Miami-Dade County Pending Home Sales Soar

Ahhhhhhhhhh.

Nothing like starting the morning off with good news.

scriv

I’m guessing these numbers were substantially skewed by the expiration of Obama’s $8,000 freebie to homebuyers. It will be interesting to see if the uptick remains true throughout the summer and, if so, if there’s an accompanying (and non-trivial) increase in prices.

1 in every 100 visitors? Maybe more like 1 in 1,000. Otherwise, Miami would need even more condos than it has now.

Joe

Couldn’t agree more… This news has absolutely nothing new.

Wait until you get the numbers for the summer and you will see that the numbers don’t look that great. The $8k tax credit is affecting these figures dramatically

PMI, a mortgage insurance provider, listed what it sees as the riskiest housing markets in America. Florida rocks it.

All I can add to this discussion is that I closed on the sale of of my 925SF condo yesterday. Cash buyer, did not need or use the $8K credit. $250/SF for a ground floor garden apartment. I lost a ton on this this investment, but still…

Also, I am looking to rent a condo when my lease expires. In the buildings I know well on South Beach, asking rents are definitely up 10% -20% plus compared to a year ago.

I can’t speak for the newer buildings on the mainland, especially those in bad areas, but I am convinced that the market for prime real estate has bounced back. Not for people who think they are going to recover what they invested in 2006, but there is activity out there.

Gtreat, love hearing good news!

I said “Usually 1 in every 100 visitors falls madly in love with Miami and decides to buy a place here. Some of them do go the extra mile and make it happen”
The key word is SOME OF THEM.
So if 1 out of 10 or 20 people who want to buy actually make it happen, then it is close to what Joe’s number is like which is 1 in every 1000 or 2000 visitors to Miami end up buying a place here. That does not seem so far fetched. Does it?

I saw this on Miami Today. They quoted Lucas extensively!

End-users, long-term investors snap up downtown Miami condos

By Yudislaidy Fernandez
After a 2009 marked by discounted bulk sales, more long-term investors and end-users with financing are now buying downtown condos.
The investor-owned units temporarily occupied by renters, plus those who’ve bought into the downtown condo lifestyle, are clearly changing the direction of downtown. Even in the slowly-recovering economy, retailers and restaurateurs are drawn to downtown’s growing office and residential community.
Lewis Goodkin, a Miami-based real estate analyst, says in recent months the downtown condo market has been seeing end-user financing become available as mortgage giant Fannie Mae has approved several condominiums for financing.
As more prospective buyers get these home loans, Mr. Goodkin said, that will transfer into a definite pickup in sales activity.
Smaller investors looking to buy long term are also reentering the market, he said. “These buyers are different from speculators looking to flip it,” he said. “These investors have a long-term mentality, like “it’s only going to get better’ type of thought.”
Realtor Lucas Lechuga, who specializes in condominiums, says since January when Fannie Mae announced the reassessments of condo towers in greater downtown — agreeing to approve more of them for financing — condo prices have bounced a bit.
Cash buyers were the ones closing on condos last year, he says, but now buyers with financing are competing with investors for available units.
Condominiums such as the Club at Brickell Bay, Vue at Brickell and most recently Marina Blue are now Fannie Mae-approved for financing, he said.
Mr. Lechuga, who sells units at Marina Blue, says last year units there were selling at $200 per square foot and today some of those units back on the market as re-sales are priced at about $300 a square foot.
“Prices are more in line to what they should have been last year if there hadn’t been so much supply and not enough demand,” Mr. Lechuga said.
With downtown attracting national and international investors, particularly from Latin America, many of them are buying the units and then renting them to others while they wait for the market to stabilize to sell, the realty experts said. Some are prepared to wait five to 10 years to get a return on their investment.
In the meantime, the increase in ownership and the influx of renters “have really accelerated absorption in the downtown area,” said Mr. Goodkin, president and chief executive officer of Goodkin Research Corp., who collaborated on a new downtown occupancy study that shows condos are filling up.
The study indicates that 74% of the 22,079 residential units built in downtown Miami since 2003 are now occupied. This reflects a 12 percentage-point increase over the 62% occupancy reported in a similar study last year. Both studies were conducted by Goodkin Consulting/Focus Real Estate Advisors in partnership with Miami’s Downtown Development Authority.
“More residents are the only way to enhance downtown,” Mr. Goodkin said. “The more you get, the more demand there is for retail, restaurants and services. Those renters are here all year around.Ö That’s a big positive for downtown.”
And the impact is starting to show, as last year more than 40 new retail businesses opened downtown.
Mr. Lechuga, a Realtor with Keller Williams Realty, says many condos that are now occupied sat empty just a year and a half ago. He agrees with Mr. Goodkin that the new residents who are moving in, many of them renters, are luring the stores and restaurants to follow them.
As a result, the rental inventory is drying up.
“Not as many units for rent as last year,” Mr. Lechuga said, citing that at Marina Blue there’s only a handful of empty rentals. Rates vary throughout downtown depending on the condominium, he said, but monthly rent can range from $1,600 for a one-bedroom apartment to up to $2,700 for a two-bedroom unit.
When it comes to for-sale units, Mr. Goodkin calls downtown’s condo values a mixed bag because there is no consistency in prices. He says a main reason is that the various owner entities are not on the same page.
The Related Group of Florida is being more aggressive in pricing and has elected to rent some units, he said, while Starwood, which controls several downtown condos after its acquisition of a Corus Bank loan package, has yet to make big moves.
Peter Zalewski, a principal of brokerage and consulting firm CondoVultures, says in properties like 1,800-unit Icon at Brickell, the developers are going back to pre-construction contract-holders at risk of losing their deposit and offering the units at discounted prices.
“In some circumstances, they are buying for 50% of what they put their money down for and they feel they are getting a great value,” Mr. Zalewski said.
Of the 6,600 new, unsold units in greater downtown, the trio of Related Group, Starwood Capital, and Cabi Developers control 57% as of the end of the first quarter, according to a CondoVultures report.
The company tracked 726 closed sales in the first quarter in this area, with buyers paying an average of $326 per square foot for these new condos, down 9% from last year.
Of a total of 82 boom-built condominiums, the sales translate to 35 condo towers now sold out, the report says, and 24 other projects that have sold at least half their units.
Downtown’s condo market is starting to be depleted compared to the clusters of condos available just a few years back, Mr. Zalewski said.
Now, he says, the bulk of the inventory is in the hands of a few developers and buyers have fewer options.
“It’s all starting to show signs of stabilization,” he said. “There’s no longer this overwhelming supply.”

