Home Price Increases in Miami Slow Over The Summer

By Sunny Isles Real Estate Expert on October 10th, 2015

Miami homes for sale

Over the past several years, Miami real estate professionals have seen some massive growth in the home prices in Miami. However, as with any increase in this business, there comes a time when things start to stabilize, and it looks like that’s what is happening right now. The home prices from June 2015 are beginning to level off. This should not be seen as a bad thing at all. It’s a natural correction that the market needs to go through to remain on the right track. This ensures that the prices do not get to the point where the number of buyers is too limited, for example.

The price of homes in Florida has been rising steadily since the end of the downturn. The recovery period has been very good to Florida, as it has with many other states. In fact, many states in the country have seen a significant return to the strength of their real estate market. There have been steady increases in home prices for 40 months and counting.

What’s Happening to Slow Things Down?

Data shows that there is still growth; it just happens to be slower. Between May and August of 2015, there was a growth of 0.3%. Even though it is an increase, it is the lowest increase in the year so far.

In addition, the number of homes for sale in the area is starting to shrink. However, the number of buyers is certainly not shrinking. If anything, it is growing stronger. People are very excited about buying condo in Miami. They are simply finding fewer properties available, which could certainly lead to a seller’s market, and that could help to keep the prices where they are, or keep them rising at a slow pace.

While it is possible that the prices could increase significantly in a buyer’s market, we’re unlikely to see a big spike. As mentioned, the market is trying to correct itself right now. What is more likely to happen is that the increased demand for properties will encourage more sellers who have been on the fence to list their properties, knowing that they have a very good chance of selling quickly and of making a good return on their investment. This is slowly but surely getting people more interested in selling their properties in Miami.

What does it mean for buyers and sellers? It means that right now is probably a very good time to start looking for a property in South Florida. Since the prices are not getting out of hand, it is possible to find some quality properties. Just keep in mind that there are quite a few others out there doing the same thing, so you don’t want to get into a bidding war over a piece of property if you can help it. Look for properties that are new to the market. Though there are fewer homes available now than in the past, there are still plenty of options that might be just what you need.

Second Quarter Sees Growth of Home Sales in Miami

By Sunny Isles Real Estate Expert on October 3rd, 2015

Miami real estate for sale

There is no question that Miami is one of the hottest cities when it comes to real estate, and it has been doing quite well every since the economy and the real estate market started to recover. They city and surrounding area has seen a nice increase in the number of sales, as well as the price of homes, in the second quarter of 2015 when compared with the previous year.

Miami Is Still the Place to Buy

During the second quarter (April, May, and June) of 2015, there were 3,913 homes sold in Miami. This number marks an increase of 7.2% over the same months in 2014. During that time, the median home price happened to go up as well. It rose 10.6% from $245,000 to $271,000. Normally, when the prices go up by more than 10%, you don’t see the number of sales go up as well. People tend to slow down and consider other areas. Of course, Miami doesn’t have that trouble at all.

People want to live in Miami, even if they might be paying more than they would have a year ago. The vibrant city, the proximity of the beach, and the fact that the real estate value has such a potential to keep rising is encouraging more and more people to buy in Miami. Some of the buyers are from the United States, but there are a number of foreign buyers as well. Canada and China are just two countries that have a lot of residents looking at Miami property.

Another thing to keep in mind is that the number of homes offered between last year and this year has remained about the same. Even though there is approximately the same number of homes on the market, the sales have picked up, and that means that buyers are going to be competing for properties. Naturally, this has the potential to push the prices higher, as it becomes a seller’s market.

Both buyers and sellers are confident in the market, and that is really helping to push the sales to the next level. Considering the fact that mortgage rates today are actually very low, and that the price of the homes, even though they’ve been rising, are still affordable for many buyers, and it is easy to see why the sales have been growing this year.

