Miami Metro Home Sales and Prices Up Sharply in November 2009

posted on December 25th, 2009 filed under: Real Estate News

Continuing a trend that began months ago, sales and prices rose again in November for single-family homes in the Miami metro area.  Most impressively, the median price of single-family homes rose from $178,500 in October to $184,800 in November.  That’s over 3.5% in a single month, and an annualized rate of appreciation of over 42%.  If this were a solid trend, buying real estate in Miami would not only be safe, but highly profitable and perhaps even an urgent matter of financial self-defense.

If only the decision were that simple.  There are countervailing considerations.

Sales have been goosed by government benefits — especially the $8,000 tax credit that was scheduled to expire at the end of November (now extended to April 30, 2010, and you know the lobbyists will be out in force for another extension when the time comes).  Many of the people who were motivated by the credit based their decision on the original November 2009 expiration.  So even if prices are rising meteorically on the elixir of cheap rates, government benefits and government-sponsored mortgage liquidity, what will happen when the effects of those temporary stimuli fade?  Will we ease into a new normal?  Or in light of how the last cheap-money cycle ended, should we be singing Won’t Get Fooled Again?

The cost of renting remains far lower than the cost of buying, so the risk of not buying remains limited to loss of opportunity to profit from a highly leveraged bet (the nature of buying anything with 10% down) on real estate in Miami or Coral Gables.  The risk is not yet the diminishment of living standards.  That could change if wage inflation takes hold and rents start rising fast.  So far, that hasn’t happened.

Median-price data reflect a shifting mix of Miami properties.  The median is the point at which an equal number of homes sold for more as sold for less.  If the number of luxury homes sold rises relative to the number of small homes sold, the median will rise — even if prices in the luxury segment fall.  The Case-Shiller price index, which tracks repeat sales of the same properties, will be released on Tuesday, December 29, and will provide insight into whether the median is telling the true story.  Don’t want to make too much of this, because the median told the story of the boom and bust and it might be foolhardy to deny it’s expression of recovery.

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posted by // This entry was posted on Friday, December 25th, 2009 at 10:20 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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