I guess other people are a lot more easily impressed than I am. The story above says Miami’s downtown occupancy rate has increased just 12 percentage points over the past year (to 74 percent). Given that prices dropped substantially in 2008-09 and that every buyer incentive under the sun has been available, this doesn’t seem like a huge gain.

Makes me think, a total disaster was averted by some high risk (and very expensive) policies by the government to help the bond market and housing. But things are not rosey for people who own much of these assets-very much including real estate. it is down BIG TIME. down as far as some have suggested, no. but it is not recovering anytime soon. the market seems to be hanging in between the bulls and the bears prediction-probably where it should be after all. and just as a reminder, last year there were some significant deals to be had if someone was willing to spend capital in the market-but the risks kept most on the sidelines.

hugo,
there are so many holes in your theory, I don’t even know where to begin. But suffice to say, you will keep passing all your life. Home ownership will just be a dream for you.

Like I said before you experts keep runing the numbers over and over again and it just doesn’t make sense tto you but the people who bought those condos last year and have already cashed out are laughing while they count their money. Just face it guys, you missed a couple of chapters in the book so you will always be left scratching you head wondering how the people at the top got there.

Come on, Lucas. According to the latest story in which you were quoted, the average sales price of new condos bought from developers is DOWN from last year. That’s hardly indicative of a big bull market that us pessimists have lost out on. There might have been some great individual deals, but it’s not like the market as a whole has reversed and we’ve all missed the boat.

As I said above, a 12-percentage-point increase in Miami condo occupancy at a time when unit prices and mortgages were low and buyer incentives were high isn’t a huge increase. Again, according to the latest article, a little more than 1 in 4 Miami condos sits unoccupied. That’s still an incredibly high number, and a number that will continue to put (downward) pressure on condo prices, ESPECIALLY in any price segment higher than the $0 to $250,000 segment in which 90-plus percent of all action is taking place lately.

Lucas, my guess is Hugo is less critical of the previous purchase as the latest purchase. If you got the purchase at $200 sq ft, it is a great deal (although one has to wonder the legitimacy of unit 5404 being sold to the entitiy CINQUANTAQUATTRO04 LLC). But the current price is $325 sq ft. From your listings (not developers obviously) there were 6 of 16 sold above $300 sq ft. The price is within the range of previous sales, but “well priced” for a decorator ready unit? Great unit and view, but what do you think it will sell for in 5 years? Just curious about your view.

Also, i wouldnt delay the post in moderation over a $2400 vs $3000 difference in opinion over rent. You are right. But since really no weight was given to a much bigger issue of interest on the mortgage or lost interest earned on capital, in the area of $30k a year, the $7k a year difference in rent is not that big of a deal. Keep up the good work, your posts are becoming active again. Any chance we can see your latest numbers on Brickell buildings like you posted in the past?

Yes, I stand by my words that unit 5404 is a well priced unit even though it’s decorator-ready. There are only six units like it in the entire building. This past December we sold unit 5108, another premium unit, for $431 per square foot. That was BEFORE the building became Fannie Mae approved. The availability of financing creates an increase in demand. That should go without saying. Try to find a 2 bedroom of that size, with that type of view, in a newer building for under $600K. There are only a few of them.

Let’s forget about bulk sales for a minute. There were also individual units to be had at extraordinary prices last Summer. For example, unit 1602 at Marina Blue was a completely finished unit that sold as a short sale for $220 per square foot. It went under contract last June and closed in October. Last week, an UNFINISHED one bedroom around the same floor went under contract for $305 per square foot.

why bother
Please go ahead and fill in the holes. Very interested to hear your views, but please provide facts and numbers and not the usual “the market will rebound” kind of stuff. And BTW, I am a home owner, thank you.

