Real Estate Market Recovery Patterns

Matt Woolsey at Forbes comes up with a great analysis on the national real estate market downturn and the recovery patterns that often ensue. It references three recovery pattern types:

  1. V-shaped: “where a market experiences a sharp, fast decline but comes out strong once it hits bottom”
  2. U-shaped: “where prices decline gradually and recover slowly”
  3. L-shaped: ” a hard, fast fall with paltry price bounce back following the market trough.”

A strong real estate market is cited as having a 1.5% vacancy rate. The current national average is 2.8%. In Miami and Tampa the figure is around 3.5%–Atlanta and Denver are in the same boat. Tampa is mentioned as following the V-shaped recovery pattern.

High investor shares are cited as the main factor in deepening the price dive. Tampa, according to the report, has a 25% investor share; Phoenix is mentioned having a 26.1% investor share. Although the article does not reference Miami’s investor share. recently, real estate analyst Jack McCabe was quoted in the NY Times as saying that up to 70% of the condos purchased during the boom in the Miami area are investor-owned.

Is Jack McCabe’s number too high? What source substantiates it? What recovery pattern could Miami follow? Is it too early to tell? Is the recent report regarding Jade a microcosm of the larger picture? There are many questions but the article presents an interesting method for looking at the problem.

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