While the single-family homes have been doing very well, the sale of condominiums has slowed down slightly. According to reports, even though the sales prices for condos increased, the number of sales dipped by about 1.8%. New listings for condos dropped as well, but that certainly doesn’t mean condos are necessarily struggling.

The Miami condominium market is faring decently when compared with many other areas, and with the increased interest in Miami, it is possible that the sales will pick up between now and the end of the year. With all that Miami has to offer, it is no wonder the desire to live in the city is continuing to rise.

Hibiscus Island Popular with European Buyers

By Sunny Isles Real Estate Expert on October 1st, 2015

Hibiscus Island homes for sale

Beautiful Hibiscus Island has been a very popular location for luxury Miami waterfront homes for years, and that popularity is now crossing the pond. European buyers have been purchasing high-end multimillion dollar properties that are right on the water recently. Even though the value of the Euro is not as high as it once was, this has not really stopped the popularity of the Miami area. Buyers from Europe are still very interested in Miami homes, and they want nothing less than the best. That’s just what they are finding on Hibiscus Island.

Why Hibiscus Island?

Well, there is a lot to love about the island. Many of the lots are very large. One home that sold recently was a 5,643-square foot house that sits on a lot that’s 13,781 square feet. Another property offers a 4,251-square foot home on 15,750 square feet of land on the waterfront. Many of these homes are large and have massive properties. Those who are looking for larger properties that can offer a greater element of privacy tend to like this option.

They also love the fact that they have an ideal location. Those who live on the island are only a short distance from both Miami Beach and downtown Miami. It really is a perfect location. Since it’s on an island, it tends to be very safe. Getting around the area can be fast and simple, and the residents love the convenience. Whether they want to find entertainment in the downtown area or spend some time relaxing on the beach, it’s all very easy.

One of the interesting things about the properties on Hibiscus Island is the fact that the Europeans who are buying are not using them as investment properties that they will rent out. While it’s possible to charge a substantial amount for rentals on the island – some can fetch more than $40,000 a month – the buyers are looking for places that they can actually call home. They buy the property and become the end user. Some may want to make changes to the property and to develop it further with the goal of creating a true dream property.

More Buyers Are Looking at the Island

The Island has seen several large sales over the past couple of months, and as soon as property goes up for sale, you can be sure that it will have plenty of eyes on it. While the Europeans are some of the most prominent buyers, there are actually buyers from plenty of other locations that are falling in love with Hibiscus Island. The homes tend to be on the higher end of the pricing scale, but given their size, the land, and the amount of things that the buyers can do to upgrade the properties, which might not be possible with condominiums, makes the price well worth it. This is certainly one of the areas that you will want to watch if you are interested in the movement of real estate in the Miami area.

South Florida Home Price Growth Is Slowing

By Sunny Isles Real Estate Expert on August 20th, 2015

Miami real estate

While the homes in South Florida have seen nearly continual increases over recent years, a new analysis by RealtyTrac shows that those rises are starting to slow. The analysis showed that while home prices increases grew by 20 percent year over year in 2013, they dropped to only 10% in February of this year.

While Pompano Beach and Fort Lauderdale also saw the same drop to only a 10% increase, this is actually reflected on a national level as well, with other major cities seeing the same rates of slowing appreciation. Overall, however, some experts feel that this decline is not necessarily a bad thing.

Potential Issues with Continued Increases

Ob Jacobi, who is the president of Windermere Real Estate in Seattle explained that “if homes were to continue appreciating in the double digits for too long, we could run into the same boom/boost market of years past”. Considering that the wages have not kept up with the increases in home prices, this may be a very true statement in Miami. The report also indicates that future expectations for home prices is that they will rise only single digits, rather than the double digits that realtors and investors have come to expect in the area.

Other Statistics

The report also provided other notable statistics as well. While average home prices have seen a decrease, those that have a $1 million price tag or higher have actually increased in the percentage of sales by 4.25%, which is higher than the previous year’s 3.46%.

