Real Estate Prices in U.S.: Great Recession v. Great Depression

posted on December 19th, 2010 filed under: Financial Responsibility, Real Estate Market Data

This is awe-inspiring.  Based on data compiled by Professor Robert Shiller of Yale University, this real estate decline has been just as deep as the one before and during the Great Depression.  But the current real estate decline has been far more rapid, accomplishing the same 30% price decline in three years that played out over eight years during the Great Depression.

Shiller U.S. Home Price Index Comparison -- Great Depression -v- Great Recession

Source:  Prof. Robert Shiller, Yale University

No wonder the U.S. banking system was insolvent.  And no wonder the Federal Reserve has taken such extreme measures.

By the way, while I was warning how severe this decline could be, I had to listen to real estate brokers and salespeople here in Miami and Coral Gables claim that I had it wrong.  One prominent broker repeatedly accused Professor Shiller, who was also very bearish, of being not only wrong but dishonest, because Shiller has an interest in a firm that makes a market in options that track real-estate prices.  It was a disgusting display of ignorance and intolerance.  Wonder how many customers that broker’s firm ushered into personal financial hell.

Be careful whose counsel you keep.

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Friday Fountain Photo

posted on December 11th, 2010 filed under: Fountains

Fountain at the newly re-opened Coral Gables Country Club:

Coral Gables Real Estate Photos -- Fountain at Coral Gables Country Club

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Coral Gables Country Club Opens for Event Business

posted on December 11th, 2010 filed under: Miami and Coral Gables Living

The Coral Gables Country Club at 997 Alhambra Circle has re-opened for event bookings.  The facility’s new cafe opened about six months ago, and the pool and gym re-opened soon after.

Coral Gables Real Estate Photos -- Coral Gables Country Club Exterior (1)

The facility, owned by the City of Coral Gables, was substantially renovated about ten years ago using the proceeds of hundreds of “lifetime” (really more like 20-year) memberships.  Those lifetime members each lost their $10,000 to $15,000 when the club closed after the relationship between the old manager and the city soured.

Coral Gables Real Estate Photos -- Coral Gables Country Club Exterior (2)

The new club’s business model appears to be very different.  As presented to the city, the operation was to resemble the old club, with a restaurant, a gym, a pool and event spaces.  The main difference was supposed to be that the restaurant would be open to the public (it was only for members before).  As it turns out, there is no restaurant.  Only the small cafe is truly public.  (The gym and pool still require memberships.)

The look and feel of the interior has been changed from traditional to modern.  It’s a rather shocking design, considering that the City of Coral Gables is renowned for its strict regulation of renovations to properties with historic architecture.  Owners of historic homes in Coral Gables face tough scrutiny when they want to make alterations.

Coral Gables Real Estate Photos -- Coral Gables Country Club Interior (2)

The Coral Gables Country Club is one of the city’s oldest and most historically significant buildings.  It served as a sales center for city founder George Merrick when he was touting the promise of paradise.  The idea that Coral Gables would allow this to be done to its own property is bizarre.

Coral Gables Real Estate Photos -- Coral Gables Country Club Interior (1)

Nothing like a faux-wood stripe in black marble to signify elegance, eh?

The interior design is only superficial, of course, and can be restored to something more appropriate someday.  In the meantime, design students have somewhere to go to study what “hideous” and “inappropriate” mean.

Opulence.  I has it.

Coral Gables Real Estate Photos -- Coral Gables Country Club Interior (4)

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Pending Home Sales Rose Smartly in October

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

The Pending Home Sales Index maintained by the National Association of Realtors posted a decent gain for October 2010.  This continues a steady trend of improvement since the predictable collapse of sales immediately after the $8,000 government handout program expired.

Pending Home Sales Index (NAR) -- Chart, Graph -- Nov. 2010

Sales should do fine as long as rates remain low and in the absence of significant further job losses.

But remember, sales and prices are two different things.  And local market dislocations can produce countertrend results.  In particular, sales of luxury homes in Miami and Coral Gables remain AWOL, creating significant risk of further price declines.

