By Sunny Isles Real Estate Expert on June 26th, 2011
as well as sales of existing condos in the Miami metropolitan area rose 46 percent in May, 2011 compared to the same period in 2010, according to data from the Miami Association of Realtors. There were a total of 1,420 condo sales last month, up from 972 in May 2010. Miami single family home sales also showed an increase, jumping 20 percent to a total of 875 sales last month.
Most of Miami condos
are purchased by International buyers who continued to dominate the Miami real estate market, with 60 percent of closed residential resales last month transacted by foreign buyers, who also bought a staggering 90 percent of new construction sales. “The current performance of the Miami market is exceeding expectations,” said Jack Levine, Chairman of the Board of the Miami Association of Realtors.
In fact, the volume of Miami home sales rose, continuing a record-setting pace. However prices are still on the decline, although there are signs of stabilization. This logic-defying housing market phenomenon continued to embrace interesting trend lines in May of 2011 — Miami condo sales soared, slashing down the inventory even further, but overall prices fell once again. Furthermore, local sales are increasing while the national market slumps, but local prices are falling faster than the national average.
Here is a full story from Miami Herald – http://www.miamiherald.com/2011/06/21/2277801_p2/south-florida-real-estate-paradox.html or you can read it below:
The region’s real estate narrative is also at odds with traditional market economics. The coexistence of shrinking supply, rising demand and falling prices has left analysts with a number of questions: How long can this frenzied sales pace —fueled by Latin American and cash investors’ appetite for discounted real estate — continue? With inventory shrinking rapidly, when will the strong sales activity translate into price stability and appreciation, as market economics dictate? How large is the “shadow inventory,” and how will those unlisted bank-owned homes affect the recovery?
In Miami-Dade, there were 875 sales of existing single-family homes and 1,420 condo sales, increases of 20 percent and 46 percent from last May, respectively. Compared to April, home sales were up 5.4 percent and condo sales were up 1.1 percent.
In Broward County, 1,142 single-family sales and 1,537 condo sales represented increases of 6 percent and 14 percent over last May, respectively.
In the first five months of the year, more than 23,000 homes and condos have traded hands in South Florida, one of the strongest five-month runs on record. Nationally, 2011 has been a poor year for sales, with double-digit declines nearly each month.
South Florida’s rapid sales pace has helped reduce the region’s housing inventory, which has gone from severely bloated to suddenly lean over the last couple of years.
There are now 31,659 homes and condos for sale in Miami area, down from 61,755 in May 2009.
The crucial “months-of-inventory” figure has slimmed to 7.2 months in Miami-Dade and 5.5 months in Broward, both down to a fraction of their peaks. Economists say that six months of housing inventory is indicative of a healthy market.
So why hasn’t the shrinking supply of homes led to price stabilization?
“We have a whole bunch of pent-up supply,” said William Hardin, professor of real estate and finance at Florida International University . “There’s a squeeze play going on because no one is going to sell a house in today’s market unless they have to.”
The majority of homes that are selling are under distressed circumstances —either a Miami foreclosure sale, or a short sale that doesn’t cover the cost of the mortgage. Those properties — popular among cash investors and foreign buyers — sell at deep discounts, dragging down overall prices in the market.
In the single-family market, May 2011 median prices fell 8 percent to $180,200 in Miami-Dade. Broward suffered a particularly large decrease, with single-family prices falling 17 percent to $188,500.
There are some signs that prices may be beginning to stabilize, specifically in the condo market, where sales have been the most rapid.
In Miami-Dade, median condo prices slipped just 1 percent, to $124,300. In Broward County’s condo market, there was a 9 percent year-over-year increase, with median prices reaching $80,400.
Year-to-date, median prices are up across the market: Miami-Dade condos (36.2 percent), Miami-Dade single-family homes (19.4 percent), Broward condos (16.5 percent) and Broward single-family homes (14.2 percent). While prices are up since January, the year-over-year figures provide a more reliable barometer of values, since they compare the same time periods in the region’s seasonally driven market. It’s too soon to say if sustained appreciation is here to stay, although industry insiders are pitching that message.
But even as South Florida’s market looks to rebound from its worst bust in history, a number of troubling issues threaten to drag out the recovery.
However, two of the factors that normally support a healthy housing industry — a strong job market and significant home equity — are painfully absent in South Florida. In Miami-Dade County, unemployment sits at record high 13.4 percent. Nearly half of all South Florida homeowners with mortgages owe more on their homes than the current value, one of the highest underwater rates in the country.
Stricter lending standards have made it difficult for many potential buyers to obtain a mortgage. In May 2011, 60 percent of home sales were completed without a mortgage as all-cash investors.