Saturday, April 08, 2006

Miami Housing Market Shows More Signs of Softening

Miami home prices wobbled in February, as the region's formerly red-hot sellers market continued to evolve into a more balanced market between buyers and sellers.

Prices for existing single-family homes in Miami-Dade were up 19 percent on a year-to-year basis but continued to drop on a month-to-month basis, for the third consecutive month. The median price of a single-family home in Miami-Dade now stands at $368,700.

Similarly, Broward single-family home prices were up compared to February last year but down compared to the previous month. A median priced single-family home is now $360,800. In January it was $370,500.

Meanwhile, condominium prices were up on both an annual and monthly basis.

The number of single-family homes and condos sold in February dropped significantly compared to the February of last year. February sales were largely up compared to the number of homes sold in January.

In recent months the inventory of homes for sale has increased dramatically and the days needed to sell a home has increased. Some say this is a so-called soft landing from the markets record highs and insist the market is remains strong but moving at a steadier pace. Others worry the Miami Housing Market is cooling and poised for price declines.

Miami'sHousing Market Continued to Cool in January 2006

Miami's housing market continued to cool in January 2006. Sales of existing single-family homes declined dramatically across the region, compared to January 2005.
Palm Beach County sales fell 39 percent, Broward's dropped 36 percent and Miami-Dade's fell 28 percent. Meanwhile, prices aren't appreciating as they were last year.
Palm Beach County's median price for January was $393,700, up just 9 percent over January 2005 and down roughly 4 percent from December.
Broward's median of $370,500 and Miami-Dade's median of $376,300 were flat compared to December. The median price means half the homes sold for more, half for less.
Existing condominium sales also were down across South Florida during January.
Nationally and locally, the sales slowdown is good because it lessens the chances that there will be a bone-jarring plunge in home prices, the "bubble" bursting scenario that many experts have long debated.
The Orlando area hit a record high 12,015 existing homes for sale in January 2006.
But Metro Orlando sales in January were up 6.2 percent from a year ago, and the median price rose 25.4 percent to $242,050, though that was less than one percent higher than in December, continuing a price flattening that began in mid-year.

Miami Housing Fueled an Explosion of Jobs

Now, home prices are settling down. They have soared an average of 110 percent in Miami-Dade and Broward counties since 2000. Prices are expected to rise this year, but by only 5 percent to 10 percent.

The jobs, wealth and consumer spending tied to real estate will slow as well. Still, a housing market slowdown is likely to simply cool South Florida's red-hot economy rather than plunge it into recession.

No industry is more directly tied to the real estate boom than construction. Those jobs alone accounted for 10 percent of Florida's record job growth last year.

Miami Housing Bubble's Bust

This year is shaping up a lot like 1987. Back then, we saw speculation in commodities and stocks in general (though in a much, much milder form than exists now). We also had a new Fed chairman -- Easy Al Greenspan succeeded Paul Volcker as chairman that summer. And, ultimately, we had a stock-market crash.

For such an event to happen, a number of market forces will need to align themselves in a certain way. Given the impossibility of predicting when that alignment will occur, we can only try to position ourselves as it develops -- though, in the very short run, I have almost no shorts, as the path of least resistance seems higher for the moment.

Certainly, there have been plenty of data points suggesting trouble in various formerly hot markets of the U.S., including Miami.

Best Time To Sell Your Home in Miami: Sooner Is Better

It used to take several years to sell something in the $8 million to $10 million range.
The last few years it's taken more like six months. There's never been depreciation in the super-luxury market in Miami, but things might slow down--and there's been lots of talk about a potential correction in the condo market. If you do intend to sell, you should put your property on the market as soon as possible. You have a higher chance of getting a quick offer now. We don't know what's going to happen in the future, nobody has that crystal ball. And don't wait until the summer, when it's hot and rainy.