reset may not come until 2010 or 2011, Gumbinger said. “That’s why there could be some lingering effects down the road.”

Of 1.1 million loans with adjustable rates in South Florida, 53 percent have already reset. But at the beginning of August, another 22 percent were scheduled to reset in the next two years, according to First American CoreLogic.

Industry experts say the foreclosure crisis won’t end until housing prices recover, not just flatten — and until the employment situation improves.

“I’ve read guesstimates that some properties might not be back to the price borrowers paid for them for 10 to 12 years,” Gumbinger said. “It could be ugly for a while yet.” unquote

This has been the same sentiment I’ve discussed with several industry experts who have a finger on the financial and lending pulse. The opportunities many buyers face in the years ahead are absolutely out of this world…if they can keep a job or their income earning ability through all of this and qualify for a loan, or better yet, buy cash.

With prices as low as they are, the vision of a positively cash-flowing rental with a good prospect for capital appreciation that will lead to a better than average building of net worth over the next 10-20 years, is starting to become a reality not recently seen (at least, not during the boom years).

There only a few (if even a handful) of ways to avert this disaster, one major one is mentioned above…employment.

Until our government finally gets it and begins to focus (and I mean, REALLY FOCUS) on creating jobs (not just saving jobs), so that consumer confidence returns, spending returns and buyers come off the fence because they no longer fear a potential job loss, we are not likely to see a recovery of prices, a further deleveraging of inventory and a recovery of our economy and housing market.

In Miami-Dade, while “…foreclosures nearly doubled from a year ago…” according to the recent article in the Miami Herald, we have also seen buyers come out in droves, helping a doubling of Pending Sales between September, 2008 and September, 2009.

This has in fact helped our Months of Inventory Based on Pending Sales to drop from 28.3 months a year ago to 8.9 months in September, 2009. Additionally, our Absorption Rate Based On Pending Sales has gone up to 11.2 from 3.5 in September, 2008.

The only way we can sustain this recovery and ensure the dire predictions fail, is to rebuild our economy through jobs, deficit reduction and tax benefits that go beyond taking a tax deduction for your pet, and to help incentivise housing purchases like an extension and even, an expansion of the home buyer tax credit has and would continue to produce.

Can our country afford to continue making housing incentives available? I’m not sure we can afford not to!

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Your pithy comments welcomed!

Can First-time Buyers still get Obama’s Tax Credit?

According to an article recently published by the Florida Association of Realtors (http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=222996), and as stipulated by the Obama Administration, there are now less than 12 weeks left before the end of the deadline  to qualify for the Tax Credit.

The deadline may be confusing to some because it is often quoted as being BEFORE December 1st. However, this simply means that all closing documents must be dated NOVEMBER 30th or earlier. If you close one minute past midnight on December 1st…you’re out of luck! (not that anyone would be up working that late).

It is important for buyers looking to take advantage of this tax credit to sit down with their Realtor (remember, not all real estate agents are Realtors – members of the National Association of Realtors, who adhere to a strict Code of Ethics), for a Buyer Consultation and specifically ask, how they plan to help you achieve this goal if this credit is of primary importance to you.

Otherwise, you may have to prepare to fore go the credit in lieu of homeownership today at still historically low interest rates (which will save you tens of thousands over the life of the loan), and historically low prices. In addition, we are close enough to the end of the year that you could still take some deductions when you file your 2009 taxes (remember to consult your tax professional), so missing the credit may not be ideal, but it isn’t all bad either.

Nonetheless, here are a few pointers if you are adamant about getting that credit AND enjoy the other benefits of homeownership outlined above.

First, understand that there are three broad categories of residential properties available for sale to you today. These are:

1. Properties available for sale which are not in any sort of distress. These are straight, “regular” sales from sellers who just need or want to sell today but who are in neither of the following two categories.
2. Properties available for sale which are in Pre-foreclosure or could soon be. These are properties for sale by the current owners who for some reason can no longer afford to keep the home (typically because of loss of a job, less income due to less hours, illness or any number of other issues), have fallen behind in their payments and are no longer making payments. Typically, these owners owe more than what the property is worth in today’s market and the only way for them to sell is via a process known as Short Selling (getting their lender to accept less than what it is owed to them as payment in full).
3. Properties available for sale by sellers who have taken the property back at auction after a foreclosure process. These sellers could be institutions (typically banks), or others who now own these properties taken back during the foreclosure auction sale.

