Home resales remain impervious to rumors of slowdown
By Marilyn Bowden
Miami-Dade's home resale market continues to flourish, observers say, with condo sales fast approaching single-family home numbers.
While there are indications of growing caution among consumers in other parts of the country, South Florida homebuyers find optimistic trends in the national picture.
The new year heralded a flurry of reports of a possible slowdown from economic pundits, according to researchers from The Meyers Group, a residential market research firm.
Meyers' Housing Market Key Indicator Alert for Jan. 31 notes that economic growth for the fourth quarter was the slowest it's been since the second quarter '95.
At the same time, The Meyers Group reports that national consumer confidence dropped 10% in January.
This drop of confidence was reflected on the housing front by an O.7% drop from December to January in the number of US residents who said they plan to buy a home in the next six months.
However, Meyers reports other indices show home-buying activity across the country remained high. Mortgage applications are up 1.9% compared to a year ago. Home ownership dropped to 67.5% in fourth quarter after reaching an all-time high of 67.7% in the third quarter, but "historically, the slight drop in ownership rates in the fourth quarter is typical," Meyers reports.
The local resale market hasn't been affected by economic fluctuation, said Ron Shuffield, president of Esslinger Wooten Maxwell Realtors.
"Buyers were confident the interest rate would drop after the inauguration," he said. "Activity picked up long before it actually did drop."
Proposed changes to property tax laws could also increase market value, he said.
"When government tinkers with the tax laws," Mr. Shuffield said, "it can either increase or decrease market values. In 1986 when they changed tax laws concerning investment real estate, it threw the market into a tailspin for 10 years. But there's probably nothing like that on the horizon."
Finally, he said, in South Florida many other factors are in play that don't come into the equation nationally.
"We have so many second home owners," he said. "Foreign investment has the whole world focused on Miami, especially in the higher end condo market. Anyone around the world who has wealth has Miami on their radar screen."
Statistics from Facts & Trends, a monthly report prepared by Esslinger Wooten Maxwell from multiple listing services, show the inventory of single-family homes, which has been decreasing dramatically over the past three years, is leveling off somewhat, though the county total of 5,414 homes on the market at the end of 2000 still represents a 20.7% drop from the year before.
The ratio of available homes to sales represents a 5.5-month housing supply.
"A proper balance is six to nine months," Mr. Shuffield said. "When the inventory drops below that, as it has over the past couple of years, it becomes a seller's market and prices begin to increase.
"If it gets over that balance, as it did three or four years ago, it's a buyer's market."
For the first time in several quarters, Mr. Shuffield said, fourth quarter 2000 sales were slightly less than in fourth quarter 1999 a decline of 1.6% in single-family homes and 0.5% in condo sales.
Facts & Trends also shows condo sales accounted for 46% of resales in the quarter. The inventory of 4,996 condos on the market in December 2000 represents a 25.5% decrease from the end of 1999.
"One of the nice developments of the past three years has been the strong condo market we have been experiencing," Mr. Shuffield said. "I believe that condos will increasingly become a more desired lifestyle as people continue to be more mobile in their jobs. The younger generations are adapting to a lifestyle that is concerned more with amenities than a larger lot."
He said condo sales in Broward County already equal single-family home sales.
"At the same time," Mr. Shuffield said, "the demand for single-family homes has certainly not diminished. It has increased even more, based on the substantial appreciation in acre lots, waterfront properties and unique homes this past year."
In some desirable communities such as Morningside, where there's no more land for new building, he said, "people are buying homes that have not been well maintained and totally restoring them to the grander days of the 1930s, '40s and '50s, creating a market for a product that hasn't existed in quite some time."
The luxury market homes and condos selling for $750,000 or more "has had a pretty good spike in the past quarter," Mr. Shuffield said, selling 50% more residences than in fourth quarter '99.
In this category, Facts & Trends shows the inventory of resale residences has bloated to a 20-month supply. In addition, most new construction targets the luxury market.
"It's not yet something to be alarmed about," Mr. Shuffield said. "A million-dollar-home buyer is a substantially secure buyer and that market continues to be strong.
"But when you start getting close to a two-year supply, anyone with a home to sell would have to pause and think that it must be pretty unique to stand out among all the others."
A buyer looking for a single-family home costing more than $750,000 has 90 more to choose from than a year ago, he said.
"To me," Mr. Shuffield said, "looking at the macro picture, we need to be careful that we are not already building more than we need."
On the other hand, he said, luxury homes are no longer out of reach of all but the wealthiest buyers.
"There are more and more people," he said, "buying in that price range who are just good, hard-working people with good-paying jobs and high mortgage payments."