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Friday Fountain Photo

posted on November 26th, 2010 filed under: Fountains

Black Friday calls for a fountain photo from Village of Merrick Park, Coral Gables, Florida:

Coral Gables Real Estate Photos -- Fountain at Merrick Park (10)

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Recent Sale — 2333 Granada Blvd., Coral Gables — $1.125 Million

posted on November 26th, 2010 filed under: Properties in Focus, Real Estate Market Data

The home at 2333 Granada Boulevard sold in September 2010 for $1,125,000, or about $296 per square foot.

Seems a little rich.  The house is nice, but the location is not for everyone; it’s right at the the corner of Granada and Coral Way, with traffic sitting in front of the house waiting for the light to change.  Needed updating too.

2333 Granada Blvd.

2333 Granada Blvd.

In terms of historical valuation, the price was reasonable.  The house last sold in July 1991 for $550,000.  The current purchase price represents about 3.8% compounded annual appreciation from that prior sale price.

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Months’ Supply of Homes in Coral Gables — Luxury Real Estate Sellers Still in Denial

posted on November 26th, 2010 filed under: Real Estate Market Data

Most of the price ranges in the Coral Gables single-family real estate market are exhibiting the most normal conditions since the downturn began.  The exceptions are the very low end, where anything priced under $250,000 sells almost immediately, and the very high end, where sellers refuse to lower their prices and buyers refuse to pay those prices.

Months Supply of Homes for Sale -- Coral Gables Real Estate -- Nov. 2010 (Table)There is now an almost comical 160-month supply of homes priced $1.5 million and up.

Months Supply of Homes for Sale -- Coral Gables Real Estate -- Nov. 2010 (Chart)

Aside from the inaction at the high end, the Coral Gables property market improved from the more broadly weak October picture.

Data are based on comparison of current active listings to October closed sales.

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Friday Fountain Photo

posted on November 20th, 2010 filed under: Fountains

Fountain at entrance to the gated community Cocoplum in Coral Gables:

Coral Gables Real Estate Photos -- Fountain at Cocoplum Entrance

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Be Realistic About Insurance Costs When Buying a Home in Miami

posted on November 20th, 2010 filed under: Financial Responsibility, Real Estate News

Your monthly payment for a home — assuming you take out a loan — consists of principal, interest, taxes and insurance.  PITI for short.

If you’re not from South Florida, you might not appreciate how expensive insurance is here.  Homeowner’s insurance can easily cost 1% to 1.5% of the home’s value per year.  And those are non deductible, after-tax dollars.

But you can’t do without it.

Hurricane Andrew -- NOAA Radar Image

Hurricane Andrew

Insurance varies depending on the size of the home, the exact location and the type of construction, among other things.  Older homes like the classic Old Spanish houses in Coral Gables can be very costly to insure, not because they aren’t generally built well but because their roofs are not fastened to the rafters and exterior walls the way current building codes would require.

Windstorm mitigation can make a huge difference in your premiums.  On an old house, going from no mitigation to impact windows and a roof retrofit can probably save 25% to 50% on premiums and pay for itself in a fairly small number of years.

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Donations Sought for Repairs to Alhambra Water Tower in Coral Gables

posted on November 19th, 2010 filed under: Miami and Coral Gables Living

Everybody loves the Alhambra Water Tower in Coral Gables.  It’s one of the city’s most iconic landmarks.

Coral Gables Real Estate Photos -- Alhambra Tower & Blooming Mimosa 3

In 2006-07, Coral Gables and the State of Florida together spent about $700,000 repairing the facade after the active 2005 hurricane season.  But apparently it needs more repair work just because of its age.  The Save the Alhambra Water Tower Project is seeking donations to complement a $200,000 commitment from the city.

From a real estate perspective, property values in north Coral Gables depend on maintenance of the many beautiful public landmarks that dot the landscape.  The north side of Coral Gables is where most of the city’s historic features are found.

A ceremony to kick off the fundraising drive will be held at the Water Tower on December 9, 2010.

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