Each of the above offers advantages and disadvantages for buyers. For instance, in the first group above (which I will call regular sales), these sellers are not at risk of loss due to foreclosure, nor are they holding an asset they don’t want (banks aren’t happy holding property that is producing no income and greatly increases their potential liability). However, many are still motivated to sell today, even if it means not getting as much as they once could, or as they might if they held on to the property for a few more years while we wash away the sins of recent years so to speak. These sellers are ready to act now and their purchase may be finalized in a matter of a few weeks or even days in some cases, rather than months. These probably offer today’s buyers the best chance of still qualifying and getting the tax credit because they can do their search process, property selection, offer, due diligence and close in time and before the November 30th deadline.

The second group belongs to the group of distressed sellers in a pickle today looking to sell and have their lenders agree to take back less than it is owed to them on the mortgage note. The only way to sell these properties is via a Short Sale process. This process is very similar to the one briefly described above except, the seller’s lender must approve the sale or agree to the short pay. The process is similar from the search process, property selection and offer to a great degree. However, at this point, begins a period of time required by the seller’s lender to evaluate the offer in light of other factors surrounding the transaction. There may be more than one lender involved (if there are more than one mortgage or encumbrance against the property), there may be insurance issues (pmi or mip), and other liens and other factors to consider. This approval process could take as little as a few short weeks (I’ve had short sales approved in two weeks), as they can take months (I’m currently negotiating one with Bank of America that took 30 days just to get the documents received and nearly 2 months into it, it is still being processed). This process can heavily weigh on a buyer’s patience and prohibits the market to recover faster from this fiasco. After acceptance, the clock begins to tick again and all the provisions under the purchase offer contract such as inspections, appraisal and others begin to take place until closing is achieved. However, this period of uncertainty created during the approval process, can now easily stretch the closing well past the November 30th deadline. This is a shame because these property sales often present a great opportunity for buyers to buy a great property, at a deeply discounted price. In addition, many of these properties are still occupied by the owners who still take care of the property, allowing the buyer to get a great deal.

Finally, there are the foreclosed properties or REOs (Real Estate Owned). These are those properties which have already been through the foreclosure process and have been taken back by the lender at auction. Although often priced well below market, many lenders and their asset managers don’t initially place the property for sale at super bargain prices. This is specially true if the condition of the property is at least decent. However, as time passes without a contract or for properties that require extensive work (beyond a little landscaping and some paint and/or carpeting), they are ultimately priced well below market to reflect the seller’s (lender’s) motivation to sell today. The advantage of these properties of course, is their significantly lower price. However, these are often not for the faint hearted. These properties typically need more than TLC and are very likely to have some code violation (some minor, others not so easy to remove without greater expense). These are typically better deals for investors and those with plenty of cash to acquire the property, make the necessary repairs and pay the fines and fees required to clear the code violations. Buyers requiring financing typically don’t stand a chance when competing to buy these when there are multiple offers, because they often compete against cash buyers. Also, because of the amount of work required, regular (conventional) financing will typically not work to buy these properties because they will not pass inspections and the lenders will not take the risk.

There is however a FHA program called Streamline FHA (203k) which will allow the buyer to borrow up to 125% of the property value or up to $35,000 which can be used for repairs. Again, a great program for regular sales or short sales, not so much for foreclosure sales, and specially when competing against cash offers. This program has a lot of requirements and takes longer to close, but provides a way for buyers to get a great deal and hire licensed and insured contractors (which could be from major stores like Lowe’s and Home Depot), to perform the work (may even be as complex as roof replacement or as simple as water heater, central A/C, carpet or kitchen/bath cabinet installation). When it’s all said and done, they’d own a great property, repaired to their liking and to enjoy for years to come.