The report also showed a few interesting changes in median home prices and foreclosed properties. As of February, the US median home price was $183,000, which is an increase of 14% over the previous year. Foreclosed property prices also increased by 17%, leading to an average price of $127,000. This jump shows that the previous savings seen on foreclosed properties after the 2013 mass distressed buying is waning, which will also help slow appreciation levels down to single digits as home buying returns to a more even market.

New Highs in Other Cities

While Miami and a majority of other major metropolitan areas saw decreases in home prices, there are others that fared much better. Denver, Colorado, San Jose, California and Austin, Texas all saw historic median home price increases over the last year.

Increase Drivers in Miami

The reason that there is not much concern over the 50% decrease in Miami is simple. The boom in Miami luxury condos and residences, many of which were purchased with foreign cash, is one of the main reasons the home prices were increasing so dramatically. As these multi-million dollar homes were moving in and being sold, it was driving the prices of single-family homes up, as well. This was since many middle-class residents started moving further inland.

Even with these on-going changes, there is little doubt that the Miami real estate market is still growing strong, and as far as luxury homes go, doesn’t show any sign of slowing in the near future.

Foreign Real Estate Investors in the US

By Sunny Isles Real Estate Expert on August 13th, 2015

Miami condos for sale

The top five foreign retail investors in United States real estate have invested over $17 billion as of the first quarter in 2015, but the numbers show that Singapore is overall leader.

First Quarter Investments

Real estate in the US has become a major investment for foreign countries, with Manhattan proving to be the most popular choice. The current NGKF Capital Markets report shows the breakdown of the more than $17 billion, and the results are surprising:

• Germany – $1.4 billion
• Australia – $1.7 billion
• China – $2.5 billion
• Canada – $3.6 billion
• Singapore – $8.1 billion

Singapore’s massive investment is staggering on its own, but considering they did not make it to the top five list at all in 2014, these rankings become even more impressive. At the current investment pace, and with Singapore’s stunning investment increase, 2015 could prove to be a record year for foreign real estate investment.

Manhattan Foreign Investment

Even though Singapore has seen a drastic increase in their US real estate investments, they don’t come close to any of the other major players when it comes to investing in Manhattan. A majority of the top five, as well as several other countries, spend their money in Manhattan, which made up 31.6 percent of the overall foreign investment capital. Over the past 12 months, investments in the city are as follows:

• Malaysia – 2.4%
• Germany – 3.3%
• Qatar – 3.7%
• Japan – 5.3%
• Brazil – 5.8%
• Norway – 12.3%
• Canada – 25.6%
• China – 26.6%

China and Canada are the foremost investors in Manhattan, and they have made a number of lucrative investments in premier skyscrapers in the city. January saw the Ivanhoe Cambridge investment firm spending $2.2 billion on the 3 Bryant Park office building in a deal with Blackstone. During the month of February, the Chinese Anbang Insurance Group closed a deal on the iconic Waldorf Astoria for $1.95 billion, making it the largest single Manhattan property investment for China.

Record New York Investment Levels Expected

According to the Preqin research firm, sovereign wealth funds have already shown a major increase in investments in the past year, with a staggering $6.31 billion growth. New York’s, and most importantly, Manhattan’s, popularity as an investment destination for sovereign wealth funds has already climbed to over $2 billion within the past 12 months. Those figures are expected to continue rising.

New York’s popularity as an investment destination is based on two things: its stability overall, and its ability to soak up massive sums of money quickly. Recent purchases in the Big Apple, such as the Norway-based Norges Bank Investment Management investing $1.74 billion in office buildings and the $337 million investment by Abu Dhabi Investment Authority on the Ian Schrager New York Edition Hotel, are impressive. These investments, along with others that are currently in negotiations, show that there is plenty of potential for a major increase in the amount of money that could be heading into New York in the coming year from foreign investments.

