Archive for the 'Real Estate Market Data' Category

Cash Remains King in Miami and Coral Gables Real Estate

posted on July 19th, 2012 filed under: Real Estate Market Data

Since the real estate bubble burst, cash transactions — i.e., without mortgage loans — have accounted for an abnormally large share of home sales in Miami and Coral Gables.  But now that sales numbers have rebounded and prices have stabilized, has the number of cash transactions normalized as well?

Not really.

Miami and Coral Gables Real Estate -- Cash Deals -- Percent of All Transactions (2005 to 2012)

Although the share of cash purchases in Miami and Coral Gables has receded somewhat from the post-crash peak, they still represent a far greater share of home sales than they did before the crash.

In other words, an unusually small portion of single-family homes sold in Miami and Coral Gables are sold to traditional buyers who have a downpayment and borrow the rest.  This is troubling.  The possibility that prices have hit bottom would be more reliable if pricing were being set by the traditional, daisy-chain relationship of incomes to loan amounts to prices.

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Recent Sales of Project Homes in Ponce-Davis and Coral Gables

posted on June 27th, 2012 filed under: Properties in Focus, Real Estate Market Data

Two recent sales of homes — one in Miami’s desirable Ponce-Davis neighborhood and the other in Coral Gables — give an indication of what buyers are apparently willing to pay in those areas for potential luxury homes in need of substantial work.

In Ponce-Davis, the house under construction at 4975 SW 78 St. sold for $2.5 million.  It was mostly finished but still needed at least a few hundred thousand dollars of work.  At 8,450 sf, the sale price works out to about $296/sf.  With the additional work, figure the property will eventually cost about $350/sf.

4975 SW 78 St.

4975 SW 78 St.

The house at 3510 Granada Boulevard was effectively a private sale, having been entered on the MLS after it was, for practical purposes, already sold.  The price was $1.2 million, which works out to about $282/sf for the 4,251-sf home.  The property is located on the Biltmore Hotel golf course.  No doubt the project is a total gut job, which should easily put the total cost at $350/sf to $400/sf, and perhaps more depending on materials and finishes.

3510 Granada Blvd.

3510 Granada Blvd.

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S&P Case-Shiller Home Price Index: Miami Update

posted on May 4th, 2012 filed under: Real Estate Market Data, Real Estate News

According to the S&P Case-Shiller Home Price Index, prices in Miami have been in a narrow, flat channel for about one year now.  A similar pattern held from 2009-2010 before slipping to the current level.

S&P Case-Shiller Home Price Index -- Miami -- Feb 2012 (from Jan 2008) (Chart, Graph)Source: Standard & Poor’s

A few observations:

  • The difference between the current level and the 2009-2010 level is about 8 out of 145 Case-Shiller index points.  That’s almost exactly the same proportion (8 out of 145) that the government’s $8,000 home buyer tax credit in 2009-2010 bears to the median home price in Miami, which stands at about $145,000.  Could be a case study in the economics of temporary government intervention.
  • It’s just a coincidence that the Case-Shiller index level is close to the median home price.  The index level does not signify dollars and cents, but the relationship of current prices to the level in January 2000, which is assigned an index level of 100.00.  The current index level of 139.49 means prices today are 39.49% higher than in January 2000.  Not bad, and indeed it represents annual compound appreciation of 2.77%, which is actually below the 2.95% rate of appreciation from 1987 to 2000, which suggests that current prices are reasonable as a matter of long-term appreciation.
  • The S&P 500 index closed at 1455.22 on the first day of trading in the year 2000.  It closed at 1391.57 yesterday.  That’s annual compound appreciation of -0.36% (i.e., depreciation, not appreciation).  Of course, January 2000 was close to the top of the biggest stock-market bubble of all time, and was before the real-estate bubble was created (yes, intentionally, and precisely to offset the bursting stock-market bubble).  Picking a different time frame would tell a different story about real estate versus stocks.  And a truly accurate comparison between real estate and stocks would be more complicated than that, taking into account dividends, income taxes, property taxes, insurance, rent avoidance, etc.

When looking at a long-term chart, it’s tempting to draw a straight line and say prices remain above the trendline:

S&P Case-Shiller Home Price Index -- Miami -- Feb 2012 (with trend line) (Chart, Graph)Source: Standard & Poor’s

On the other hand, a trendline accurately adjusted for the effect of compounding would curve gradually upward.  If the Case-Shiller index had continued rising at its 1987-2000 rate of 2.95% instead of booming and busting, its current value would be about 142.50.  In that sense, prices have already overshot to the downside by a few percent.