I brought this up because this website is called MIAMI CONDO INVESTMENTS, and everytime I have posted in this site I have mentioned that some of these purchases don’t make any sense AS INVESTMENTS . If you are to live in one of these units, things change dramatically.

Lucas, if the unit rents for $3,000, then using my numbers you will get a return of 1.6%. A bit better, but still nowhere near the returns required for an iliquid investment like real estate unless you are expecting significant appreciation in the next 5 years. That means you probably think this unit will sell for something like $700k in 5 years. Like gables said, very interested to see what you think it will be worth in 5 years.

Gables
You are absolutely correct. The deal at $206psf was more attractive to me, I am just having a tough time understanding the rapid apprectaion on some of of these condos, but I guess the market is what it is.

Also, as per your comment to Lucas on the reasoning behind my post “awaiting moderation”, I completely disagree. I have been posting on this site for many years and it’s absurd that my post gets held back for that issue alone.

Finally: I am not being a pessimist. I have been helping many people in their efforts to buy a unit that provides some decent cash flow but have been unable to do so. All decent returns are dependant on appreciation and I don’t see big gains over the next few years with rates going nowhere but up and govmt programs ending.

w/ stock market reflated, and govt support it did support RE prices a bit..But mark my word..2011 would be a horror….

why bother, i agree with you on possible future supply of housing. it will create a bit of a conundrum. as supply dwindles, demand will rise along with prices-in theory. my big question mark is on the demand side. will demand be as voracious as the past decade? this was fueled by investors AND homebuyers with access to cheap money following the belief that housing prices never fall-so no matter what price you purchase at you can still sell out of the position at a future higher point. we will have fewer investors and homebuyers going forward-and cheap money at some point will disappear. if money is still cheap in a couple of years then another bubble could form? but if money becomes expensive demand will be lower than the past, but at rational levels. lack of clarity in price appreciation does not help the issue.

gables, why bother — Downtown Miami has a 74% occupancy rate, with full occupancy not expected to be reached for 2-3 more years based on the current absorption and rental rates. That would bring us to between mid-year 2012 and mid-year 2013. Even if the economy recovers in roaring fashion, I can’t imagine there will be a “severe shortage” of housing by 2015, least of all in Miami. I’m really curious about your underlying logic on those projections/fears, especially given the lack of cheap and easy credit (and the general lack of good jobs coming to Miami).

gables — I understand that housing starts are way off, but after the historic overbuild during the boom years, it seems like it will take more than 3-5 years for a shortage — real or perceived — to affect Miami r.e. prices. I understand your point about buyers wanting to see 100 units instead of 10, but I think the probable lack of easy, cheap credit will more than offset that factor.

——

JL — I forgot to reply to you last night, but I agree 100% with your comment about the $400+ market. That segment is all but stagnant today, despite prices that have often been slashed 50% or more from boom prices, mortgage rates that are at or near historic lows, and the availability of all sorts of buyer incentives from Uncle Sam, developers, etc. Based on current absorption rates, Miami has at least a 5-year supply of higher-end condos, so I can’t imagine there will be a shortage in any price segment come 2015, except possibly the low-end $0 to $250,000 segment in which 90% of the sales are occurring right now.

Mortgage borrower delinquency rates in the first quarter of 2010 continued to be highest in Nevada (15.98 percent) and Florida (14.65 percent),
With regard to regional forecasts, Florida is anticipated to experience the highest mortgage delinquency rate by the end of 2010, reaching as high as 18.2 percent.
http://www.marketwire.com/press-release/TransUnion-National-Mortgage-Delinquencies-Fall-174-Percent-in-2010-Opening-Quarter-1256842.htm

More than four of every 10 owners of single-family homes in the Miami-Fort Lauderdale area owed more on their mortgages than their homes were worth at the end of March, according to a report released Monday. In March, just over 51 percent of all homes that sold in the area, which includes Miami-Dade, Broward and Palm Beach counties, went for a loss. And 83 percent of all homes — not only those that sold — saw their values decline year-over-year.
The report said home values fell nearly 10 percent from March 2009 to March of this year. The median price of all homes in the area is now $160,700.

Home sellers in South Florida (Miami/Ft. Lauderdale/Palm Beach) had the largest price reduction percentage, compared to the original list price, at 13.38 percent on average, or a median price reduction of $30,900

why bother — “4 in 10 is nothing”? Seriously?

The article says 83% of Miami’s homes declined in value year over year, so how do you figure the number of homes underwater “used to be much higher”? Did Miami homeowners dump a lot of extra cash (equity) into their homes over the last year to make up for the declining prices? If not, your math doesn’t seem to add up.

Here is a blog post addressing the situation of people underwater who should be walk away but aren’t:

http://blog.altosresearch.com/maybe-ltvs-dont-matter-as-much-as-you-think/#more-1548