Friday Fountain Photo

posted on July 2nd, 2010 filed under: Fountains

Fountain at southeast entrance gate, on Coconut Grove Drive, to Old Spanish Village development in downtown Coral Gables.  (See prior post for background on the state of affairs at this formerly ballyhooed, now boo-hooed development.)

Coral Gables Real Estate Photos -- Fountain at Old Spanish Village -- Coconut Grove Drive Entrance

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S&P Case-Shiller Home Price Index Drifts Lower in Miami

posted on July 2nd, 2010 filed under: Real Estate Market Data

The S&P Case-Shiller Home Price Index, which tracks repeat sales of the same homes, continues to drift lower for the Miami metro area.  The chart below is based on the non-seasonally-adjusted data set.  Ordinarily, seasonally adjusted numbers might be more desirable, but these are not ordinary times.  Show me the money.

S&P Case-Shiller Home Price Index -- Miami -- Apr. 2010 (NSA)

The weakness in the Case-Shiller Index contrasts with relative strength in median price data.  The divergence is probably a result of the shifting mix of homes sold.  We’re moving from correction in the low-priced market segment toward correction in the higher-priced market segment.  Liquidation of bad subprime loans has passed its peak and is receding.  Liquidation of bad Alt-A, Option ARM and prime loans is just getting underway.  (See prior post showing reset schedule.)

As a result, the mix of homes sold may be shifting from the low end toward the high end, giving a boost to the median price (i.e., the price at which the same number of houses sold for more as for less).  Indices that track repeat sales of the same homes, however, show continued weakness as the prices of higher-end and luxury homes fall.

Anecdotally, there have been some very significant sales and price reductions suggesting that property values are indeed falling at the higher end in Miami and Coral Gables.

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Recent Sale: 909 North Greenway Dr., Coral Gables

posted on July 2nd, 2010 filed under: Financial Responsibility, Properties in Focus

This recent sale in Coral Gables may be challenging for potential home buyers and their agents to understand.  At 5,405 square feet according to public records, 909 North Greenway might seem to have sold recently for an inordinately low price at $842,500.  That’s just shy of $156/sf.

909 North Greenway Dr.

909 North Greenway Dr.

Indeed, it was cheap, even considering the need for some serious updating.  But the key to understanding the price is that a big portion of the square footage –over 2,000 square feet according to public records — is in a second building out back that houses a couple of apartment units.  That might be great for an extended family that wants a compound, or for someone who wants rental income.  But it’s not for everyone.  The main house is just over 3,000 square feet.

And the master bedroom and bathroom were both tiny.  Typical of many of the older two-story homes in Coral Gables, the second story has a much smaller footprint than the first.  Sometimes there’s nothing but a single bedroom upstairs (here there were three, but with a pint-sized master).

Property taxes and homeowner’s insurance are additional factors when considering a property like this.  All that extra square footage in the thing out back might be nice, but you’d better really want it, because you’re going to pay for it whether you want it or not.  Property taxes are about $20,000.  Insurance would be about $15,000 to $25,000, depending on the carrier and coverage limits.  And remember, insurance is not tax-deductible.  For those uninitiated to home ownership in South Florida, the carrying costs can be quite shocking.

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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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