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The Difference between Cost vs. Price
Sellers and buyers of real estate often fixate on what the price of a property is and in doing so, lose sight of the more important factor, cost. Price is what you get for the property if you are a seller and what you pay for it if you are a buyer. However, what affects both seller and buyer on a monthly basis is the cost. In addition to principal, interest, taxes and insurance costs, there are maintenance costs and maybe association fees.
If you are a seller, consider how much it is costing you to carry that property each month you don’t sell it. Based on the inventory of similar properties in your area vs the number of sales, you can calculate how much it is going to cost you to continue carrying that property for the average number of months it is taking to sell properties in your area. I suggest you cut your sales price and take the loss upfront vs slowly cash out each month.
If you are a buyer, realize that there has never been a better time to buy than right now. You have a large number of options, the interest rates are the lowest they have been in decades and there is the government tax credit that expires at the end of April 2010. If you are waiting for prices to go down lower, consider the cost of owning if the prices go down but the interest rates go up. If prices come down 10% more, but interest rates inch up only 1% your monthly payments are going to be roughly the same.
Small Homes Are Back In Demand
The days of the McMansions have been put on hold for now. What is selling in Miami are the smaller homes on smaller lots in neighborhoods that are close to shopping and transportation. Most of the homes fitting this description are under $500,000 and many are under $300,000 and are therefore perfect for first-time homebuyers.
If you have a home that fits this description, now is a good time to sell since inventories in these price ranges are low and buyers are often bidding above asking. Many of these buyers want to be under contract prior to the end of April in order to qualify for the First Time Homebuyers Tax Credit.
Miami Real Estate – Selling Your Home? List It In January
Most agents will tell you that the best time to list your home for sale is in the late spring and early summer to take advantage of the “summer move”. The summer tends to be the time when most families move as it does not disrupt school schedules. This year, however, I would recommend that you list your house as soon as the new year sets in. The extension and expansion of the First-Time Homebuyer’s tax credit as well as the inching up of interest rates is going to keep the market trudging along, but in order to qualify for the tax credit a property must be under contract by the end of April, 2010.
If your property is already on the market and you are not getting a lot of showings by the end of January, take another look at the market in your area and make sure your property is priced right. You may also want to spruce up the exterior to create better curb appeal.
Related Articles:
Selling Your Home? You Need To Price It Right
First Time Homebuyers Tax Credit Extended and Improved
Don’t Under Estimate The Value of Curb Appeal
Sales Under $250,000 Drive October’s Existing-Home Sales Surge
48.5% of the increase in sales reported by NAR were under $250,000. In the South, 51.6% of the sales were under $250,000. The increase in sales was largely due to the expiration of the first-time homebuyers credit, which President Obama ended up extending and expanding. Most experts expect the next couple of months sales to slide back a bit.
Miami Foreclosures – Down For October But Probably Will Increase
Although the number of homes in foreclosure decreased in October from the same time last year, the overall number of foreclosures are still high and some experts think it will rise. According to RealtyTrac, there were 7, 741 foreclosures in Miami Dade as of October. Most of the first round of foreclosures were sub-prime and adjustable-rate mortgages that became unaffordable once interest rates reset. The potential for another round of foreclosures is due to the large amount of negative equity many people currently have in their homes and the high unemployment rate, 11.3%, in Miami-Dade County.
This new round of foreclosures will keep real estate prices low, and may push them lower, unless the current sales trend continues and a balance is reached where inventories are stable at a 6 – 9 month supply. The recently extended and expanded First Time Homebuyers Tax Credit, continued low interest rates and real estate prices that have retrenched, should help keep sales moving and inventories decreasing. The graph below is for single-family homes and condo sales for Miami-Dade County. Some areas within the county are already at a 6-9 month supply level.
Single-Family Homes and Condos in Miami-Dade County
South Florida Real Estate – Third Quarter Summary
According to the National Association of Realtors third quarter report, sales are up throughout most of the country. The biggest increase in sales was in Florida at 36.8%. This is no surprise considering that we are also the state with the highest number (9 out of the top 15) of metro area price decreases in the double digits. Miami-Fort Lauderdale-Miami Beach metro area had a price decrease of 24.6 percent. What this means to you depends on whether you are a:
- Seller – Pricing is everything in this market. Although sales are up, the high unemployment rate and continued high inventories mean that prices will not be going up any time soon.
- Buyer – If you are waiting for the bottom of the market, you probably missed it, but high inventory levels, low interest rates and the extension and expansion of the First Time Homebuyers Tax Credit, still equal a great time to buy.
