Miami-Dade County – Mid Year Real Estate Report

In bank-owned properties, Buyers, closing, Commercial Real Estate, credit, Distressed Sales, First-Time Buyer, florida, forclosure, foreclosure, government, HAFA, Home Buyer, home sellers, Industry trends, lenders, Market Report, miami, miami beach, mortgage, Multi-Family Real Estate, new rules, real estate, REO, Sellers, Short Sales, tax credit, Trends on July 11, 2010 at 10:45 pm

Wow…the last 18 months have been a roller coaster ride in Miami-Dade county. Click Facts & Trends Report – June2010 to view full report and follow along.

With a drop in inventory of almost 34% since January, 2009 to an increase of 62% in Closed Sales in the same period with Pending Sales accounting for almost 80% more properties under contract, pointing to a great recovery. All this with slightly more than a 1% increase in new listings, one could ALMOST say we’re out of hot water. Until we look at more recent figures, that is.

True, year over year numbers still reflect quite a positive story considering what happened after the market collapsed. However, inventory for sale dropped only by 18% or almost by half as compared to the 18-month period. In addition, there are over 24% new listings in the system these days from June 2009 (compared to the easily ignored 1% in the 18 month period), and a drop in closed sales of almost 2% year-over-year, coupled by a much less than robust 20.3% of new pending sales from prior June’s numbers (as compared to the 79.5% increase in the 18 months since January, 2009.

Between May and June 2010, inventories increased for the first time in the entire 18 months (actually…for the first time since September 2008), by 2.1% to 24,150 units, while new listings jumped by 9.4% to 5,634 units. Closed sales however, increased by a measly 0.2% while pending sales went up by only 6.7% between May and June, 2010.

Based on Closed Sales, Months of Inventory dropped by 59.1% in 18 months (a drop from 30.4 months down to 12.4), and dropped by 16.3% year over year, only to jump by 1.8% (up from 12.2 months), from May to June, 2010. This type of activity has cased a substantial and noticeable change in the absorption rate, which deteriorated from a 144.2% increase in the 18 month period (from 3.3 units to 8), to a disappointing 19.4% between June 2009 and June 2010, and a drop of 1.8% from 8.2 in May.

At this pace, with stimulus no longer incentivising sales, interest rates not getting folks off the fence (not even to refinance at today’s 4.5% rates (not seen in about 60 years!), employment (or lack of), weighing on peoples minds, a mounting national debt, increase mandates for health care and the addition of thousands of IRS agents to ‘chase’ folks…it’s no wonder people may be scared and unmotivated by real estate.

This is quite sad because, prices in Miami right now are low enough that would make it cheaper to buy than to rent for the first time in years. The average list price of properties in Miami has dropped in recent months and was quite neutral over the 18 month period from January 2009 ($519,000) to June 2010 ($522,000), for a meager 0.6% increase. Compared to the year over year figures between June 2009 and June 2010, when the average price of a property for sale dropped by 4.6% (from $547k down to $522k) and by 2.8% between May and June, 2010 from $537k to $522k.

While the price of properties for sale was dropping, the price of properties sold was increasing as follows:


Closed Price trend

This trend of increased closed prices has been a reflection of the highly competitive market we are faced with. REO sellers are finding multiple cash offers, forcing the bottom to rise once more. With average Sold Price increasing by 17% in 18 months, sellers were beginning to see a light at the end of the tunnel (not a train coming for a change), buyers were beginning to feel the frustration of under bidding.

Serious buyers have been snatching bargains in Dade county because they have been aggressively competing for the low hanging fruit. Those REO / foreclosed properties banks were under-pricing in order to attract buyers and quickly sell their inventory. This tactic easily explains in part the drop in prices for properties for sale and the increase in sold inventory. Regular sellers and Short sellers also have had to adjust.

But with banks opting for foreclosure avoidance and more short sale negotiations using one of the HAFA programs now available, they’re also saving time, money and court costs, jams and errors by simply negotiating to avoid a foreclosure. In addition, there are laws lenders must now adhere to when they take a property back in foreclosure, which forces them into additional county and/or city compliance issues (like Miami-Dade’s Certificate of Use).

Nonetheless, the Median Price for sold property in Miami-Dade has dropped by 8.2% in 18 months (from $164k to $150k), by 6.2% from $160 in June 2009. It then dropped by as much as to $140k in February, 2010 before going up again to $160k in May and now, back down to $150k (another 6.2% drop but this time, not in a year’s time but in one month!). This places today’s Median Sold Price at $150k back down to levels not seen since about April, 2002! That was more than 8 years ago, in case you were wondering….

Overall…charts for the last 6 months can be seen Facts & Trends Report – 6Months ended June2010

So what does it all mean to YOU? Who knows! What does your Chrystal ball say? Will interest rates remain low, will hours work improve so that fold start to work regular hours again? Will wages increase and unemployment drop? Will the national deficit, debt and trade improve in the weeks and months ahead? Will the impact on new taxes, natural disasters, man-made disasters, continue to erode your way of life?

Will the government continue to dress up the CPI or measure of inflation (which compares prices of a basket of goods from period to period), begin to notice that items not listed in the CPI’s basket of goods are in fact increasing as told by your grocery bill any time you buy items not in that basket (I mean…aren’t meals at fast food restaurants costing more than a year or two ago? I think so), will real estate bring us out of this recession or are we headed into a double dip recession due to wars, taxes, health care, impact fees on pollution and other cost passed on to consumers? What about politics? Will November’s elections effect any positive change or will create no change at all or even make matters worse?

In my humble opinion…we have been doing great in Miami-Dade. There is just too much noise and confusion to properly read the future past today or even tomorrow. Changes in laws, politics and everything in between and not even related to them are coming as fast as lightning, giving business and folk few ways to find niche opportunities and have the time to recognize the brakes, devise a plan and execute it to any lasting degree. If you are not nimble enough to recognize change and implement a plan of action PRONTO…you are likely to miss the boat.

Rentals have continued to be difficult to gauge, for example. It used to be you could pretty well predict what rent values would be worth in a few year’s time, helping investors find buying opportunities and figure out cap rates and ways to improve property values with some changes. Now, this seems to be no longer possible without a long-term plan. Unless you are willing to invest today knowing that the likelihood of the property’s value improving over time is historically high, you may be quite reluctant to enter the market today.

If you are a renter considering whether to buy real estate or wait…I could quote an old real estate adage: Don’t wait to buy real estate…buy real estate…and wait. Specially with prices as low as they were more than 8 years ago and interest rates as low as they were some 60 years ago! Really! Why wait?!

The same goes for those in distress. Yes, property values may go up in the months and years ahead. This does you NO good if you cannot wait. Get out from under that cloud and in as few as 2 to 3 years, you may even qualify again as a first-time buyer, able to buy using an FHA loan program, hopefully at still attractive rates.

Investors on the other hands are finding it better to pool funds and either buy notes or buy in bulk. Flippers are finding the bottom market become a difficult, murky water to be in. However, opportunities abound and will continue to be seen in the luxury market (at least over $500k). Some of these properties can be acquired at substantial discounts from their high. With the right formula, and access to money, deals can still be made, all with more zeroes.

If you are curious about the state of a particular area in the county, let me know and I can create charts for that area for you (even for some buildings).

  1. […] by MiamiRealEstateKing on July 13, 2010 · Leave a Comment  I recently published a Mid-Year Report where I presented some of the data that describes what this real estate market looks like for […]

  2. […] Miami-Dade County – Mid Year Real Estate Report « Miami Real Estate Blog […]

  3. […] Read the original post: Miami-Dade County – Mid Year Real Estate Report « Miami Real … […]

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