Miller Samuel, Inc., a New York-based property appraisal firm, released a report that described South Florida’s coastal real estate market as a tale of three markets.
Vanessa Grout of Douglas Elliman Florida, the Miami Beach real estate firm that commissioned the report, believes that the biggest portion of the market, distressed properties, is affecting the other sectors and obscuring the housing industry’s image for potential buyers.
“With REOs, which are bank-owned properties, these are deeply discounted properties that are priced to sell fast with little or no due diligence and no financing,” she said, using the industry initials for “real estate owned” by banks.
The Miami Herald reported that the other two portions of the market are new construction and non-distressed resales.
According to Miller Samuel’s report of “coastal communities” in the Miami-Dade County, the non-distressed sector of the market has been moving toward stability this past year. Sales of these homes are back to 2005 levels. Prices, excluding foreclosure and short sales properties, are almost flat.
In the first quarter, the coastal market, had 5,101 existing home sales, which is the most ample total it’s been in five years. However, a high number of distressed sales decreased average prices by 14 percent. The prices of non-distressed properties rose 0.4 percent.
The study concentrated on the more prosperous areas near the water such as: Key Biscayne, Miami Beach, Coconut Grove and Pinecrest. Broward County was excluded from the study.
Jonathon Miller, who formulated the report for Miller Samuel, said the choice to concentrate on waterfront areas was an intentional move to get down into a more refined view of South Florida real estate. Miller believes that region-wide data is too broad for a highly assorted market.
This view is shared by many local real estate agents who are tired of all of the negative news surrounding the overall market’s plummet over the past five years.
Grout believes that some consumers tend to shy away from problems that may arise with purchasing a short sale or foreclosure and instead centralize their focus on the non-distressed market. In the coastal communities studied the median sales price for a non-distressed home increased 0.4 percent from last year and sits at $482,870.
However, some experts in the field believe that due to the interconnectedness of the real estate market, it is inadvisable to not look at foreclosures and short sales.
“We see it done a lot by different Realtors and real estate groups,” said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. “They want to handpick information that promotes the most positive image of the real estate market in order to increase sales for their agents.”
Grout and Miller stress that the report was administered independently and was based on nonpartisan data from the Multiple Listing Service, with no guidance from the real estate company.
The report also mentioned that the difference between the listing price and sales price has dropped from 11.6 percent to 8.3 percent this year, meaning that consumers are moving toward complying more on price.
Sales of foreclosures, in the first quarter this year, made up 64.7 percent of the total sales. This number is up from 54.8 percent last year.
“We’re still relatively sick overall,” said McCabe. “Until the foreclosures and short sales get down to where they are 10 percent or less of the marketplace, we’ll still see prices stay flat.”