Buying a condo throws another monkey-wrench to the transaction because the condo building also has to qualify for a mortgage (in addition to buyer qualifications), based on current FNMA and FHA guidelines. You must work with a qualified lending professional and Realtor to make these work for you.

For many, dealing with with these matters may seem confusing and so, now more than ever, Buyers must hire a qualified Realtor, preferably one who is also a Certified Distressed Property Expert (CDPE – www.CDPE.com to find one near you), to guide them through this maze.

I’d welcome any questions, comments or remarks, and thank you for reading this blog post.

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If you know someone in financial distress who could use the advise of a professional to sell their property and save their credit, there are 9 ways to avoid foreclosure and they can be explored in a special report I can make available to them. Just make sure they read this post or write to InfoPack@SellMyBeachHome.Info to order a copy. Otherwise, they can call 866-520-SAYL (7295) and select extension 9504. This line will work for calls originated within the USA or Canada (ONLY – others outside these areas, please send us an email), to listen to a recorded message available 24/7 (speak to no agent), offered by this writer as a public service.

Can a well connected Realtor expose you better?

Realtors have access to listings in France

PARIS – Aug. 6, 2009 – The Federation Nationale de l’Immobilier (FNAIM), the French association of real estate professionals, has contracted with Immobel, a provider of international real estate technology and cross language marketing services, to translate all French real estate listings into English and make them available for U.S. Realtors® to market on their websites.

Over the last two years, members of the Realtor Association of Greater Miami and the Beaches (RAMB) and the Sarasota Florida Association of Realtors (SAR) participated in a pilot program, offering translated Paris listings through Immobel’s Global Listing Exchange; meanwhile, Paris brokers marketed Miami and Sarasota listings translated into French to their own clients.

“French buyers represent an important market segment in South Florida,” says Teresa King Kinney, chief executive officer of RAMB. “We have seen an incredible increase in serious buyers from Paris and the French markets. These buyers are knowledgeable, sophisticated and serious about owning in Miami.”

Based on the success of the pilot program, FNAIM is expanding the Immobel Global Listing Exchange service to include all of the listings in France.

Starting Sept. 15, FNAIM members will be able to display more than 300,000 U.S. real estate listings translated into French. Global Listing Exchange participants include Realtor organizations in Florida, California, Las Vegas and Washington, D.C. Like their American counterparts, FNAIM members will earn referral fees from the sale of American real estate to their French clients.

FNAIM will use Immobel’s Global Listing Exchange platform to deliver the translated versions of more than 500,000 French listings – from country Chateaux to Paris apartments – through widgets embedded into Realtors’ websites. U.S. Realtors will earn referral fees on the sales of French property that result.

Referral fee agreements between the international property professionals are supported by the protocols of the International Consortium of Real Estate Associations (ICREA). Both the National Association of Realtors (NAR) and the Federation Nationale de l’Immobilier (FNAIM) are ICREA members.

South Carolina-based Immobel uses professional linguists to translate property listings into 13 languages. Immobel developed and owns the technology powering the Global Listing Exchange. More at www.Immobel.com.

The Federation Nationale de l’Immobilier, La FNAIM represents a membership of more than 12,000 property brokerages with approximately one hundred thousand property professionals. Members include brokers, property managers, commercial property professionals, appraisers and other professionals in the real estate industry in France. Property professionals in France are licensed and also participate in a guarantee fund

The International Consortium of Real Estate Associations is composed of more than 30 national associations. Current member associations represent approximately half of the world’s GDP.

Reprinted with permission © 2009 FLORIDA ASSOCIATION OF REALTORS®

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If you would like to see properties in Paris, France (soon all of France), just visit http://www.Immobel.com/MiamiRealEstateKing, choose your preferred language among the 13 available, check the link for “Paris Listings” and find your dream Paris or Florida Vacation Home from one easy to use website.

Wenceslao is a proud member of the Realtor Association of Greater Miami and the Beaches and invites you to try it.

Key Biscayne, Bal Harbor, Fisher Island Named by Forbes among 10 Best Places to Get Luxury Condos Deals

MIAMI – Aug. 6, 2009 – Thanks to a huge inventory, many condominiums are bargains these days.

