Archive for April, 2012

The Best Advice, Right Here

posted on April 20th, 2012 filed under: Financial Responsibility, Real Estate Market Data, Real Estate News

Miami Real Estate Photos -- Biscayne Bay and Waterfront Homes on Palm Island

“[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.”

House Price Index Update — New York and Miami, Sept. 4, 2008.

How many other real estate agents warned you at all, much less so accurately?  Heck, how many economists did?

The best advice.  The best real-estate representation.  Right here.

posted by // Comments Off on The Best Advice, Right Here

Luxury Land in Coral Gables Brings 27% Gain in One Year

posted on April 20th, 2012 filed under: Properties in Focus

Who says the days of buying and flipping are over?  The 49,658-sf (1.14-acre) lot at 4940 Hammock Lake Drive in Coral Gables sold for $1.1 million in March 2011, and just sold again for $1.4 million in March 2012.  That’s $300k or 27% in a single year — a tidy gain.

4940 Hammock Lake Drive

4940 Hammock Lake Drive

The lot is located in the desirable and soon-to-be-gated Hammock Lakes neighborhood, but is not waterfront.

Don’t expect this kind of deal to be commonplace, however.  Land in Miami and Coral Gables may have stabilized, but it isn’t rising at a 27% annual pace.  The cheap sale last year reportedly happened after one of the owners unexpectedly died, and plans for building a new house and new life together were shattered.  The human element often figures prominently in residential real estate transactions.

Just goes to illustrate that the real estate market is highly inefficient and illiquid, creating occasional opportunities for attentive and well-informed market participants.

posted by // Comments Off on Luxury Land in Coral Gables Brings 27% Gain in One Year

Months’ Supply of Homes for Sale Is Back to Normal in Coral Gables

posted on April 18th, 2012 filed under: Real Estate Market Data

There is now a perfectly normal 6.4-month supply of homes for sale in the Coral Gables single-family real estate market.

Months Supply of Homes for Sale -- Coral Gables, FL -- April 2012 (Table)

The data reflect a normal progression toward slower sales at higher price ranges.  Homes priced below $250,000 are few, but sell in a flash.

Months Supply of Homes for Sale -- Coral Gables, FL -- April 2012 (Chart, Graph)

The months’ supply figure is a fundamental measure of market conditions.  It represents the number of homes available divided by the number sold in the preceding month.  Normal is about 6 to 8 months’ supply, indicating a roughly even balance of power between sellers and buyers.  A number below 6 suggests a sellers’ market.  A number over 8 suggests a buyer’s market.

posted by // Comments Off on Months’ Supply of Homes for Sale Is Back to Normal in Coral Gables

Opportunity and Risk in the New York Suburbs

posted on April 9th, 2012 filed under: Properties in Focus, Real Estate Market Data, Real Estate News

It’s too soon for prices to start rising in the New York suburbs, and significant risk remains for further declines.  Beware salesmen (and saleswomen) bearing happy-talk.

According to the National Association of Home Builders, the New York metro remains the least affordable in the nation, with a median home price of $409,000 and a median income of $67,400, a ratio of 6 to 1.  That’s down from 8 to 1 at the peak of the real estate mania, but still far above the 3 to 1 that prevailed in New York before the boom began.  Sure, record-low interest rates ease the pain, but if rates rise faster than incomes, the downward pressure on prices will intensify.  That’s what pricked the bubble a few short years ago.  Have we already forgotten?

A similar observation works at the micro-market level.  Consider the exemplary New York City suburban yuppie enclave of Cedar Knolls, a neighborhood in the city of Yonkers that shares a zip code and much of its daily life with the adjacent village of Bronxville.

Bronxville is no median suburb.  Wikipedia puts the median family income at $200,000.  The average kid taking the SAT at Bronxville High School scores at about the 90th percentile nationwide.

Being in Yonkers, Cedar Knolls doesn’t get Bronxville schools.  But most of the houses are classics from the 1920s, and carry much lower price tags and property taxes than their Bronxville counterparts.  The combination of beauty and relative affordability makes Cedar Knolls a popular choice among young professionals who work in New York City, but haven’t gained master-of-universe status.

You won’t find income data for Cedar Knolls, but a proxy will do.  Let’s compare Cedar Knolls home prices to a widely published compensation benchmark for young professionals in New York: the salary of first-year associates at big New York City law firms.

  • In 1998, before the real estate boom, first-year lawyers made about $90,000, and a typical Cedar Knolls home could be had for about $450,000 — a ratio of about 5 to 1.
  • When Cedar Knolls home prices topped out in 2004, first-year lawyers made about $190,000 (salaries spiked when dot-coms were luring lawyers away from firms), and a typical Cedar Knolls home cost about $1.25 million, a ratio of about 6.5 to 1.
  • In 2011, first-year lawyers were back to about $170,000 (bonuses were crimped by the financial crisis).

If you don’t want to pay a bubbly price for a house in Cedar Knolls, you might want to stay close to the pre-boom ratio of 5 to 1, which works out to $850,000.  But sales prices during the past year suggest that you’d have a hard time paying so “little”:

  • 132 Pondfield Road West sold for $1,083,500 (6.4 times the salary of a first-year lawyer)
132 Pondfield Road West

132 Pondfield Road West

  • 11 Beechmont Avenue sold for $1.2 million (over 7 times the salary of a first-year lawyer)
11 Beechmont Avenue

11 Beechmont Avenue

But there are some decent opportunities out there:

  • 170 Pondfield Road West is now listed for $945,000 (about 5.5 times the salary of a first-year lawyer, and considerably less than the current owner paid about eight years ago).
170 Pondfield Road West

170 Pondfield Road West

  • 13 Cedar Lane is now listed for $1.195 million (about 7 times the salary of a first-year lawyer, but for one of the larger homes in Cedar Knolls, a 6 BR, 4-1/2 BA, 3,860 sf house — almost twice the size of 11 Beechmont).
13 Cedar Lane

13 Cedar Lane

All four of the above properties are basically within a one-block radius.

After a real estate boom, overvaluation is worked off by a combination of falling prices and rising incomes.  While that plays out, the market will present attractive opportunities to savvy buyers.  REF Real Estate likes savvy buyers.

REF Real Estate is a licensed real estate broker in Florida and New York.

posted by // Comments Off on Opportunity and Risk in the New York Suburbs