Residential Home Sales Rising

By Sunny Isles Real Estate Expert on August 8th, 2015

Miami Beach homes for sale

A new report released by the Miami Association of Realtors shows that homes sales are continuing to rise in Miami. The largest increase was in Miami single-family homes, which saw a year over year increase of 14.2% over February of last year. Condos are also still on the rise, with an increase of 1.4%.

These increases brought the total home sales in Miami in February up to 2,174, which is an improvement over last February’s sales of 2,036. So what’s behind these increases? Many realtors believe it’s a combination of buyer demand and seller confidence. (Click Here to view recent home sales in Miami)

As confidence and buyer demand continue to grow, they are creating listings that are more active, as well as driving sale prices higher in the process.

Cash Sales

Cash sales are another major part of Miami’s real estate market. While there was a decrease year over year compared to last February, the sales did increase from January to February. With all-cash sales last February making up 62.5% of all closed sales, and this February’s numbers being at 58.8%, there was a noticeable drop. However, month to month increases from January to February were 57.2% and 58.8% respectively.

While the Miami Association of Realtors believes the year decrease is due to the lack of loans from the Federal Housing Administration, Miami is still doing well. In fact, Miami all-cash home sales are over double the national average, which is a good indication that Miami is the place that buyers go when they want luxurious homes.

Other Real Estate Numbers for Miami

Considering how Miami compares to the national averages, there are also other benefits in the real estate market. The number of short sales from February of 2014 to February of 2015 saw a decline, with 35% of the total residential sales in South Florida being distressed sales. Last year, those sales were at 36%.

At this time, active listings are also up by nine percent over the year, with almost a nine-month supply of available condos, and over a five month supply of single family residential homes available. On average, the real estate market in an area is considered balanced when there is a six to nine month supply of available homes. While single family homes aren’t quite there, these numbers are expected to continue increasing based on the comparison of numbers from February 2014.

The current level of homes and condos, as well as the increased sales in Miami, have made them one of the most active in the entire United States. The demand for homes is both from local domestic buyers and overseas buyers. The number of foreign buyers continues to increase in the area, and a majority of these represent the all-cash sales as well. These buyers are coming to Miami and South Florida for investment and second homes.

While it will remain to be seen if Miami maintains year over year increases in home sales, the growing popularity with foreign buyers looking for luxury homes is still on the rise, and this provides major benefits to the SoFla economy.

The Retro Revival of MiMo – The Miami Modern Biscayne Boulevard District

By Sunny Isles Real Estate Expert on July 31st, 2015

Miami real estate

MiMo is the name given to the Miami Modern Biscayne Boulevard Historic District, but it also describes the architecture found in the area between 50th and 77th streets that were built between the late 1940s and early 1970s as well. While the motels lining this strip were once the chosen locales for prostitutes and drug dealers, it has now become one of the hippest areas in Miami’s Upper Eastside. (See properties for sale in the area – http://www.sunnyislesmiamirealestate.com/Design-District/)

Leading the Way

The force behind this once downtrodden area becoming the MiMo hotspot it is today is former Miami Beach residents who’ve decided that home ownership and a yard to call their own is a better option than a beachside condo. Along with them are plenty of boutique and shop owners, modern office spaces, trendy new restaurants and period hotels that are transforming Biscayne Boulevard.

MiMo Players

There are a number of buyers and developers snapping up spaces or putting down roots in the MiMo district who want rehabilitate these retro locations, and change the perception of Biscayne Boulevard in the process. One of the major players in Avra Jain, whose purchases and renovations started with Vagabond Hotel. Since that purchase in 2012, she has spent over $12 million on real estate in the area, as well as untold renovation costs.

Greenstreet Real Estate Partners, which is a real estate investment fund valued at $1.5 billion, is another developer making strides in the area, with over $14 million spent on office properties and retail space.

The MiMo Attraction

So why are all these developers and transplants choosing a retro-revival of the Miami Modern District? Because the current costs of buying and renting are still a relative bargain. However, with the influx of interest in the area, rent has gone up as well for retail space. With a 50% increase throughout the area over the last three years, it has left some worried that the increased prices and the costs of renovation will eventually drive rents too high, and force businesses to close that can’t charge enough to offset the increasing costs.

