Scramble for under-$300,000 homes chases a shrinking supply
By Marilyn Bowden
Buyers are scrambling to buy single-family homes and condos priced under $300,000, experts say, before shrinking supply puts an end to the buyers' market.
"The inventories of single-family homes and condos for less than $300,000 have dropped dramatically over the past year," said Ron Shuffield, president of Esslinger Wooten Maxwell Realtors, known as EWM. "Two-thirds of sales are still foreclosures and short sales, and that inventory is drying up."
Inventory has decreased more than 65% since August 2008, when sales began rising, and 45% since the beginning of this year, said Jack H. Levine, president of Levine Realty and chairman of the board of Miami Association of Realtors.
"Sales are up and inventory is way down," said Melissa Rubin, broker and vice president at Platinum Properties. "We are bucking the trends for all figures."
Mr. Shuffield said 3,053 single-family homes priced under $300,000 are listed on the multiple listing service, or MLS, for Miami-Dade County. The MLS lists homes for resale.
"For the past quarter, they've been selling at an average of 722 a month," he said. "That's a four-month supply, which is low."
In general, Realtors consider six to nine months of inventory ideal.
Of those 3,053 houses, Mr. Shuffield said, 56% are listed as foreclosures or short sales. A year ago, distressed properties accounted for 53% of the 4,623 homes under $300,000 on the resale market.
"The inventory of all homes available right now for less than $300,000 represents 52% of the inventory," he said, "and 73% of sales."
The under-$300,000 condo market tells a similar tale, Mr. Shuffield said. At the end of August, 5,107 were on the market, selling at an average of 1,108 a month — a five-month supply. That's a steep decline from the 10,488 units for sale a year ago, when the sales rate of 1,061 represented a 10-month supply.
About 54% of the entire resale inventory of condos is priced under $300,000, he said; 81% of all condo resales fell into this price category.
"We're down to about a 30-day supply of foreclosures," Mr. Levine said, "and they are selling almost faster than they can come on the market. One property that came on the market recently had 100 offers. A lot of people are chasing these properties because the prices are so good."
Cash buyers who had been holding out are now coming to the fore, Ms. Rubin said, and fighting to get these properties while they last.
"Many are offering cash sight unseen," she said.
What's keeping prices from escalating more quickly, brokers agree, is uncertainty about the "shadow market," the number of foreclosed properties held by lenders that haven't yet been offered for sale.
"We know there are still a lot of foreclosures lurking out there that haven't come to market yet," Mr. Shuffield said. "Banks have really slowed in sending them to us.
"The foreclosure freeze at the end of last year changed the way banks look at their distressed property. Now they're proactively working with homeowners to short-sell rather than foreclosing on them."
Ms. Rubin called the shadow market the missing link in the equation.
Another major factor, Mr. Levine said, is the question of financing.
"It's very difficult to get through the underwriting and appraisal process," he said, "and so about 60% of sales are to cash buyers.
"We're starting to see seller financing coming back to the marketplace."
International buyers are stepping into the breach. Mr. Shuffield said the international market continues to drive this price range as well as others, accounting for more than 60% of all sales.
"We're on track this year," he said, "to sell more than any other year in our history."
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