Comments on: Miami Real Estate Market Contradictions

By: Xavier Zayas-Bazan

Xavier Zayas-Bazan — Thu, 31 May 2007 00:33:15 +0000

It’s already hitting the fan Marco. Unfortunately a large chunk of the market are flippers. Don’t count on them holding on for long (especially when they’re hit with inevitable regular assessment increases and unexpected special assessments). For many, the choice is going to be sell now and take a loss or face foreclosure. As the inventory shakeout continues, there will be a dip in the prices until end-buyers fill in the inventory. This will take time. There are factors that can stabilize the market, for example, a boost in office development will improve demographics, increase the MHI, and improve property values, but the progress is slow moving. Retail activity can help, but with occupancy incomplete and potentially seasonal, it doesn’t look encouraging at this point.

By: Marco Hernandez

Marco Hernandez — Wed, 30 May 2007 22:37:30 +0000

I believe Forbes is correct. The average household income for Miami-Dade County was $36,089 in 2003 (U.S. Census Bureau). The price of a median home in Miami-Dade County is over $270,000, more than twice what the average household can afford. Just wait until the foreclosures begin to stack up. Too many people have bitten off more than they can chew and it’s just a matter of time before it hits the fan. Buyers should wait it out. They have nothing to lose. Sellers (flippers) don’t want to take a loss and are keeping the asking prices high. Unless we see a large increase in salaries across the board, prices should logically decrease.

By: Wall Street Journal: Florida is Housing Shakeout Epicenter « Boom or Bust: Miami

Tue, 15 May 2007 04:27:08 +0000

[...] recent comment posted here by a reader named Brad describes the current situation as a reflection of “the current [...]

By: Xavier Zayas-Bazan (BoB)

Xavier Zayas-Bazan (BoB) — Fri, 11 May 2007 19:21:04 +0000

CNBC Sources:
S&P/Case-Shiller Home Price Index, February 07′ and McCabe Research and Consulting

Forbes Sources:
National Association of Realtors (NAR), the U.S. Census Bureau and the Office of Federal Housing Enterprise Oversight

By: mikeymia

mikeymia — Fri, 11 May 2007 18:22:19 +0000

Do you know where the articles were getting their data from?

By: Xavier Zayas-Bazan (BoB)

Xavier Zayas-Bazan (BoB) — Fri, 11 May 2007 17:59:54 +0000

Brad brings up a good point, but the price drop down effect will be short term. Some buyers will be desperate to sell because of lack of funds. The market has to correct itself. These people have to be phased out. But look at the median home price of Miami compared to other less active but more established markets. Use the Forbes list. It is much lower. There is enough construction activity to result in the affirmation of Miami as a world class city. In the long run, Miami, with its comparatively low home prices and historically high construction activity, presents a market, particularly the urban multi-family segment, that is ripe for continued value gain.

Regarding the data issues that Mikey points out, one or several buildings coming online is an expected boost in the number of closings. A reality check. Not a skew or distortion. Pre-construction sales data is sketchy at best so closings are the final tally. As far as foreclosures, Miami is high up on the list due to the massive sum of transactions that have and still are taking place. There has been so much hype that many people invested for the wrong reasons and with insufficient funding and planning. This is not a deficiency on the part of Miami’s real estate market, but an inevitable effect of the residential boom and the buzz that trailed it.

By: mikeymia

mikeymia — Fri, 11 May 2007 15:17:59 +0000

Do the condo numbers accurately reflect reality? If I buy a condo in late 2005 in the amount of 500,000, but don’t close on it till 2007 It shows up in the 2007 numbers right? Which to me means that the 2005 numbers are lower then the market represented, and 2007 numbers are a reflection of how the market was in 2005. I think that if this was just a few units it wouldn’t matter but when you have an entire 400 unit building closing on contracts in a short time span (2 months) doesn’t that skew the numbers? If the market is still appreciating at 18% yoy why are condo units in luxury buildings showing up in the foreclosre noitices on miami-dadeclerk.com?

By: brad5720

brad5720 — Fri, 11 May 2007 14:43:37 +0000

I think the Forbes analysis is correct whereas the CNBC analysis is a reflection on the current stalemate between buyers and sellers and sellers’ unwillingness to lower prices. There is no way prices will hold or increase when all those additional units downtown and elsewhere come online in the next 12-18 months. I predict (as does Forbes) that we will see significant price reductions in the condo sector once all the speculator buyers start receiving their closing date notices from developers.