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Rental Rates On The Rise
With the increasing popularity of living in walkable communities, rents are on the rise in areas such as downtown Brickell and Coral Gables. The fact that there are so many new buildings with great amenities and upgraded finishes, such as granite counter tops and modern kitchens and baths, in these two areas have lead to an increase in demand and rents. An unfurnished 2 bedroom 2 bath condo in a newer building starts at $2000.
Miami Real Estate – Pending Home Sales Jump In January
According to the Miami Realtors Association, January total pending home sales jumped 28% over January 2010 and increased 2.5% from December. Pending sales were as follows:
- condominium: increased 37.2 percent compared year over year. Increased 3.3 percent from December.
- single-family homes: increased 15.531 percent from January 2010. Increased 1.4 percent from December.
Although this jump in pending sales has put a dent in the overall inventory, I expect inventory to inch up a bit now that SuperBowl Sunday is over and people start to focus on the Spring selling season. However, properties that are priced right are definitely selling as first-time homebuyers and investors jump back into the market.
The luxury market still has a way to go in chipping away at the inventory levels. As of today, there are 1143 single family homes listed over $1,000,000. 37 are currently pending (25 went pending in January) and 11 closed in January. Depending on whether you look at pending sales or closed sales per month, based on current numbers we have between 46 (pending sales) and 104 (closed sales) months worth of luxury inventory. Considering 6-9 months represents a stable market, we have a ways to go.
Coconut Grove, FL Real Estate – Market Summary
Market information from the Multiple Listing Service for single family homes for the month of January are as follows:
- Closed sales: 8. None were short sales, 7 were REOs. 5 were cash sales.
- Price range of closed sales: $565,000 – $48,000
- Pending sales: 12. 2 short sales, 1 REO
- Price range of pending sales: $2.39 million – $57,900
- Active listings: 176. 18 short sales, 5 REOs
- Price range of active listings: $16.9 million – $49,900 (no, I didn’t forget a zero!)
Distressed sales made up less of the sales going to contract in January, but made up the majority of closed sales. the actual closings for the month are of regular sales. Based on the number of active listings, distressed sales make up 13% of the market.
What does this mean if you are a buyer? Based on the number of active listings to closed sales, there is still a lot of inventory to work through, so it is still a buyers market. Once you narrow down your price range and specifications however, there won’t be as much to choose from, so use the statistics and market information to negotiate your price. If the house you like is a regular sale and it is priced right, you won’t have as much room to negotiate as you will on one that is overpriced. Cash was king in the distressed sales for January, so if you are going in with financing, make sure you have a very tight offer, including your pre-approval letter for a mortgage, a realistic deposit, and good timing for inspections and other due diligence.
What does this mean if you are a seller? You have a lot of competition so price really does matter, especially in the higher price ranges (84 of the current active listings are over $1,000,000, but the highest closed sale for January was under $600,000). Look at the active sales that most closely match your home in terms of size, location, updates, lot size, amenities. Consider pricing it 10-15% below your closest competition, make sure it has great curb appeal, and de-clutter and freshen up the inside with some elbow grease and a fresh coat of neutral paint. The good news is that if your house is priced right compared to your competition, it will sell.
“Economists Bullish On Miami”
In case you missed my posts on the projected economic improvement of South Florida and Miami-Dade in particular, read today’s front page Miami Herald article, Forecast calls for robust rebound in Dade.
Previous posts I have written include a lot more detail if you want to read more:
Commercial Real Estate Starting To Pick Up
Still Doubt An Economic Recovery Is Taking Place In Miami?
Miami Real Estate – If You Are Looking To Invest, Miami Is Top Choice
Commercial Real Estate Starting to Pick Up
The recent up-tick in consumer spending has resulted in an increase in demand for retail space. Since the multi-family and office had been showing improvement, this is a good sign the economy is starting to pick up.