Forbes magazine took a look at the nationwide condo market to determine where the best deals could be found. Because financing can be hard to get, prices on luxury models have fallen the most.

The magazine suggested that the best deals come from paying cash or at least putting down enough cash so the property can be purchased with a federally-backed loan. It also suggested that buyers bid low. Since these properties are moving slowly, even a lowball offer might be accepted.

Here are the top 10 best places for condominium deals and their ZIP codes, as determined by Forbes:

1. Olympic Village, Calif., 96146

2. Tahoe City, Calif., 96145

3. Terra Linda, Calif., 94903

4. Fisher Island, Fla., 33109

5. Dallas, Texas, 75205

6. Malibu, Calif., 90265

7. Bal Harbour Fla., 33154

8. Key Biscayne, Fla., 33149

9. Lake Forest, Ill., 60045

10. New York City (Upper West Side), 10069

Reprinted with permission © Copyright 2009 Florida Association of Realtors®

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If you wish to find an opportunity in any Florida market or need the assistance of a professional, visit http://www.Immobel.com/MiamiRealEstateKing to find your dream home, vacation home or 2nd home.

Dow Up on Home Sales 3rd Consecutive Up Month News – Did You Miss the Bottom?

The Associated Press published an article today (Dow tops 9,000 as home sales rise for 3rd month), where they may be telling the tale of a perceived bottom. This, is precisely why it is nearly impossible to time the top (as many painfully learned), or the bottom.

While many still wait for home prices to finish dropping, smart buyers are out en-force, getting qualified for loans, making offers and yes…even closing on home purchases.

Miami-Dade County is no stranger to these news or numbers. For the last 12 months, inventories have been steadily declining, while for the past 8 months pending and closed sales have in turn, been steadily rising, helping our months of inventory to subside towards something that is begining to look like normalcy may be returning.

Don’t believe it?! The numbers and charts don’t lie! Just, take a look:

Percentage-wise, it looks like this:

	1 year
	June 08	June 09	% Change
For Sale	41934	29408	-29.9%
Sold	1164	1696	45.7%
Pended	1596	2910	82.3%

Did you notice the numbers? Homes For Sale (Active listings), down almost 30% from a year ago, while Closed Sales (Sold Properties), were up almost 46% and Pending Sales (Properties under contract and arguably, a better indicator of current market activity since this number hints at the fact that people, are buying!), were up over 82%!

All this activity has caused the months of inventory (an indicator of how long it takes current inventory to move), to drop by more than 1/2 in 12 months to almost a 52% decrease from 36 months of inventory June of last year to just over 17 months last month. As if that were not enough, Months of Inventory based on Pending Sales has dropeed by over 61%!

What’s causing this in the middle of the worse recession we’ve seen in decades? Who knows!! One thing is certain, inventories are being picked up and in the middle of this Price War and Beauty Contest we’re having, it is those properties that are best kept and being offered at the lowest prices which represent the best values today and that are selling first.

After all, Median Prices have dropped from $270,000 in June, 2008 to $165,000 in June, 2009. This is up 7% from May, 2009’s Median Price of $154,000, but a drop of almost 40% year-over-year. At The last time we saw these price levels was long before the boom blinded us with greed, around December, 2002, some 7 years ago now.

What will keep these numbers improving? Jobs, which should help ease lending edginess, which should in turn allow for enough financial grease and consumer confidence to rise.

Also, the hope that interest rates don’t take off, causing massive inflation. This is still among many fears in the market due to the possibility that expensive government programs and federal borrowing would require interest rates to rise in order to entice foreign investors to continue buying our Treasury paper and financing our way out of the mess we’ve created.

In the meantime, with interest rates still historically, low in the mid-single digits, and property prices possibly at a bottom and inventory levels slowly heading towards normalcy (about 6-9 months), it only makes sense for folk who are decided in buying and are waiting for that provervial bottom to come knocking at their door to welcome this opportunity once and for all.

It is said that Luck, is When Preparation Meets Opportunity. This, may just be the crossroads you’ve been waiting for so, prepare to make your luck and take advantage of this opportunity.

(Read the latest related post from the Associated Press: Existing home sales show signs of recovery)