For South Florida Real Estate Market, a hopeful sign

South Florida's housing sector asserted its independence from national trends in July as a key measure of the real estate market improved year-over-year, with the region's international buyers and still-drooping prices propping up the local housing market.

In July, pending home sales in Miami-Dade County stood at 10,113, up 40.5 percent from July of 2009, according to figures released Tuesday by the Miami Realtors. In Broward, pending sales stood at 7,830 in July, up 25.4 percent from a year earlier.

Pending home sales refer to the number of housing contracts that have been signed, and offer an early indicator of sales activity because typical sales have a one- to two-month lag between a sales contract and a completed deal.

South Florida sizes up well when compared to the national picture, where the pending home sales index hit a record low 75.7 in June, according to the National Association of Realtors. It was the second monthly falloff after the April 30 deadline to enter the federal homebuyer tax credit program, with June's pending sales down nearly 19 percent from the same month a year earlier.

The local market hasn't been completely immune from the post-tax-credit slump. In the past three months, pending home sales are down 3.2 percent in Miami-Dade and down 5.1 percent in Broward.

``We are encouraged by the statistics for pending home sales in the South Florida real estate market even after the expiration of the homebuyer tax credit,'' Jack H. Levine, chairman of the board of the Miami Realtors, said in a statement. ``While the number of pending sales has dropped slightly month-over-month, they are still significantly higher than they were a year ago.''

With financing still difficult to obtain, all-cash buyers and deep discounts on distressed properties are propping up sales, said Peter Zalewski, a principal at Bal-Harbour-based Condo Vultures.

About 60 percent of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit.

Additionally, more than half of recent sales in Miami-Dade and Broward counties involve short sales or bank-owned home sales. In the last 12 months, the number of bank-owned condos and single-family homes sold has more than doubled.

A short sale occurs when a home is sold for a price that is less than the value of the outstanding mortgage. In what has become a notoriously lengthy process, both the seller and the bank must agree to the price.

Banks have recently become more willing to allow sellers to pursue short sales, which now account for one in four South Florida sales.

There were 944 short sales in Miami-Dade and Broward in June, up from only 379 a year earlier, according to analysis by Esslinger-Wooten-Maxwell Realty.

That's a reason to be cautious while interpreting pending homes sales data in a market like South Florida's, said Doug DeWitt, Miami-based real estate broker.

Many short sale contracts are rejected by the bank after a seller agrees to sell for a price below what they owe, meaning those pending sales don't lead to closings.

Additionally, because short sales take months to process, many remain in the ``pending'' stage longer than normal, boosting pending sales numbers for multiple months.

In Miami-Dade County, more than half of the pending single-family home sales on the Multiple Listing Service are short sales, said DeWitt.

``I'd say at least half of those are not going to close,'' he said. ``I would say stick to the actual closed sales to make the true comparison, because there's a lot of different ways that these pending sales can fall through.''

The increasing number of short sales and bank-owned properties coming to market has put downward pressure on prices in South Florida, said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach. In June, median prices of existing homes stood at $203,300 in Miami-Dade, down about 4 percent from the same month a year earlier. Median existing condo prices, at $128,000, were down about 9 percent in Miami-Dade.

``When you're in a neighborhood that has two foreclosures and a short sale that are priced $50,000 or $75,000 below what you thought you could get for your home, you do not set the barometer for the other [home] prices,'' McCabe said. ``They set the prices for you.''

Tejus Karia, who has been trying to sell his Davie townhouse for eight months, has cut prices multiple times.

He has slashed the price on the three-bedroom, from $185,000 to $165,000 to draw in buyers but didn't get a single offer. He recently decided to rent it instead.

Zalewski said many sellers are coming to accept the new, lower pricing levels being dictated by the market, and are acting accordingly.

According to a report by Trulia, one in five home sellers in the Miami area slashed prices last month, with an average reduction of 13 percent.

