Sales volume up, prices down for Miami-Dade homes
By Marilyn Bowden
A surge in home sales in November could mean that the huge inventory of homes on the market in Miami-Dade has begun to decline, but experts say prices are still very much in flux.
According to the Florida Association of Realtors, sales of single-family homes in Miami in November 2008 were up 39% over November 2007. Sales statewide showed a 4% increase during the period.
The median sales price for a single-family home in Miami dropped 37% from November to November, 10 percentage points more than the median fell across the state.
It's important to look at larger trends in the economy over the past year to understand what this means for the local market, said Keyes Co. President Michael Pappas.
"A year ago the market froze with the subprime markets," he said, deflating sales activity to 263 homes in November 2007. "Then the New Year came in and the market started improving."
But November closings, Mr. Pappas said, are generally the result of sales activity in August, so they represent activity before the market froze again this fall when the financial crisis hit its peak.
More sales at lower prices — the median price for Miami homes sales closing in November was $224,700 — also reflects a surge in distress sales such as the resale of foreclosed properties, he said.
"In California, sales were up 83% in November," Mr. Pappas said, "all because of foreclosures. We are trailing them, but it's the same pattern, and we can expect more of the same in 2009: the number of units sold will be up, but the pricing bottom may not be there yet."
A recent survey of the single-family home and condo markets in Miami-Dade by The Dabby Group, a valuation and consulting firm, found that close to 30% of all sales are foreclosure disposition sales.
"In addition, we estimate that another 9% of sales are short sales," principal David Dabby said. "Thus, close to 40% of all sales are distressed sales — an unprecedented high level."
For example, he said, in the late 1980s, the most recent spike in distressed sales, 15% to 20% of sales — mostly condos — were distressed; in the mid 1960s, 15% of sales were distressed.
"In normal times," Mr. Dabby said, "the level of distressed sales over the past 50 years was typically in the 3% to 8% range."
The Florida Association of Realtors, which tracks resales of existing properties only, reported a similar drop in sales price — 35% — for Miami condo units for November 2008 compared with November 2007. Sales volume increased 4%.
Existing condos are competing with new units still coming on the market, said Scott Coloney, principal with The Coloney Group of RE/MAX and spearhead of the Foreclosure Response Team.
"Preconstruction deals aren't reflected in those numbers," he said. "There was a lot more of that activity a year ago than there is now, and for all those who walk away from their deposits, developers are going to have to resell those units all over again."
The steep drop in median price, Mr. Coloney said, is the flip side of the double-digit growth that inflated prices in the boom years earlier this decade, and represent an adjustment.
"I think we haven't seen the end of the preconstruction fallout yet," he said. "When developers start to see what they really have, there will be short sale here opportunities, and that is what will be seeing in "09."
Both Mr. Pappas and Mr. Coloney said current trends are healthy for the city in the long term, with more sales activity reducing inventory and prices being restored to affordable levels.
"It is good that lenders are finally disposing of previously foreclosed homes at a faster pace," Mr. Dabby said. "I foresee this continuing for a long time to come. Before the market can recover in a meaningful way, the majority of distressed homes have to work their way through the system and that process is under way."