Active Miami-Dade Home-Sale Market Bucking National Trend - September 24, 2010

Year-over-year home sales were up in Miami-Dade County in August and median prices fell, opposing the dreary national picture.

By TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com

Since a federal tax break expired June 30, home sales have fallen 20.9 percent in Phoenix, 32.5 percent in Las Vegas, 19.9 percent in San Diego, and even 25 percent in Austin's recession-resistant housing market.

But in Miami-Dade, which continues to battle massive amounts of foreclosures, a bloated inventory of homes and high unemployment, sales have outperformed the national market for the past two months, ignoring the post-tax credit hangover. Since June, Miami-Dade combined sales are flat, according to data from the Florida Association of Realtors.

Miami-Dade's numbers stack up well next to national numbers, an indication that falling prices and international interest in South Florida real estate are sustaining sales.

Nationally, August sales rose slightly from July's 15-year lows, but were still down 19 percent year-over-year and 22.5 percent since June, the National Association of Realtors said.

The federal homebuyer's tax credit expired in April, so most markets saw a bump in sales in May and June, as buyers closed sales before the program's original June 30 deadline.

Miami-Dade sales of existing homes, condos and townhouses increased 31.3 percent in August compared to the same month of 2009, figures released Thursday show.

The picture is not as pretty in Broward County, where year-over-year existing sales slumped 11.6 percent in August for all home types, and sales have slipped 18.7 percent since June.

Comparing South Florida to some of the headline markets in the most troubled states - Nevada, California and Arizona - gives a more nuanced picture of the factors that have distinguished the Miami area from the rest of the country.

"Miami hit its peak in the fourth quarter of 2005, the other markets didn't hit their peaks until the fourth quarter of 2007," said Peter Zalewski, a principal at Bal Harbour-based consultancy Condo Vultures.

"In Miami, the prices have been cut since 2009. If you go to Southern California, you're not going to see those price cuts yet."

As home prices rise nationally, South Florida continues to see its prices slashed, fueling the appetite of bargain-hungry international buyers and local investors.

In August, condo prices fell 28 percent to $104,800 in Miami-Dade, and single-family home prices fell 6 percent to $182,900. In a lending environment where many struggle to obtain loans for the discounted properties, cash-wielding investors have ramped up their activity, propping up sales.

MIAMI VS. LAS VEGAS

Las Vegas, by many measures, is the housing market most similar to South Florida. Its second-home purchasers and retirees, tourism-fueled economy, and federally-protected land boundaries all mirror South Florida, which has a limited supply of land because it's sandwiched between the Atlantic Ocean and the Everglades.

Like Miami, Las Vegas went through a housing boom cycle of giant proportions, as a rush of developers built up the area. When the economy tanked, foreclosures, stalled projects and short sales became the norm.

The region appears to have relied more on the federal tax credit for its housing recovery than South Florida.

Las Vegas existing sales drooped 18.5 percent in July, and 9.7 percent in August compared to those same months last year.

Low prices in Sin City have also sparked investor activity -- a median priced condo costs $68,000 in Las Vegas -- but those investors have not been as aggressive as they have been in Miami. For one, the international investors that have propped up South Florida's market have been far less active in Las Vegas.

Only about 4 percent of the country's international buyers purchase in Nevada, according to a report by the National Association of Realtors. In Florida, which has the nation's largest crop of international home buyers, that figure is 22 percent. And a large chunk of them are buying in the Miami area, said Oliver Ruiz, residential president of the Miami Association of Realtors.

"We continue to see strong demand from international buyers in all price points, including the high-end market," he said in a statement.

"These buyers are willing to outbid competing offers and are 89 percent cash, a factor that automatically expedites their transactions."

MIAMI VS. PHOENIX

Like Florida, Arizona ranks consistently among the top five states for foreclosure activity, in the aftermath of mid-decade exotic mortgage loans and speculator activity.

Home prices doubled in Phoenix between 2002 and 2006, and the ensuing crash was just as extreme, leaving two-thirds of homeowners underwater, according to the real estate firm Zillow.

Like Miami, Phoenix's condo market continues to see prices slashed -- the median was down 33 percent in August to $70,000 -- and investors have shown up to cash in on low prices. All-cash buyers made up 42 percent of Phoenix home sales last month, according to Dataquick, a real estate information firm. But Phoenix's inventory of condos pales in comparison to Miami, where a building boom created more than 20,000 units in five years.

Phoenix has one condo listed for sale for every five houses while Miami-Dade has nearly twice as many condos for sale as single-family homes. The remaining 16,000-unit inventory in Miami has helped push prices down more than 40 percent since 2008.

Investors have scooped these condos up at a fast clip, sometimes buying in bulk, and hoping to capitalize on the rental market in the short term.

In August, Miami-Dade condo sales anchored the rising sales numbers, as 857 condo purchases represented an increase of 51 percent from last August. However, drooping prices couldn't sustain sales in Broward, where August saw median prices fall 14 percent to $73,300. Sales there dropped 7 percent to 818.

MIAMI VS. SAN DIEGO

San Diego was also a leading victim of the housing crash, but home prices have already begun to rebound there, as they have throughout California for the past two years. The median San Diego home sold for $338,000 in August, compared to just $280,000 in January last year, a sign its market may have hit already its nadir.

Bargain hunters in South Florida still have hope for market-bottom prices, as August figures showed prices falling across the board. Median prices for single-family homes fell a further 6 percent to $182,000 in August compared to the same month last year.

Evan Goldman, a local Realtor and member of the Master Brokers Forum, bought a five-bedroom home in Pinecrest in August, after the price was slashed from the mid-$700s to $629,000.

"I really saw prices going down and down, and from my standpoint I felt as if they were bottoming out," he said.

MIAMI VS. AUSTIN

Miami's August sales report even bests cities like Austin, Texas, which is considered one of the country's most stable housing markets. The region dodged the boom-bust cycle and the city has a 7.2 percent unemployment rate, compared to Miami-Dade's 12.7 percent rate.

But in the post-tax credit market, Miami can claim supremacy over Austin in the home sales arena. Austin sales were down 15 percent year-over-year in August, while Miami-Dade sales jumped by a third.

Likewise, Miami-Dade outperformed Portland, Ore., Des Moines, Iowa, Los Angeles, Denver and many other markets in August sales.

Rochelle Oliver, 26, who recently put an offer in on a three-bedroom house in Miami Beach, believes now is a good time to make her first home purchase.

The house was a bargain, but she faces competition.

"Someone else has put an offer on it - higher than my offer," she said. "I'm waiting to hear back. Hopefully their deal doesn't go through."


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