July home sales in Miami – a reflection of the economy at large

In Buyers, Condo rules, FIU, Fl, Florida Legislature, government, HAMP, Home Warranty, HomePath, Investing, Lease Agreements, Leasing, lenders, Loan Originator, scams, SIOR, Treasury on September 3, 2011 at 9:52 am

Some say our economy will not recover until this or that is changed. Some feel housing must recover in order for everything else to recover. Others blame the low dollar, the amount of money that is printed, Europe, earthquakes and climate change.

I still feel that the key to a recovery is JOBS. Without jobs, folks’ confidence and ability to spend and qualify to buy homes, will remain low – hec…non-existent.

With unemployment stubbornly high above 9% (well over 18% according to experts if one includes the under-employed and all those who just…quit looking), it is no wonder housing can’t seem to recover.

In spite of Miami’s ability to appeal to the affluence of non-residents and investors (and THANK GOD for that), Miami’s home resale market looms.

One great aspect is that Miami’s available real estate inventory for sale has been rapidly dropping from a high of 24,368 units in Sept., 2010 to our July, 2011 low of 15,578 units available for sale. A 63.9% drop in inventory, 4.3% lower than June, 2011’s inventory of 16,272 units, 35% lower than the 23,976 units in July, 2010 and almost 32% lower than at the end of the same quarter in 2010. The drop of New listings has also helped inventory levels continue to drop.

By all accounts, less inventory is great. This generally means that buyers have less inventory to choose from and that prices should begin to pick up. Supply and demand. Yet, low supply continues to be coupled to low demand as reflected by the meek Pending sales number between June and July, 2011 (2.2% lower) and the much weaker Sold (Closed) units which dropped 21% between June and July, 2011.

Thankfully, Pending Sales (an indicator of future closed sales), had been quite strong in July, 2011 as compared to July, 2010 (up 19.4%) and as reflected by the Pending Sales number between the end of Q1-2011 as compared to Q1-2010 (up 21.1%).

Will these numbers improve? Again – I say, not until JOBS recover.

Comparing sectors of our market, sales in properties valued at different price ranges appear to be mimicking the market at large, including market segments under $500,000 and between $500,000 and just under $2M as shown in the two charts below

Under $500,000

Between $500,000 to just under $2M

Between $2M and just under $5M, we begin to see some changes, though Pending Sales – the so important forward looking indicator of future closed sales has completely stalled.

Above, are the numbers for properties valued at between $2M and $5M

However, by the time we get to homes valued at $5M and above, the difference is stark.

Above, properties in our highest market segment – above $5M

As you can see, properties valued at $5M and above are among the only market segment displaying improvement on all accounts. Between June and July, 2011, between July, 2011 and July, 2010 and between Q1-2011 and Q1-2010. Most impressive are the improvements between July, 2010 and July, 2011. I mean, 10 properties Sold and 12 under contract may not seem like much until you are reminded that these are at least $5,000,000 a pop and financing…well…this is not their bag.

So, the $5M and above market segment is where most affluent buyers are doing their bidding. After all this is Miami!


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