Housing Inventory
Miami area homes spent a median of 48 days on the market before they went to pending in October, a 49 percent decrease year-over-year. The data comes from a recent Redfin Real-Time Fastest Markets report, which also revealed that 23.3 percent of listings pended in two weeks or less, a 7.2 percent increase from October 2012.
Furthermore, a recent Corelogic: Home Price Index report found that Florida home prices increased 12.8 percent in October from the same time a year before. This number was slightly higher than the national average of 12.5 percent. These figures are positive signs, but what are area professionals seeing themselves?
Charlette Seidel, Broker, Coldwell Banker Residential Real Estate, Coral Gables
How will affordability affect agents’ clients in the next year?
Well, it always affects clients – you can’t get away from that. My advice is: adjust priorities and there’s plenty of affordable properties. We would all love a 4-bedroom, 2-bathroom house, with a two-car garage and a pool in Coral Gables for $500,000, but it just doesn’t exist. For buyers, they have to set their priorities, and location is always one. You don’t always get everything you want if you’re picking location, which of course many people do.
How will inventory affect the buyer/seller market?
I think in a positive way. It’s going to give buyers more of a choice. When there is low inventory, instead of being able to show a buyer ten properties, you can show them three or four. They have to sit and wait until something comes on the market that they want. And now at this point, we feel there is going to be an increase of inventory, as we’ve seen in the past sixty days, and again more so in January.
Year after year in January, you get all those people that don’t list after Thanksgiving, through all the holidays. They’re doing other things and they just don’t want to focus on selling a house at that time. But by mid-January, we start to see condominiums and houses come on the market. Condominium owners are going to want to put their condos on the market because many of our out-of-the-country buyers want condominiums, not the houses.
And January’s the time to put a condominium on the market, not in August when so many of our foreign visitors are gone. Also, more inventory gives sellers more choices of where to go. One of the complaints we get with a seller is, “When I sell, where am I going to go?” So they need choices just as much buyers do, or they’re just going to sit.
Vladimir Golik, Broker-Owner, Keller Williams Realty Premier Properties, Miami/Fort Lauderdale
How will affordability affect agents’ clients?
This is always a concern when you have double digit appreciation in real estate prices over a short period of time (the last two years). Another factor affecting living in Florida, specifically South Florida, is our insurance cost. Every homeowner always lives in fear of the next renewal period. Many discounts that homeowners were receiving were stripped away this past year after “re-inspections” were conducted.
These two factors will impact the first time buyer and those attempting to move-up the next tier the most, especially those looking in the half-million and under market. I believe home prices have begun to level off, and some areas may see a small correction.
How will inventory affect the buyer/seller market?
The under $500,000 inventory has been shrinking for almost two years, and there is no sign of the reverse. The other factor that caused the tight supply is almost no single-family construction took place in six years. There are some pockets where new developments are under way by mostly the large national builders. This new inventory has been selling very successfully and for top dollar (I would be cautious as a buyer here and recommend to compare).
Most of these prices begin in the high 200’s and then go up. I see the resale market under $500,000 to remain tight, with some loosening in the middle of next year. This is predicated that most of the investors who own and rent homes, mostly the private funds and Reits, keep renting. If they start to sell off, inventory will increase and prices may soften. The higher priced properties and new luxury condo market will be plenty to choose from.
Brian Carter, Realtor, Majestic Properties, Miami
Will home prices keep rising?
Yes, but at a different rate. For Miami, three years ago was high double digit growth, two years ago low double digit growth. This year looks to be 7 percent to 15 percent, depending upon the product. That said, now that we are approaching the longer term valuation of properties in Miami, the growth will be more like the rate of growth of GDP, inflation and job-creation.
If lending opens up more, and buyers earn more cash for down payments and condo associations continue to repair their budgets, upward pressure will be kept on prices.
What will happen with the sellers’ market?
For Miami, we have actually entered a period where buyers only want to pay up to a fraction above the last sales prices and as more of those buyers require financing, prices will grow, but more slowly. For prices to advance, buyers will have to find more cash to come up for a price above the appraisal.
Where prices are now, many people are no longer under water and many of the investors seeing three years of appreciation are ready to start putting the inventory on the market. Currently sales/transactional volume has fallen as the prices sellers are asking are 25 percent – 30 percent above the last sales prices. This gap is not being bridged, as buyers are not paying up. Six months will pass before the sellers who must or want to sell will start discounting their asking prices to a rational level just above the last sold and closed prices. Sellers who don’t have to sell will take the property off the market.
Again, this will lead to growth in prices at just above inflation. For long term buyers, this is a good thing. Buyers just need to be patient and negotiate the best deal possible, as they are buying at historically low rates. One day they will look back and the value of their loan will be the low interest rate, and they will feel like rock stars for buying today and locking in those fixed rates.
Do REOs/foreclosures still have a big effect on the market/will they next year?
These effects are becoming less and less impactful each year. I see many lenders preferring to take back the property and price them above appraised values to see what they may recoup.
Eli Montag, Realtor, Coldwell Banker Residential Real Estate, Miami
Will prices keep rising?
Short term, I believe yes. It’s a still a sellers’ market, there’s still high demand in the Miami area and there’s been no signs of slowdown. Anything that’s well-priced and good quality is flying fast, usually with multiple offers, and I do expect, in the short run, for prices to keep rising.
Is there anything that you could envision causing prices to drop?
History tells us that there we’re do for a market correction eventually. Everything’s cyclical. It just can’t continue to rise at this pace. I think growth will slow, and I think it will plateau and ultimately come down.
Again, that’s just looking back at history and looking at previous years. But the encouraging thing is that everything in the marketplace has been done the right way. Banks have tightened lending policies and buyers are coming up with more cash down. That’s an encouraging sign that should help sustain the growth and hopefully avoid a repeat of 2008.
What are you seeing with the sellers’ market?
I mean the sellers’ market is as defined. There is way more demand than there is supply, so it’s a great time to be a seller in today’s marketplace. If you have a quality product and you price it well, it’s going to fly. I take around buyers all the time and there’s such a limited supply. Until there’s an increase in supply – and we’re starting to see that with a lot of new construction projects – or until the demand goes down, I don’t see the sellers’ market changing in the short term.