Archive for June, 2010

New York Market Check: Sales Flat, Median Prices Up for Existing Homes in May Compared to April

posted on June 25th, 2010 filed under: Real Estate Market Data

The New York Association of Realtors reports that sales were basically flat (282 versus 284) for Westchester County, New York in May compared to April.  But the median price jumped from $590,000 to $610,000.

As with the Miami existing-homes data, the rise in the median price could have resulted from a shift in the mix of homes sold.  Look for confirmation from indices that track same-home sales (FHFA, S&P Case-Shiller) before concluding that home values are appreciating.  As noted previously, the Case-Shiller index has indicated weakness for many months.  The recently released FHFA index shows prices in decline as well (more on that in an upcoming post).

And of course, the New York market remains monstrously overpriced relative to incomes (see posts from February 2010 and March 2009).

Buyer beware.

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Friday Fountain Photo

posted on June 25th, 2010 filed under: Fountains

The Mildred and Claude Pepper Fountain at Bayfront Park in downtown Miami.

Miami Real Estate Photos -- Mildred and Claude Pepper Fountain -- Bayfront Park

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Existing Home Sales Fall Nationally, Rise Strongly in Miami, in May 2010. Median Prices Up Both Nationally and in Miami.

posted on June 22nd, 2010 filed under: Real Estate Market Data

Contrary to expectations for an increase in home sales from the homebuyer tax credit, the number of closings in May fell a modest 2.2% from April.  That’s a disappointment for those expecting a big finish to the tax-credit incentive.

Sales in Miami, however, rose  strongly, from 592 in April to 727 in May — an increase of 23%.

Coral Gables Real Estate Photos -- Neighborhood Street 1

Sales are not the same thing as prices.  Nationally, prices fared significantly better than sales, rising about 4.2% compared to April.  Notably, prices have risen for three consecutive months since February, even as the homebuyer tax credit continued to stimulate low-end demand.  During the months leading up to the initially scheduled expiration of the tax credit in November 2009, prices fell month after month.  It is possible that the second-round extension of the tax credit, which expanded the eligibility limits, might have stimulated transactions at higher price points.  But housing bears who predict another leg down for prices need to keep an open mind.

In Miami, the median price rose from $192,000 in April to $196,700 in May, an increase of 2.4%.  This is within the Miami market’s range over recent months.

Data are from the National Association of Realtors and Florida Association of Realtors, and reflect sales from Realtor MLS data.  Transactions are not limited to repeat sales of the same houses, and the price data are therefore subject to distortion from shifts in the mix of homes sold (more expensive versus less expensive).

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Homebuilder Sentiment Retreats Sharply in June 2010

posted on June 15th, 2010 filed under: Real Estate Market Data

The Housing Market Index maintained by the National Association of Home Builders and Wells Fargo posted a sharp decline in June.  The index fell 5 points from 22 in May to 17 in June, one of the bigger drops on record, and the biggest since a decline from 14 to 9 in October-November 2008.

Coral Gables Real Estate Photos -- New Home Under Construction

But don’t read too much into the decline — yet.  The index had surged through May, as the artificial boost from the expiring homebuyer tax credit worked its way through the system.  So the current level merely reflects a retreat to the poor sentiment that prevailed before the government-induced surge.  The index remains up sharply from the single-digit, Armageddon levels of November 2008 to March 2009.

Keep an eye on the next few months.  A level of 17 reflects despair.  If the index breaks below 15, that would reflect a renewed sense of crisis.

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Coral Gables Buys Out Developer Using County Funds

posted on June 13th, 2010 filed under: Properties in Focus, Real Estate News

In April, the city commission in Coral Gables approved the city’s purchase of an empty lot at 4650 Alhambra Circle, to be used as a park.  The lot is two blocks north of Blue Road, on the west side of Alhambra.

4650 Alhambra Cir., Coral Gables -- Map

Three cheers for parks.

Here’s the problem.  The city paid $1,000,000 for the lot.  The seller paid $950,000 in 2005, at the top of the real estate market.

4650 Alhambra Cir., Coral Gables -- Sale DataDoes anybody think property values have risen since 2005?

Not the county property appraiser, who puts the value at $635,760.

4650 Alhambra Cir., Coral Gables -- Assessment

The city, however, found its own appraisers to justify the million-dollar price tag.

Appraisal #1 was based on “comparable” sales on Valencia Avenue (prime real estate near the Biltmore Hotel and Venetian Pool), and on Tigertail Avenue, far away in north Coconut Grove:

4650 Alhambra Cir., Coral Gables -- Appraisal #1Appraisal #2 was based on a bunch of sales from 2008 and 2009:

4650 Alhambra Cir., Coral Gables -- Appraisal #2.pt1

4650 Alhambra Cir., Coral Gables -- Appraisal #2.pt2

Appraisal #3 was based on sales including the one on Valencia, one in Coconut Grove and one on School House Road in the estate area known as Ponce/Davis.  Oh, and a fourth one that wasn’t a sale but a listing — a property that sold in 2003 for $650,000 but which the appraiser estimated at about $1.1 million after discounting from the asking price of $1.395 million.  (That property apparently never sold.)