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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.

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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.

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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.

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Prices Bottom at Cosmopolitan Condo in South Beach

posted on March 19th, 2012 filed under: Properties in Focus, Real Estate Market Data

Here’s another sign of a bottom in Miami Real Estate: the price per square foot of condos sold at the Cosmopolitan Condo in South Beach.

The chart below shows the sales history going back to the building’s construction in 2004.  Blue represents individual unit sales, black is the 20-sale moving average.  Prices have broken above the moving average, reversing the downtrend.

Cosmopolitan -- South Beach -- Sales History -- By Date -- with Moving Average

The Cosmopolitan is located at 110 Washington Street in the very desirable SoFi (south of Fifth Street) neighborhood of South Beach, which is one of the most desirable locations in Miami Beach.  The Cosmo is a middle-market building, with units in nearby luxury condos like Continuum and Apogee selling for much higher prices per square foot, and units in the dwindling stock of old buildings in SoFi selling for less.

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NAHB Data Say the Downturn Is Over

posted on February 29th, 2012 filed under: Real Estate Market Data

The Housing Market Index (HMI) maintained by the National Association of Home Builders and Wells Fargo suggests the bottom is in and the downturn is over.

The HMI is a sentiment index.  It reflects a monthly survey of home builders that measures their opinions of current conditions and future expectations.  So even if lagging or concurrent price or sales data continue to struggle, home builders may become more optimistic about the future based on their inside insight.

A minor uptick in the HMI would not be noteworthy.  But the HMI has spiked over the last few months in a manner that previously has been associated with the end of a downturn (compare the recent spike to that in the early 1990s in the chart below).

NAHB Housing Market Index (HMI) -- Chart, Graph -- February 2012

Risks remain — especially the possibility of higher inflation and interest rates without corresponding wage gains.  But for now at least, the HMI is telling a different tale.

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Supply of Single-Family Homes for Sale in Coral Gables Drops Below 300

posted on February 3rd, 2012 filed under: Real Estate Market Data, Real Estate News

The number of single-family homes for sale in Coral Gables has dropped below 300 (to be precise, the number stands at 297), according to MLS data.  The supply has steadily declined since hitting a high of 631 in March 2008.

Coral Gables Real Estate Photos -- Entrance Arch at Miracle Mile and Douglas Rd 2

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2805 Columbus Boulevard Sells for $527 Per Square Foot

posted on January 18th, 2012 filed under: Financial Responsibility, Properties in Focus, Real Estate Market Data, Real Estate News

The home at 2805 Columbus Boulevard recently sold for $3.3 million.  Just a couple of shady blocks up the tree-canopied street from the elegant Biltmore Hotel, it’s easy to see the attraction.

2805 Columbus Blvd

2805 Columbus Blvd.

But the sale will pose a challenge for anyone trying to understand the value of luxury real estate in north Coral Gables.  At 6,255 square feet and built in 2004, the home sold for $527 per square foot.  The lot is 16,500 square feet, and not on water or a golf course.

Compare the recent sale of nearby 1260 Anastasia Avenue, an 8,701-sf Mediterranean built in 2001 on a 24,400-sf lot.  Located directly on the Biltmore golf course, the home sold in August for $3.05 million.

1260 Anastasia Ave.

1260 Anastasia Ave.

Granted, the clean lines of the architecture and interior at 2805 Columbus might have resonated especially well with today’s luxury home buyer.  But are Mediterraneans really going out of style, to the point that you can get 25% more house on 50% more lot, throw in the Biltmore golf course location, and still pay 13% less?

No, there is no objective explanation for the disparity in these two sales.  In real estate, subjective factors sometimes dominate.  That’s troubling if you want to believe that the market is rational.  But it’s also promising, because it means the market will occasionally present you with opportunities.

In the case of 2805 Columbus, the buyer was a Puerto Rico limited liability company, and the same agent both listed the property and found the buyer.  The transaction is essentially opaque.

The buyers of 1260 Anastasia, meanwhile, were James and Pamula Schlesinger.  Mr. Schlesinger appears to be the president and CEO of AWE Talisman, a real estate development firm.  Obviously, Mr. Schlesinger would not be likely to overpay for real estate.

If you, too, would like to avoid overpaying for a home in Miami, Miami Beach or Coral Gables, REF Real Estate will be glad to assist — and give you a hefty commission rebate.

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