State Of Real Estate Home Values Likely Wont Rebound Until Mid2010
Written by Miami Today on February 19, 2009
By Scott E. Pacheco
Despite a spike in sales in South Florida, the area probably won’t see a bottoming out of single-family home prices until mid-2010, says Brad Hunter, chief economist with West Palm Beach-based Metrostudy.
"Yes, there are more transactions occurring," he said. "The problem is really that the increased sales — that is predominantly short sales and distressed sales — it’s not really a situation that’s bullish for home prices."
Mr. Hunter joined Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors; Michael Y. Cannon, executive director, Integra Realty Resources; and Peter Zalewski, owner/broker of Condo Vultures Realty, at the State of Real Estate forum presented by the Greater Miami Chamber of Commerce on Friday.
Much of the discussion centered on property values and sales, and the timeline for a turnaround.
"My feeling is this does not indicate we are at bottom" for values, Mr. Hunter said. "We are going to see a slower rate of price decline but still a price decline throughout 2009."
In the condominium market, Mr. Zalewski says about 34,250 condo units are in the market, with about 37%, or 12,589, available.
"Typically a rule of thumb is a healthy building should have 10% of its inventory" on the market, he said. "We have about four times the inventory of a healthy market."
As for bulk sales, institutional buyers want projects where they can pick up more than 50% of the inventory, in part to be able to control some of the decisions of condo associations, Mr. Zalewski said.
"There’s only about a dozen projects where that’s going to be possible," he said. "I really believe by this time next year all of the bulk product would have been traded already."
"The money’s out there — everybody wants to come in and buy in Miami," he said. "A year or two from now people are going to wish that they did something right now."
Mr. Shuffield sees a positive in the falling of home prices.
"A house after taxes is going to be a little less than renting," he said. "It’s getting to a balance now. Generally, inventories are going down and sales are coming up."
And the idea that South Florida is unaffordable has also taken a hit. He said a majority of single-family homes in Miami-Dade come in under $300,000.
"Prices are going to continue to settle somewhat," he said.
He added that American buyers are back in a "huge way" after the recent influx of foreign investors.
Mr. Cannon said the real estate markets all have activity right now and, as in basic economics, the economy will adjust itself. "The market goes as the money flows."
As for the current state of real estate, it really depends on who you are, Mr. Shuffield said. "It’s great news if you are a vulture, devastating for sellers."