Lower-priced Miami home sales dominate as distressed supply shrinks
By Marilyn Bowden
Sales of lower-priced homes continue to dominate the housing market in Miami-Dade, and the inventory of distressed properties is dwindling. But a number of unknowns cloud the forecast for the future.
Most properties selling for less than $300,000 are distressed — either foreclosures or short sales —, said Vanessa Grout, president & CEO of Douglas Elliman Florida. The market share of distressed sales, according to The Douglas Elliman Report for the second quarter, reached 64.7% in first quarter 2011 but fell to 53.9% in the second quarter.
Ms. Grout said The Douglas Elliman Report, which covers Miami-Dade's coastal communities east of I-95, is prepared by Miller Samuel, an unaffiliated appraisal and consulting service, to ensure objectivity.
"The drop in market share in the second quarter tells us the inventory of distressed properties is flushing out," she said.
The report attributes the decline to the weakening of prices, which, year over year, dropped 7.8% for distressed condos and 13.8% for distressed single-family homes. The average median price across all price ranges in the areas covered rose 16.1% in the second quarter of this year, from $140,000 to $162,500 — which reflects an uptick in prices of non-distressed properties at the same time that distressed property prices are falling, Ms. Grout said.
Countywide, sales involving single-family homes in the $200,000 and under price range dropped 10% over a two-year period, from 537 in July 2009 to 482 in July '11, according to Clarus MarketMetrics, a third-party provider of market statistics, said Lori Fein, a Realtor at Prudential Florida Realty.
The number of new properties priced under $200,000 on the market in July 2011 was 9% lower than in the same month two years earlier, Clarus reports. Total inventory dropped 38%, from 5,916 to 3,666, reducing supply, at the current pace of sales, to 2.5 months.
"The number of lower-priced homes on the market has declined considerably," Ms. Fein said. "There currently are fewer new listings and fewer bank-owned properties on the market.
"At the same time, it appears that more investors are back in the market, so more people are competing for fewer properties. Mortgage rates remain low, so more buyers may be eligible.
"Right now, it's harder for buyers who don't have cash to compete with cash-buying investors at all price ranges."
Ms. Grout said almost 70% of all transactions are cash sales. In the distressed market, the figure jumps to 78%.
Though the numbers are encouraging, several variables could come into play.
One is the recent Standard & Poor downgrade of the US credit rating. "It will be interesting to see what effect that will have," Ms. Grout said.
Another is the unknown quantity of units still to be released. Ms. Grout estimated 20 condominium buildings still have inventory that hasn't been launched.
In addition, there's much speculation about the "shadow market" of inventory controlled by lenders, who are alleged to be dragging their feet on completing foreclosure proceedings.
"There are supposed to be more foreclosures coming on the market over time," Ms. Fein said. "The big questions would be, in what neighborhoods, and when? As inventory rises and/or prices fall, how the numbers are reported and then interpreted will make all the difference for buyers and sellers."
"I think the shadow market is a very real threat," Ms. Grout said. "Indications are that lenders, still dealing with the robosigning controversy, are not putting all bank-owned properties on the market. But that threat is dissipating as time goes on."
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