In the 12 months ending September 30, 2008, the number of South Florida single-family homes and condominiums listed for sale in excess of $300,000 has declined 27%, a much-needed positive sign for South Florida’s residential real estate market. While a clear sign of a growing stability in the higher price ranges, inventories for properties priced below $300,000 continue to see increases: single-family inventories up 78%
between September 2007 and September 2008 and condo inventories up 12% for the same period.
A report from our comprehensive software, Facts & Trends™, notes that 9,121 single-family homes priced at $300,000 or more were listed for sale in Miami-Dade and 7,689 in Broward County as of October 1, 2008. That’s a significant decline from the 11,436 homes in Miami-Dade and 10,010 in Broward that were on the market for sale on October 1, 2007.
Owners of homes at these price levels typically have more equity and feel less pressure to sell immediately, allowing them to either rent their properties, or simply take them off the market.
As a result of this trend between the higher and lower price ranges, single-family homes and condos priced less than $300,000 are now approaching 62% of the region’s current inventory, compared to just 22% in April 2005, when the “seller’s market” was at its peak.
Foreclosures and “short sales,” where the owner’s equity is less than the outstanding balance of the mortgage, are concentrated in the lower-priced market segment…both single-family homes and condos. These distress sales increase available inventory and put downward pressure on prices. 27% of Miami-Dade & Broward listings on October 1, 2008, were listed as “short sale or foreclosed properties”, some 22,000 out of the 80,649 properties which were actively for sale in the MLS at that time.
To that end, buyers today can choose from an abundance of single-family homes at lower price points. Overall, the South Florida market is becoming more affordable for working professionals and other moderate-income individuals and families.
That trend also applies to the region’s condominium market, where inventory levels are at historic highs. In Miami-Dade, there were only 5,125 condominiums listed for sale in April 2005 – a 3.3 months supply – and 3,333 condominiums in Broward, a 1.7 months supply.
As of October 1, 2008, there were 25,251 condos for sale in Miami-Dade, a 43-month supply and 22,670 condos in Broward, a 29-month supply.
Clearly, it will take some time for the South Florida condominium market to regain its balance, but there remain pockets of strength within the overall marketplace.
Condo buildings with a high percentage of owner-occupants have relatively low inventories and stable pricing. Buildings with a high percentage of investor-owners have seen the greatest declines in value and the highest number of vacant units. The rebound of this market will be very “building specific” and “neighborhood specific”.
Looking ahead, condominium buildings with above-average services, and close-at-hand amenities will rebound more quickly than newly developed residences in marginal locations. Easy access to grocery stores, restaurants, shopping and public transportation is very important to today’s condominium buyer.
As to values of homes and condos, a major issue in South Florida is of course the volume of foreclosed properties that we are currently experiencing. The number of foreclosures located within, or near, each specific neighborhood or building has an impact on appraisals for future buyers needing to finance their purchases.
A seller may have their home or condo appropriately priced; however, if there are a number of foreclosed or “short sale” properties within the comparable area, that will clearly affect the ultimate sale price of all properties within that specific market.
Conversely, if a neighborhood is relatively free of distressed properties, we are finding that properly priced homes are indeed moving.We are seeing this reflected in all price range homes and condos. Appropriate pricing is beginning to move inventory.
The operative phrase in that last sentence is “properly priced homes.” We see, sale-after-sale, where buyers who are coming to grips with the market realities, are selling their properties.
We are seeing this reflected in all price range homes and condos. Appropriate pricing is beginning to move inventory.
In all, residential values which have dipped 25%-30% below the peaks of 2006 are still realizing significant increases for individuals who have owned their homes or condos for four years or more. The median price of a home in Miami-Dade in January 2002 was $155,000 while the median price today is $265,000, which takes into account significant decreases in value over the past 24 months. Even with the decreases in value of these past months, the median priced single-family home in Miami-Dade County has increased 71% in value over the past six and a half years.
The challenge of today’s market will continue to be with us until we can begin to chip-away at the single family home and condo inventories priced under $300,000 in both counties.
The encouraging news lies in the fact that our federal government has finally taken aggressive action to alleviate the financial burden that has been mounting against our banking system. The $700 billion+ package recently approved by Congress will take a while longer to arrive in our local markets, but relief will certainly begin to appear in early 2009, if not before.
Which, in conclusion, takes me back to my comments about price. A properly priced home or condo, in either county, is not only seeing activity, but results. It is crucial to take into account the variables of a neighborhood or building. I call them sub-sub-markets, where we are now focusing on areas as small as square blocks, or individual buildings…as value and subsequent sales activity can now depend on very fine differences between specific buildings and neighborhoods.
Of course, one of the major factors is the ability to secure financing, a topic I am leaving for another report. But, suffice it to say, having a pre-qualified individual is now one of the greatest assets in our industry. A well-qualified buyer today with the ability to close upon his or her purchase is more important than the price someone less qualified to close may offer.
Click to receive this post by email and to receive future Real Talk posts.
Read more and see the Related Charts