4650 Alhambra Cir., Coral Gables -- Appraisal #3.pt1

4650 Alhambra Cir., Coral Gables -- Appraisal #3.pt2

Seems it was more important to find vacant land, no matter how remote in time and space, than to consider comparables like the property at 4607 Alhambra Circle — a mirror image of 4650 occupying the same size and shape lot right across the street from 4650 Alhambra.  The property at 4607 sold in 2008 for $1.855 million — with a 5351-sf house on it.  And that was in 2008; the county appraiser says it’s now worth $1,325,535.

But of course, none of this really matters, because Coral Gables wasn’t spending its own money anyway.  This bailout was courtesy of county taxpayers.

4650 Alhambra Cir., Coral Gables -- Source of Funds

As everybody knows, Miami-Dade County has plenty of money to throw around for things like parks in Coral Gables.

The biggest shame is that the would-be developer’s dreams were never realized.  After obtaining approval to split the lot in two, the project never materialized.

4650 Alhambra Cir., Coral Gables -- Building Site SeparationThank heavens the good taxpayers of Miami-Dade County were kind enough to make this poor developer more or less whole.  We can’t have people failing at the things they try to do.  Then nobody would ever try to do anything.

Right?

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Friday Fountain Photo

posted on June 11th, 2010 filed under: Fountains

Fountain at Granada Plaza in Coral Gables (Granada Boulevard and Alhambra Circle), catercorner from the Country Club of Coral Gables property.

Coral Gables Real Estate Photos -- Fountain -- Granada Plaza -- Granada Blvd. & Alhambra Cir.

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Watch for Home Flopping in Miami and Coral Gables

posted on June 9th, 2010 filed under: Real Estate News

Yes, flopping, not flipping.  If you follow real estate in Miami and Coral Gables closely, you’ll see the occasional short sale that’s too good to be true.  The price is not just cheaper than the mortgage balance, it’s much cheaper than its current market value based on comparable property sales.

A Bloomberg news report suggests you could be looking at a home flopper, the latest mutation in the endless evolution of mortgage fraudsters.  Instead of convincing banks to lend too much for a property, today’s fraudster convinces banks to release properties for too little, often using a “broker price opinion” rather than a full appraisal.  Then the buyer turns around and sells for more than the below-market price the bank accepted.

Miami Real Estate Photos -- Biscayne Bay & Downtown 4

I can think of a few transactions that might have been flops.  When a short sale is listed way below market value, the listing agent doesn’t return calls for showings, and the property goes under contract in a couple of days, you have to wonder.

It turns out that flopping gets a boost from the federal government’s TARP bailout program, which promotes short sales by giving thousands of dollars to buyers, sellers and mortgage servicers who close short sales.  The TARP program requires only broker price opinions, not full appraisals.  Of course, appraisals are no panacea, but TARP inspector general Neil Barofsky says BPOs make it particularly easy to pick taxpayers’ pockets:

“It appears that the program may lack necessary antifraud protections.”

A government handout program that lacks necessary antifraud programs.  What a surprise.

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S&P Case-Shiller Index Flat to Down in Miami and New York for Period Ending March 2010

posted on June 4th, 2010 filed under: Real Estate Market Data

According to the Case-Shiller Home Price Index for the three months ending March 2010, home prices in Miami were essentially flat compared to the prior month’s reading.

On a seasonally adjusted basis, the index rose from 147.23 to 147.27, a statistically meaningless change.  Without seasonal adjustments, the index fell from 147.52 to 146.15.

Miami Real Estate Photos -- Pine Manor Townhouses 2

Another reference point, the New York market, fared about the same.  The seasonally adjusted index fell slightly from 170.98 to 170.73, and the non-adjusted index fell a bit more, from 170.57 to 169.42.

The big picture is consistent with the dire views expressed here in 2008:

“[P]rices in Miami will fall 30% to 50% over a period of three to four years, and not return to their old highs until more than a decade has passed”

“[P]rices in New York will be roughly flat at best for about five to seven years beginning in 2005, with greater risk to the downside than to the upside.”

House Price Index Update — New York and Miami, The Real Estate Fountain, Sept. 4, 2008.

And in early 2009:

“[S]ignificant downturns in real estate prices have taken three to four years from the time prices start falling to the point that they reverse up from their ultimate trough.”

House Price Index Update — Miami and New York, The Real Estate Fountain, Feb. 10, 2009.

Another characteristic of real estate busts is that prices typically bounce from an initial low before sinking to the final low.  This cycle is shaping up true to form.

S&P Case-Shiller Home Price Index -- Real Estate Cycle Highs & Lows -- Miami and New York

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Friday Fountain Photo

posted on June 4th, 2010 filed under: Fountains

Fountain at The Mark condo, 1155 Brickell Bay Drive, located on Biscayne Bay in the Brickell neighborhood of downtown Miami.

Miami Real Estate Photos -- Fountain at The Mark Condo -- 1155 Brickell Bay Drive

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