MiamiRealEstateKing

The Year in Review – A Summary of Real Estate Matters In Miami-Dade County for 2009

In arm, Distressed Sales, First-Time Buyer, florida, forclosure, foreclosure, government, HAFA, HAMP, Home Buyer, home sellers, lenders, Loan Originator, loan reset, mediation, miami, miami beach, modification, mortgage, option-arm, real estate, Sellers, Short Sales, Treasury on January 14, 2010 at 7:25 pm

The numbers are just churning off the virtual presses. Inventory levels throughout the county were down 35% between December, 2008 and December 2009 (down 3.2% from November to December, 2009), while closed sales were up 19.5% (up 4.1%), respectively.

Take a look at the following few charts…

The bottom line…although 2009 was a gloomy year for many, mainly due to unemployment concerns, the Obama Administration’s Tax Credit program has paid off.

Something else that has paid off is that some modifications are finally beginning to happen. I’m finally beginning to hear clients tell me that their modifications are going through and that they’re saving a lot of money.

For now, both these programs alone have helped tapper inventory levels and improve sales throughout the county.

However, the tax credit program expires in a few months (properties must be under contract by April 30th, 2010 and close by June to qualify).  For the moment, the question then remains, what will happen after the program expires? Will sales drop off like car sales did after the cash-for-clunkers program expired, or will the momentum be enough to sustain continued support?

One thing is for certain, business was probably better than many expected throughout the county.

However, there is still a disconnect between the Average List Price and Average Sold Price, even though the Median Price in the county has leveled off at around $160,000 (see below charts).

Chart2

The difference between the Average Active (List) Price and Average Sold Price is very possibly indicating that buyers are bargain hunting, and that higher priced properties are still sitting on the market unsold.

This is critical for sellers. Unless you are a lender looking to rid yourself of your REO inventory at fire-sale prices or a homeowner in distressed looking to sell your property in a short sale in order to avoid foreclosure, you are likely a seller in the upper price range (a softer segment of our market), or you are just overpriced and not likely to sell until you adjust your expectations and firmly compete with the bargain-priced properties available for sale in your building or neighborhood.

The Median Price proves that buyers are bargain-hunting. In addition, the Months of Inventory and Absorption Rates for Closed and Pending Sales reflect the rate at which inventory is finally moving county-wide as follows:

Chart3

In essence…it looks like this:

Date

12/08

11/09

12/09

Months of Inventory based on Closed Sales

26.0

15.2

14.1

Months of Inventory based on Pended Sales

23.6

10.9

10.1

Absorption Rate based on Closed Sales

3.9

6.6

7.1

Absorption Rate based on Pended Sales

4.2

9.2

9.9

Chart4

As improved as it is, we’re still a ways off. Until the employment numbers improve, the healthcare issues are resolved, loan modifications and short sales are streamlined and lenders go through the incredible amount of inventory in their books, plus we overcome the challenges predicted for 2010 and 2011 with the increased numbers of under-water mortgages experts expect to see, we may still be 3-5 years away from true “normal” – whatever that looks like when all this is over.

Surely, interest rates will not remain this low for too much longer, and neither will prices. Therefore, buyers planning to enjoy home ownership will likely need to make sure they have plans to stay put for at least 5+ years, before properties purchased today begin to pay off.

If you are an investor, it is more likely in this market for you to see a positive cash flow however. Warning – rent rates are also under pressure due to increased vacancies caused by the excess inventory many builders still hold, plus the empty units wanna-be investors  (who purchased several units during the boom thinking this would be their ticket to financial freedom), still hold or are being taken back in foreclosure and being sold and flooding the market.

This is why first-time buyers are reining in these days. These are the knights in shinning armor coming to rescue our housing market. However, these are locals with limited earning capacity who can not afford the upper level priced properties and have been consuming the lower priced properties once sold for tens, even hundreds of thousands more just 3 years ago.

Sellers who are still holding on to dear life thinking the market will turn around soon and they’ll soon get that selling price they’re holding on to, need to consider that if they cannot wait at least 3-5 more years before they see some semblance of that magic number, they need to either get serious and sell now before things get worse (even if prices begin to stabilize soon – if they’re struggling to make those payments and they’re one car or medical problem away from financial disaster), they are well advised to contact a professional and seriously listen to what they have to say about selling in this market.

In my next blog post I’ll provide a similar analysis of the areas i our county holding the highest concentration of condos – zip codes 33131, 33139 and 33140. Until then…may 2010 prove all the experts wrong and pleasantly surprise us.

Your comments welcomed 🙂

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