Others in the area disagree with this fear, as they believe that the purchases are based on actual business plans, rather than simple speculation, and a desire to return Biscayne to its former glory.

Changes from 51st Street to 77th Street

Biscayne Boulevard has become an investment retro-revival from 51st Street all the way to 77th, with investors and developers truly trying to make a difference in the area. In addition to Jain’s Vagabond Hotel, there are 16 other major properties along the Boulevard that are either in the process of being renovated, have already undergone renovation, or are slated for building to start in the near future. All of this shows that there are plenty of people and residents that are discovering MiMo, and doing their best to return it to something more than its former glory. With all the changes, and the numerous businesses and developers flocking to the area, it’s clear that this is one area that is worth watching and considering.

No Housing Bubble in Sight

By Sunny Isles Real Estate Expert on July 21st, 2015

Miami real estate

Statistically speaking, housing is on a roll. Year-to-date home sales are up 6.3 % and prices in May were 7.9% higher than a year earlier. The trends are expected to stay positive and are likely to boost business dollar volume by as much as 15% in 2015. These statistics don’t even include new home construction, which is growing at a strong clip as well.

But this rosy picture does raise concerns about affordability. After all, wages are rising by only 2% annually and renters are getting squeezed, having to endure 4% rate hikes while home prices accelerate more quickly. In addition, mortgage rates have notched their highest level of the year, reaching about 4% in June, and should continue to rise well into next year.

Some armchair analysts have suggested that we’re entering a new housing market bubble. But hard facts suggest otherwise. Underlying conditions today are fundamentally different from the bubble of a decade ago. Back then, credit was easy to obtain and home sales were running at more than 8.5 million a year (existing and new homes combined). New home construction volume topped 2 million annually.

By comparison, credit today is extremely tight, which has led to an unusually high level of all-cash sales. Home sales are barely over 5 million and new home construction is barely scratching 1 million units. Meanwhile, for the past eight years, total mortgage balances have failed. The reasons show what’s changed from 10 years ago: home owners are paying their mortgages on time and few are seeking cash-out refinances.

It’s fair to ask, though, whether at some point affordability problems will choke off home buying. That’s possible. But there’s my thinking about what could neutralize those fears. After running various scenarios, I expect home prices to rise continuously as long as mortgage rates remain under 6%. Early in the summer, the average rate was 4%. It may rise to 5.5% by the end of next year. Should mortgage rates cross the 6% mark, maybe two years down the road, then either home prices will be flat or other forces will be evident. Going forward, keep in mind that robust job creation and meaningful increases in income levels will help propel home prices. For now, though, no bubble or impending crash is in sight.

By Lawrence Yun, NAR (National Association of Realtors) chief economist.

International Buyers and the South Florida Real Estate Boom

By Sunny Isles Real Estate Expert on July 12th, 2015

Miami homes for sale

Over the past four years South Florida has seen record-breaking real estate sales. According to a report completed for the Miami Association of Realtors, Latin American buyers are leading the way in driving those real estate sales higher.

The Ultra-Rich Buyers

Ultra-rich buyers are snapping up luxury residences in Miami-Dade County and Broward County at a record pace. According to reports from 2014, 68% of these buyers are from Latin America. Rounding out these buyers are:

• Argentina – 12% of sales
• Brazil – 11% of sales
• Columbia – 8% of sales
• Canada – 7% of sales
• France – 5% of sales
• Mexico – 4% of sales

In addition to the foreign cash from these locations, China joined the list in Miami with 2% of the total sales, and this is the first time they have been on it. Considering that China is one of the strongest markets for new business, this can have major benefits for Miami home sales.

