Home-sale surge a sign of recovery

Driven by drop-dead prices on foreclosures and short sales and a looming deadline for federal tax credits, home and condo sales in South Florida shot up in March, brightening the outlook that this year may herald a real estate recovery.

At the same time, wealthy buyers who have waited on the sidelines as the market tumbled are now jumping in. Those investors are opting to put their cash into property rather than risk it in the still-volatile stock market, real estate agents say.

``What we are seeing is that prices have dropped 40 to 50 percent since the height of the market, which has made attaining a home much more affordable,'' said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach.

In Miami-Dade County, sales of existing homes rose 17 percent in March compared to the same month last year, and median prices declined 4 percent to $197,500, according to figures released Thursday by the trade group Florida Realtors.

At the same time, condominium sales jumped 58 percent to 835 sales, while median prices fell 8 percent to $138,800.

Figures for Broward County trailed Miami-Dade's, with existing home sales up 8 percent in March, and median prices falling 3 percent to $214,000, compared to the same month last year.

March condo sales jumped by 46 percent to 1,140 in Broward, while median condo prices fell 10 percent to $73,600, compared to March 2009, the figures show.

While rising sales are uplifting news, analysts differ on whether South Florida's real estate prices have hit rock bottom, which is likely the true test of an incipient recovery.

David Dabby, president of the Dabby Group in Coral Gables, believes prices have stabilized since hitting the floor in April 2009. They've been wavering -- some months up slightly, others down -- at the same low level since then.

``The market is in recovery, but it's a very weak recovery, and no price recovery, just price stabilization,'' Dabby said. ``Stabilization of prices is the best we can hope for in the foreseeable future.''

FUTURE PRICES

Meanwhile, McCabe is betting South Florida prices will hit bottom between the end of 2010 and mid-2011, with condo prices possibly continuing to decline until the end of 2011, due to the high supply of condos on the market.

``Foreclosure activity is continuing to drive the market and will keep a lid on prices for the foreseeable future,'' Dabby said.

During March, he said 55 percent of all single-family home sales in Miami-Dade were foreclosures or short sales, in which lenders allow homes to be sold for less than the mortgages owed against them.

``It's just a foreclosure buying binge, and I hope it continues, because that is the only way we will return to a normal market,'' he said.

According to data from EWM Realtors, nearly 24,000 homes and condos were available for sale in Miami-Dade at the end of March. That has been whittled down since March of last year, when 34,123 homes and condos were on the market. Similarly, in Broward, 17,469 homes and condos were on the market at the end of March, down from 26,668 one year ago, EWM Realtors data shows.

Wealthy buyers are heating up the market and helping to absorb the supply, some Realtors say.

``This first quarter is the best first quarter we've had certainly in the last three years,'' said Claudia Lewis, a Realtor with Century 21 Premier Elite Realty in Coral Gables. ``It has been so active, most agents are working 12, 13, 14 hours a day.''


In recent weeks, Lewis has sold or delivered contracts for a $3 million house in Redland, a $2 million house in Pinecrest and three $1 million-plus condos in Coconut Grove.

``The market has just changed dramatically from the fourth quarter of 2009 to the first quarter of 2010,'' she said. ``There has been a dramatic increase in activity and sales.''

FINANCING

Nudging the market further is financing -- when available -- remains affordable, with mortgage rates hovering at about 5 percent.

In fact, even foreign investors are again abundant, particularly from Europe and Latin America, said Maria Visser, international director/corporate relocation, and a broker associate with Century 21 Premier Elite Realty in Coral Gables.

``What they are seeing is that prices are low, interest rates are low -- when has it been this attractive to buy here?'' she said.

Yet another financial impetus: Potential buyers have one week left to gain access to federal tax credits, geared to stimulate sales.

Buyers who have signed a contract to purchase a primary residence by April 30 have until June 30 to close to be eligible for the federal tax credit of up to $8,000 for first-time buyers and up to $6,500 for repeat buyers.

``We're seeing a last-minute rush here for people trying to capitalize on this, and I have several buyers coming to town specifically to find something with the intent of making a contract before the end of the month to meet the deadline,'' said Steve Scarpone, a Realtor with Coldwell Banker in Kendall.

To spur sales even after the deadline, Coldwell Banker is asking its sellers to agree to pay $8,000 toward a buyer's closing costs after May 1.

In fact, a survey released this week by Century 21 Real Estate showed that first-time home buyers rated the three most influential factors in their decision to buy a home as current housing prices (66 percent), followed closely by the home buyer tax credit (63 percent) and low interest rates (60 percent).

ACROSS U.S.

Nationwide, existing-home sales, including single-family, townhomes, condos and co-ops, rose 6.8 percent to 5.35 million in March, compared to 5.01 million the previous month, according to data from the National Association of Realtors.

The median sales price rose 0.4 percent in March to $170,700, and sales were up 16.1 percent, compared to March 2009, marking the beginning of an expected spring surge, the association said.

The home buyer tax credit is spurring sales across the nation, said Lawrence Yun, chief economist for the association. A NARS survey shows first-time buyers purchased 44 percent of homes in March, up from 42 percent in February. Investors accounted for 19 percent of transactions in March, unchanged from February; the remaining sales were to repeat buyers.

``The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices,'' Yun said in a statement. ``This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.''

Source: http://www.miamiherald.com/2010/04/22/1593777_p2/home-sale-surge-a-sign-of-recovery.html

BY INA PAIVA CORDLE
icordle@MiamiHerald.com