This table from the KCM post “The Cost of Waiting for Prices to Fall” is a great visual to update my post from yesterday regarding mortgage rates hitting the 5% mark
Author: jenniferwollmann
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Mortgage Rates Hit 5%
Mortgage rates are inching up, currently hovering around 5%. According to a CNNmoney.com report, interest rates at 5% don’t affect home buyers. While 5% is still low, and would only add slightly to a monthly mortgage, a continued increase in rates will affect the amount of home a buyer can purchase.
Other posts that discuss mortgage rates include:
Mortgage Rates – How An Increase In Rates Affects Your Purchasing Power
Fannie Mae and Freddie Mac Increasing Interest Rates and Fees
The Difference between Cost vs. Price
Take advantage of what is supposed to be another beautiful South Florida weekend and get outside. The animal sculptures of Francois-Xavier Lalanne are on exhibit at Fairchild Tropical Garden and are sure to delight children of all ages. Two of my personal favorites are included here. Which one is yours?
Miami Palmetto Senior High School will be adding an Environmental and Science Masters Academy to their curriculum this Fall.
The proposed curriculum is as follows:
- 9th grade – Honors or Gifted Biology, Honors Geometry or Honors Algebra II
- 10th grade – Honors or Gifted Chemistry, AP Environmental Science, Honors Algebra II or Pre-calculus or Analysis of Functions
- 11th grade – Two of the following science courses – AP Chemistry, AP Biology, AP Physics, Honors Marine Biology, Honors Anatomy/Phisiology or Honors Solar Energy and Pre-Calculus, AP Calculus AB or BC or AP Statistics
- 12th grade – Research 4 or Honors Solar Energy and AP Chemistry, AP Biology, AP Physics, Honors Marine Biology, or Honors Anatomy/Physiology; AP Calculus AB or BC, AP Statistics or Multivariable Calculus/Differential Equations.
Considering that MPSH’s AP Environmental Science passing rate last year was 90%, compared to about a 40% national average, and that MPSH won the Lexus Eco Challenge and moves on to the Final Challenge, the new Masters Academy should prove to be a challenging yet fun program for students who want to excel in the environmental science field.
No wonder MPSH is one of the top rated schools in Miami-Dade County.
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.
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.
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
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Super Bowl Sunday Open Houses
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.
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.