On a local level, Miami Today reported the following increases in November:
- Total taxable sales are up 7.5% from last year
- Autos and accessories taxable sales are up 14.8%
- Tourism and recreation taxable sales are up 14.2%
- Hotel occupancy up 8.6% with daily room rates up 3.5%
- Building investment taxable sales up 4.9%
At a commercial meeting yesterday, the main spaces people were looking for were restaurant space and shopping/retail centers. The majority of the investors looking were from Venezuela, Argentina and Brazil.
Although our unemployment rate is high in Miami, the fact that tourism is up and investors are coming back to commercial, seems to indicate we have turned a corner.
Still Doubt An Economic Recovery Is Taking Place In Miami?
There was so much good news about economic activity in the Miami Today, today that I had to share some of the ones that popped out at me. In addition to the one about all of the economic growth numbers from November (see tomorrow’s post), the following things jumped out at me as a good sign that Miami, despite the economic downturn, has continued pursuing projects that focus on long term growth
- Record number of passengers arrive at Port of Miami
- Downtown Miami condos are filling, resulting in new activity at Bayside Marketplace
- Seagis Property Group buying up more industrial space with long term plans to stay in Miami market
- Major film and entertainment projects are heading into town (The Magic City, Bones, Charlies Angels)
- Downtown population jumped 81% over the past 10 years
- Codina is getting ready to build a 230 unit luxury rental in Doral
- Twin 27-story residential towers close to getting okay
- 369 unit condominium project moving forward with plans to begin in second quarter
- Tech incubator at FIU lands million-$ military contract
I point all this out because it is easy to focus on the negatives of unemployment, short sales, and foreclosures, all of which are very real and very painful. The fact that companies are investing here, tourists are visiting, inventories are getting absorbed, and developers are getting ready to start building again, all tell me that we are bouncing along the bottom, but the end is in sight. Since unemployment is a lagging indicator, it will be one of the last economic indicators to pick up. All of the items listed above will help the unemployment rate, which in turn will further help stabilize our battered housing market.
Rental Property Owners Must Issue 1099′s
The Small Business Jobs Act that passed Congress last year requires all property owners that rent out properties to file a 1099 for each vendor who does $600 or more in work. Even if you only rent out a single property, you must collect the following for each vendor:
- name
- address
- Social Security or Federal Employer Identification Number
The details to the exceptions to this requirement have yet to be ironed out but the exceptions include:
- burden: if gathering the required information and issuing the forms create a hardship
- duration: the property is only a temporary rental of your own residence
- income: your income from the rental doesn’t meet minimal threshold requirements (as yet unidentified)
If you are renting out a property, make sure you, your bookkeeper, and/or CPA have a way of tracking each vendor starting January 1, 2011.
Miami Real Estate – If You Are Looking To Invest, Miami Is Top Choice
According to Mark Vitner, an economist for Wells Fargo, Miami is his top choice of a market poised for economic growth. How can that be? We have one of the highest unemployment, foreclosure and number of underwater homes in the country. However, Vitner stated that Miami is currently posting some of the highest taxable sales and number of jobs created in the state.
Miami has always been blessed with gorgeous weather, colorful landscapes, tourquoise waters, and beautiful beaches. One of the main reasons our economy has been chugging along better than most is due to our popularity with tourists, especially international ones, who have helped both our tourism and retail industries.
Miami Real Estate – Condo Inventory Continues to Shrink
According to Condovultures.com, only 16% of the 22,231 condo units built in Greater Downtown Miami during the latest boom are still available for sale. If you continue to wait for prices to drop further, you will probably find you missed the boat. That doesn’t mean prices are going to appreciated rapidly, or at all, in the next year or two. We still have short sales, older construction, and regular owner foreclosures (vs developer foreclosures) to work our way through.
Waiting Until After The Super Bowl To List Your Home?
Common belief in the residential real estate industry is that nothing happens until after Super Bowl Sunday
, which this year happens to be February 6. Many sellers hold off on listing their home until after then. That may be a mistake. Sales are currently up. In Miami-Dade County, 893 single family homes and 1,397 condos or townhomes have gone under contract since January 1. Buyers are out there and you will have a lot more competition after Super Bowl Sunday.
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