International Buyers Love Miami

In order to understand just how much international buyers are increasing Miami real estate sales, it’s important to understand just how much they are paying for their new luxury homes. Among these ultra-rich international buyers, 28% spent over $500,000, with 9% paying as much as $1 million or more. The average price per purchase comes in at just over $444,000, which is considerably more than the national average of only $245,000. Another important bit of information – 81% of these purchases were paid for in cash. These purchases have led to Florida leading the nation in international transactions, with a staggering 23% in 2014.

Why are so many foreign investors leaping to make purchases in Miami? Besides the gorgeous weather and beautiful surroundings, there are two other important reasons:

• Security of Assets – When these buyers invest their own fortunes in American properties and dollars, they protect themselves from the decreases in value that occur with the currency from their own countries.
• Luxuriousness – Another important factor for these increases is the extravagant luxuriousness of the homes that are available in South Florida. Developers understand that foreign buyers want the best of the best, and they are doing everything they can to provide it. By building residences that answer to the discerning tastes of the ultra-rich, they continue to drive massive sales.

Single-Family Homes in Miami

While the influx of foreign investors in Miami has driven the increases in luxury home prices, that has also had an effect on single-family homes as well. February numbers showed that the median price for a single-family home in Miami increased by 7.9% over the previous year, coming in at $245,000. Condos also saw an increase, with median prices jumping to $189,000, which is an 8.4% increase over the previous year. The increases in February marked 39 months of increases on single-family homes, and 44 months for condos.

While all of these increases are considerable benefits, major players in the Florida real estate market caution that it is important to remember that balance and discipline are still important to ensure that these increases continue, without causing major problems in the future.

S&P Case-Shiller Indices Show Miami Had Highest Gains

By Sunny Isles Real Estate Expert on June 30th, 2015

Sunny Isles Oceanfront condos

According to the S&P Case-Shiller Home Prices Indices for January 2015, Miami real estate – view website had the second highest gain year over year in the last 12 months, with an 8.3% increase in home prices. Additionally, the city tied with San Diego and Charlotte for month-over-month increases, with .7% rises.

Year over Year Increases

S&P Case-Shiller provides both 10-City and 20-City Composites for year over year prices, and both saw increases for year over year numbers over December’s totals, with the 10-City showing an increase of 4.4% compared to December’s 4.3%. The 20-City Composite shows an increase to 4.6% compared to the previous 4.4% increase.

Month over Month Indices

The month over month indices, however, showed a decline of .1% with a majority of the cities showing no change. The report explained that the noticeable decline in cities such as San Francisco, which has a .9% decrease, and Washington, D.C., which had a .5% decrease, could have been due to the weather that was unseasonably wet and cold during the period.

Overall, there continue to be price gains across the housing market. While this is a major benefit that is likely led by an increase in consumer confidence, low inflation, cheap oil, and low interest rates, there are some difficulties in the housing market, as well.

Market Difficulties

The housing market still faces difficulties for a few different reasons, which include:

• Wage Deficit – While home prices are increasing, wages are not seeing the same growth. In fact, the home prices are rising at nearly twice the rate of average wages. This means that if the home prices continue on the same pace, without the wages catching up, would-be homebuyers will not meet the median income requirements to qualify for homes that meet their needs.
• Interest Rates – While the interest rates are currently low, the differences between wage and home price increases could cause problems. If the interest rates increase the slightest bit, it could result in a major setback as homebuyers are put under even more pressure.
• Residential Construction – New residential home construction has still not made it back to the pre-crisis peak, and the current level of one million is not comforting. Historically, any time prior to 2008 when these numbers were that low, the economy was suffering from a recession. Due to this, the new home sector is still considered weak, and this can present its own problems if there are changes in the future.

Miami developers are still seeing increases, which is a major bonus for them and the South Florida economy. However, one area that has shown some decreases is the sale of condos. While these numbers are still higher than previous years, there are some that believe that this sector may be reaching its peak. Time and future indices will tell, but for many in the Miami housing market, the future is still looking bright, and the area is expected to continue growing due to interest from foreign buyers.