Karia said the main obstacle for most of his buyers was the lack of financing: ``Nobody could come up with the money. The banks aren't lending money, and that's going to leave a lot of these houses in limbo.''

Source: http://www.miamiherald.com/2010/08/03/v-fullstory/1760066/for-s-fla-market-a-hopeful-sign.html


By TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com

Hopes rise with sales of downtown Miami condos

The idea of a vibrant city center in Miami is bolstered by a Downtown Development Authority finding that condo sales -- and prices -- are going up.

Residents and officials longing to see downtown Miami transformed into the nexus of a bustling, 24-hour city are beginning to see a little cooperation from the market.

Even as home prices have continued to drop across South Florida, downtown Miami -- the hub of the over-development that many believe sparked the housing market collapse -- seems poised for a comeback, a new study released by the Miami Downtown Development Authority shows.

The report found sales of downtown condos have accelerated during the first half of this year, and the inventory of empty new condos on the market is steadily declining. Prices are on the rise as well.

In the first six months of this year, there were 1,933 units sold in Miami's downtown area, which stretches from Brickell north to Midtown and from I-95 east to Biscayne Bay. That's an increase of 110 percent over the first six months of 2009, when 919 units closed.

``Downtown is an exciting place to be right now, with everything going on, and the report shows that people want to live downtown. They want to live in the heart of the city,'' said Leo Zabezhinsky, the DDA's manager of business development, real estate and research. Zabezhinsky moderated a downtown-themed discussion during the Greater Miami Chamber of Commerce's Real Estate Committee meeting on Tuesday.

The average sales price of a downtown home was $356,100 in the first six months of the year, up about 16 percent from the first two quarters of 2009, when the average unit sold for $306,700. For comparison, existing condo prices across Miami-Dade County dropped about 9 percent between June 2009 and June 2010 to $128,800.

The inventory of new, unsold condo units in the downtown area stood at an estimated 5,400 units as of June 30.

About half of the unsold units in the downtown area are in the Brickell area. The Central Business District, bounded by NE Fifth Street on the north and the Miami River on the south, contains nearly a quarter of the remaining new condo units.

At the current sales pace, downtown Miami's glut of new condos could be absorbed within the next 18 months, but there are a couple of caveats.

First, the DDA's numbers do not include the 870 units at the completed Mint at Riverfront and Paramount Bay buildings, currently empty but set to begin sales in the near future. Secondly, much of the sales activity has been generated by investors, who are largely expected to unload these properties back onto the market once prices rise and the housing picture brightens.

``Resale of investor-owned properties could continue for four or five years,'' said Craig Werley, president and owner of Focus Real Estate Advisors and one of the authors of the study.

In the meantime, those hoping that an active rental market can spur the type of downtown renaissance longed for by a growing group of supporters are encouraged by an occupancy rate inching towards 75 percent. The DDA's report shows leasing activity up 14 percent in the first six months of the year compared to 2009, with average rent down about 1 percent, to $1,787.

Another potential economic stimulator for the area, though still untested, is the arrival of the revamped Miami Heat team at downtown's AmericanAirlines Arena. With LeBron James, Chris Bosh and Dwyane Wade promising multiple championships, the effect on AAA's neighborhood could be transformative, said William Talbert III, president and CEO of the Greater Miami Convention and Visitors Bureau.

``Just think about all the restaurants that are going to open up,'' he said. ``You talk about a stimulus package -- that's one.''

But a number of major issues still hinder Miami's downtown from rivaling some of the other metropolitan hubs like Chicago and New York, said Sharon Dresser, co-founder of High Street Retail USA in Midtown.

The lack of flagship shopping destinations, inadequate public transportation between central downtown and areas like Midtown and the Design District and ``real or perceived'' safety issues all need to be addressed, she said.

``If you want to do serious shopping, you have to leave the downtown area,'' she said.

Source: http://www.miamiherald.com/2010/07/28/1749345/hopes-rise-with-sales-of-downtown.html

By TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com