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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Must Be High Season

posted on February 21st, 2012 filed under: Miami and Coral Gables Living

No shortage of things to do in Miami in February.  You couldn’t go anywhere without stumbling onto some event this Presidents’ Day weekend . . . .

  • The inaugural Art Wynwood International Contemporary Art Fair filled the streets of Miami’s current bohemia in Wynwood, where artists go to struggle these days
  • The Coconut Grove Arts Festival filled the streets of Miami’s erstwhile bohemia, where real estate values are way too high and the ambiance way too conventional for those artists who truly struggle
  • The Miami International Boat Show stoked the imaginations of buyers and gawkers alike

Miami Beach Real Estate Photos -- Miami International Boat Show 2012 (1)

  • The University of Miami Hurricanes baseball team led off its 2012 season in fine form with a 3-game sweep of the Rutgers Scarlet Knights, including a 12-inning nail-biter in Game 2 that saw both teams blow bases-loaded opportunities to break a 1-1 tie.

Coral Gables Real Estate Photos -- UM Univ Miami Hurricanes Baseball 2012

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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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Federal Reserve Says: No Rush to Buy That House

posted on January 28th, 2012 filed under: Real Estate News

In the 1970s, inflation, wages, interest rates and home prices chased each other upward like runaway balloons.  People paid more for houses despite rising interest rates because people feared that waiting would only mean paying more and borrowing at a higher rate to do it.  That’s the inflation dynamic — prices rise as consumers buy now fearing higher prices later.

This ain’t the 1970s . . . at least if you ask the Federal Reserve.

Bernanke & Co. this week announced they do not expect to raise interest rates until the end of 2014.  This is great if you think low interest rates are an end in themselves.  On the other hand, when you see news like this, always ask why.  Apparently, the Federal Reserve thinks the economy is going to remain weak for a very long time.

The Fed might as well have told home buyers: “No need to rush.”

Ben Bernanke Photo (Wikipedia Commons)

So if you’re looking for real estate in Miami, Coral Gables, Coconut Grove, Miami Beach or Pinecrest, Ben Bernanke thinks you have plenty of time to shop.  Just remember, he and the Fed have been enormously wrong before.

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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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Dog Days for New Listings Drawing to a Close

posted on January 2nd, 2012 filed under: Real Estate Market Data

The November-December period is low season for new real estate listings in Miami, Miami Beach and Coral Gables.  January through April is high season.

If you’ve been thinking that no new listings of homes for sale have hit the market lately, that’s probably because you’re right.  But cheer up.  The new year will bring a significant number of new properties to market as surely as day follows night.

New Listings -- Single-Family -- Coral Gables -- January 2008 to November 2011

May you find the home you’re looking for in 2012 (and have the good sense to use REF Real Estate to get the best advice on buying real estate in Miami or Coral Gables, and a hefty commission rebate).

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1248 Coral Way Auctioned for $1.175 Million

posted on December 20th, 2011 filed under: Properties in Focus, Real Estate News

The federal government recently auctioned a significant property in Coral Gables.  This was no distressed property, though.  Uncle Sam came to own 1248 Coral Way when the prior owner died and left it to help pay the federal debt.  (Yes, really.)  On a recent Saturday, the home was auctioned to the highest bidder for $1.175 million.

The 3,887-sf house, built in 1928, has seen better days.

Coral Gables Real Estate Photos -- 1248 Coral Way (Exterior)

Coral Gables Real Estate Photos -- 1248 Coral Way (Exterior 2)

Most of the rooms are a gut job, but some nice details remain.

Coral Gables Real Estate Photos -- 1248 Coral Way (Interior)

The value primarily resides in the land: two 17,500-sf lots, one with the historic but decrepit house on it, and the other an adjacent vacant parcel.

Coral Gables Real Estate Photos -- 1248 Coral Way (Land)

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Friday Fountain Photo

posted on December 10th, 2011 filed under: Fountains

Fountain at Ponce de Leon Park in Coral Gables, Florida (1201 Ponce de Leon Boulevard, bounded by Ponce de Leon Boulevard, East Ponce de Leon Boulevard and Antilla Avenue).