- Investor – There are and will continue to be good buys but the high unemployment rate and inventory levels will continue to put downward pressure on rental and vacancy rates across the commercial/investment sector.-
More detailed information regarding specific real estate markets in Miami-Dade County can be found in Miami Real Estate – Single Family Homes Market Summary
First Time Homebuyers Tax Credit Extended and Improved
What does the bill that President Obama signed into law on Friday mean to you if you are a first time homebuyer? It means that you did not miss out on the First Time Homebuyers Tax Credit and may be able to qualify for it now, even if you didn’t before. Why? Because the new First Time Homebuyers Tax Credit:
- expanded the credit to higher income individuals and married couples,
- expanded the credit to existing sellers who are looking to move up or downsize their primary residence as long as they owned and occupied the residence for five consecutive years out of the previous eight,
- extended the deadline until April 30, 2010 to be under contract as long as closing takes place by June 30, 2010
Miami Real Estate – Single Family Homes Market Summary
Below is a quick snap shot of what the real estate market for single family homes looked like in October. These numbers are derived from the Multiple Listing Service and though they do not include For Sale By Owners and anything not listed on the MLS, they are indicative of what is going on in our local markets. The closed sales may be slightly underestimated due to the lag time in posting the sale in the MLS.
Coconut Grove
- Closed Sales: 14. 3 short sales, 1 REO. Highest Sales Price: $1.7 million. Lowest Sales Price: $154,900.
- Pending Sales: 22
- Active Listings: 177 down from 217 at end of Sept. Highest List Price: $18 million. Lowest List Price: $65,900.
- Summary: Inventory is down from the end of the third quarter.
Coral Gables
- Closed Sales: 33. 1 short sales, 2 REOs. Highest Sales Price: $5.15 million. Lowest Sales Price: $358,000.
- Pending Sales: 89
- Active Listings: 432. Highest List Price: $49.5 million. Lowest List Price: $235,000
- Summary: Inventory decreased to 432 down from 450 at the end of the third quarter. The number of closed sales that were short sales or REOs are down significantly from the end of the third quarter, when there were 11 each closed short sales and REOs.
Key Biscayne
- Closed Sales: 3. 0 short sales, 1 REO. Highest Sales Price: $3.5 million. Lowest Sales Price: $820,000.
- Pending Sales: 4.
- Active Listings: 129. Highest List Price: $24.950 million. Lowest List Price: $789,000.
- Summary: Sales are down, inventory is the same as of the end of the third quarter.
Miami Beach
- Closed Sales: 13. No short sales, 4 REOs. Highest Sales Price: $9.7 million. Lowest Sales Price: $240,000
- Pending Sales: 53
- Active Listings: 380. Highest List Price: $29.9 million. Lowest List Price: $200,000.
- Summary: Inventory has decreased slightly. The number of closings that were short sales or REOs have decreased significantly since the end of last quarter.
Palmetto Bay
- Closed Sales: 6. 1 short sale, 1 REO. Highest Sales Price: $625,00. Lowest Sales Price: $142,600.
- Pending Sales: 52
- Active Listings: 154. Highest List Price: $2.85 million. Lowest List Price: $155,000.
- Summary: The number of closed sales due to short sales is down significantly from the end of September.
Pinecrest
- Closed Sales: 14. 1 short sale and 2 REOs. Highest Sales Price: $2.6 million. Lowest Sales Price: $419,000.
- Pending Sales: 35
- Active Listings: 211. Highest List Price: $5.9 million. Lowest List Price: $349,000.
- Summary: Although the inventory in Pinecrest decreased slightly from 227 at the end of September to 210 at the end of October, the current inventory level divided by the number of sales closed in October result in a 15 month supply of properties. The median price of current listings is $1.395 million and 30% of the listings are over $2 million.
South Miami
- Closed Sales: 3. 0 short sales, 1 REO. Highest Sales Price: $325,000. Lowest Sales Price: $266,000.
- Pending Sales: 30
- Active Listings: 68. Highest List Price: $1.880 million. Lowest List Price: $62,300.
- Summary: The number of closed sales is down slightly from the second quarter, which had 28 closed sales. Inventory is up from 28 at the end of June.
Miami Real Estate Market – Pending Sales, What Do They Really Mean?
The National Association of Realtors reported a 21.2 percent increase in pending home sales for the month of September. This is the 8th consecutive monthly gain so, what does that mean in terms of the real estate market? The answer, as always, is it depends on the location. The NAR number is a national number so it takes in the number of pending sales across the country. There are some areas of the country, such as the Northeast, that had a decrease in pending sales from August to September.
On a national basis, the increase in pending home sales bodes well for the housing market since most pending sales result in closed sales within 1 – 4 months. If you are currently trying to buy or sell real estate, you need to look at what all the numbers are doing in the location where you are buying or selling. In addition to looking at pending and closed sales; look at the inventory; price per square foot of listings, pending and recently closed sales; and the number of short sales and foreclosures in each category. All of these numbers will give you a good picture of what is going on in your market and will guide you in your offers if you are a buyer and your pricing if you are a seller.
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