Tuesday, October 29, 2013
Wednesday, August 28, 2013
Predictable Equilibrium Part Deux
Just thought that you'd might like to know that I've noticed
a small change in the Country Club of Miami these past few weeks. There have been at least four price
reductions of on market listings in the neighborhood. Now this is not necessarily a cause for alarm,
yet it is indeed an indication that the local market may have gotten a little
ahead of itself. The recent interest
rates increases could bear some of the blame, and the imbalance of supply and
demand that's driven the double digit increases over the past 18 months seems
to be easing. One of my colleagues that
works in West Broward has also noticed this in his local market. That being said, I feel that we're on the cusp
of a return to a more balanced market with historically conservative appreciation
levels , heading towards a phrase I coined in 2009; predictable equilibrium. Here's
where I wrote about this back then in my blog: http://bitsaboutrealestate.blogspot.com/2009/07/predictable-equilibrium.html
Tuesday, August 6, 2013
Poppin!
What can I say, the real estate market is popping! My
big challenge today is simply in finding homes for all of the prospective
buyers out there. Yet, industry experts agree that it won't stay this hot
for much longer. The double digit price increases that we're experiencing
right now a function of a noticeable imbalance between supply and demand.
Yet as more homeowners are now in a positive equity position thereby allowing
them to move up or down, interest rates continue to creep up, and much of the
new home inventory gets closer to completion, we will be in a more balanced
marketplace as we enter 2014. And price appreciation will naturally abate
to a more historically relevant rate.
There is a unique window of opportunity in today's marketplace to sell for top dollar. Yet like all windows, this one, for the reasons mentioned above, will close.
Thursday, July 18, 2013
Friday, March 29, 2013
new condo development
It's really remarkable the incredible optimism that developers now have about the Florida real estate market: a complete 180 from just a few years ago. And I do not agree with those that say that we're creating a new "bubble". The dynamics of this new expansion is very different. See here:
83 New Condo Towers Proposed For South Florida; It's 2004 All Over Again - WORLD PROPERTY CHANNEL Global News Center
83 New Condo Towers Proposed For South Florida; It's 2004 All Over Again - WORLD PROPERTY CHANNEL Global News Center
bidding wars
It never ceases to amaze me that what's old is once again new again. Not since 2006 have I witnessed the type of market activity that I'm seeing in today's market. At first it was only the lower priced homes that were getting the multiple offers. Yet now, this type of activity has started happening at the higher price ranges. Case in point: I brought a $475,000 home to market on a Monday, sold it for full asking price on Wednesday, and I have another full price back-up offer in waiting. Seller's market? You bet!
Wednesday, January 30, 2013
A new bubble?
I just read a headline in the Miami Herald that the rate of real estate price appreciation is back to 2006 levels. Now, the first thought that came to mind was 'Uh oh, not again!" After all, right after prices hit their peak in 06...........well, you know what happened next.
Really? Are we doing this again? Actually, we're not. You see, our prior real estate boom in South Florida was falsely propped up by sub-prime loans, questionable lending practices, and so called "real estate investors" making huge bets with 100% financing. Not to mention all of the buyers that were salivating to get their hands on so called "mortgage backed securities" This "house of cards" without any real substance behind it was destined to collapse.
Fast forward to 2013: We have more than 100 projects is some stage of construction in Miami-Dade County. Many of these projects are 50% sold out already, and not a day goes by that I don't get an email from a developer touting their new community or building. Sounds allot like 2006.
However, there are some observations that I've made which lead me to believe that we, as a market, are not heading towards the same mistakes of the past. For starters, the percentage of cash sales is much higher than it was prior to the bust. Also, anyone that's financing must be rock-solid; good credit, strong down payment, verified assets, etc. Liar loans simply don't exist. Furthermore, the consumer has become a more conservative animal. Just about everyone that I've sold a home or condo to in the past 12 months has, on average, purchased 30% less property than they could actually qualify for. So in the event that there's in interruption in the household income, chances are that that property won't end up in foreclosure. And as for the developers; they too have learned from past sins by adopting a more European/South American model with respect to financing. Many now require as much as 40% down payments.
All in all, this paradigm shift in the minds of lenders, builders, and consumers leads me to be very optimistic that we're not creating another Frankenstein that will eventually turn on us. : )
Really? Are we doing this again? Actually, we're not. You see, our prior real estate boom in South Florida was falsely propped up by sub-prime loans, questionable lending practices, and so called "real estate investors" making huge bets with 100% financing. Not to mention all of the buyers that were salivating to get their hands on so called "mortgage backed securities" This "house of cards" without any real substance behind it was destined to collapse.
Fast forward to 2013: We have more than 100 projects is some stage of construction in Miami-Dade County. Many of these projects are 50% sold out already, and not a day goes by that I don't get an email from a developer touting their new community or building. Sounds allot like 2006.
However, there are some observations that I've made which lead me to believe that we, as a market, are not heading towards the same mistakes of the past. For starters, the percentage of cash sales is much higher than it was prior to the bust. Also, anyone that's financing must be rock-solid; good credit, strong down payment, verified assets, etc. Liar loans simply don't exist. Furthermore, the consumer has become a more conservative animal. Just about everyone that I've sold a home or condo to in the past 12 months has, on average, purchased 30% less property than they could actually qualify for. So in the event that there's in interruption in the household income, chances are that that property won't end up in foreclosure. And as for the developers; they too have learned from past sins by adopting a more European/South American model with respect to financing. Many now require as much as 40% down payments.
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