Coral Gables Real Estate Photos -- Fountain -- Ponce de Leon Park

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Miami: Affordability and Risk

posted on November 18th, 2011 filed under: Financial Responsibility, Real Estate Market Data

The boom and bust have played out in the charts posted here (with appropriate dire warnings) over time.  Here’s another view, this time based on the monthly median single-family home price for the Miami metro area, tracked by the Florida Association of Realtors.

Miami Real Estate -- Median Price -- Single-Family Homes (Jan 1994 to Sept 2011)

It looks like prices are roughly back where they belong.  Basically, the show is over.  And it’s tempting not to try to put too fine a point on it.  But don’t let the boom and bust cloud your judgment.  Before the boom, the notion of a decline in home prices was consigned to insignificant seasonal wiggles within a gradual upward trend.  The idea of even a 10% decline in prices would have shaken people to the core.  Now that we have lived through a >50% decline, there is a temptation to glibly brush off another 10% or so.  Yet if you’re only putting 10% down, a 10% decline wipes out your equity.

So we really do still need to care about the risk-reward balance.

On the reward side, interest rates are at record lows:

30-Year Fixed Interest Rate (Freddie Mac)

The combination of nearer-to-normal prices and record-low interest rates makes the cost of borrowing as low as it has been since the beginning of the median price series in 1994.  Consider the product of multiplying the median home price by the prevailing interest rate on the 30-year fixed mortgage. (Multiplying price by interest rate is not the same as the annual mortgage payment, but it’s a fair index of borrowing cost.)

Miami Real Estate -- Median Price x Interest Rate (Jan 1994 to Sept 2011)

That’s a beautiful chart for anyone who sat out the boom and wants to buy for the long haul.

So where’s the risk?  Primarily, in the uncertainty about when, or how fast, the punch bowl of low interest rates will be taken away.  Low rates fueled the boom, and rising rates helped prick the bubble and bring on the bust.  (“When the tide goes out, you find out who’s been swimming naked.”)

True, the risk of ruin from rising rates is much lower when buying near historically normal prices.  For one thing, rates are not supposed to rise unless the economy does better, and wage gains could then offset rising rates (as in the 1970s, when inflation ran hot but wage gains did too, and home prices actually rose smartly even as the 30-year mortgage rose from 8% to 16%).

But extraordinary measures have been taken.  A vast sum of money has been printed.  The Federal Reserve has reportedly surpassed China to become the single largest owner of U.S. Treasury debt.  If (or as some would say, when) inflation runs hot, rates could go up even as wages remain under pressure from economic weakness, foreign competition, etc.  Higher rates without higher wages could put new downward pressure on prices.

If you’re thinking of buying real estate in Miami (South Beach, Brickell, Coral Gables, Coconut Grove, Pinecrest, etc.), the low rates make it temptingly affordable.  Just know the risk when you reach for that reward.

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What You Get for $900,000 in Sunset Neighborhood of Coral Gables

posted on November 2nd, 2011 filed under: Properties in Focus

Perhaps the strongest pricing in Coral Gables is in the vicinity of the highly regarded Sunset Elementary School.  As REF has explained here and to customers, buying a house in the Sunset neighborhood does not mean you get to go to the school.  Really, the alarm cannot be sounded too often on this point.

With that in mind, what are people getting for their money in the Sunset Elementary area of south Gables?  Two recent sales show just how divergent the current real estate market can be.  For $849,000, a Bahamian corporation took 743 Tibidabo Avenue off the hands of the people who bought it for $820,000 in January 2008.  Who knew the market went up since then?

743 Tibidabo Ave.

743 Tibidabo Ave

The price of $849k works out to $430/sf for this 1,972-sf pillbox.  The house was already updated in 2008 (I know — I was in it), so that’s not the explanation.

On a brighter note for buyers in the Sunset Elementary neighborhood of Coral Gables, the classic French Village home at 1013 Hardee Road sold for $880,000, or $256/sf for the 3,431-sf beauty.

1013 Hardee Rd.

1013 Hardee Rd

Yes, it needs updating and maybe some repairs.  But you could put $100,000 into it and still be at just $285/sf.  Heck, you’d have to put $600,000 into it before you’d hit the $430/sf that the other people paid for 743 Tibidabo.

Plain ranch-style homes are a fact of life in South Florida.  And maybe I’m a bit of an aesthetic or architectural snob.  But there’s something to be learned here.  It’s actually a guiding principle here at REF.  The real estate market is inefficient, and there is value to be had . . . or not.

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