The Miami Beaches Market Pulse – April 2016 vs. April 2015

The Miami Beaches Market Pulse – April 2016 versus April 2015

The Miami Beaches
The Miami Beaches, Intra-coastal Waterways & North Biscayne Bay

It is a beautiful Saturday morning on the Miami Beaches as I write this blog post, which is a month overdue.  In my previous articles, particularly the February & March Market Pulse editions, I expounded upon existing & potential threats to the Miami Beaches Real Estate Markets (February), and I demonstrated 1st quarter sales volumes for the first quarter of the past 17 years according to tax records on the Miami Beaches.

Yes, it is true that existing home sales have taken a beating over the past two years with only a moderate drop in Median Sales Prices, but this has been due, largely, to 1)  New Construction / Pre-Construction Sales (which are generally non-MLS sales) and 2)  The falling in value of virtually every currency in the world relative to the US Dollar.  I am sure that the talking heads may also cite “political uncertainty” ahead of what is perhaps one of the most unique election cycles in more than 100 years; but I have yet to see an authoritative poll indicating such.

I will be more brief than usual and simply publish the April 2016 versus April 2015 MLS data (and May’s is next) this month as I am winding up for an extensive 2-part edition for June 2016 where I will cover the first half of the year compared to prior years (should I go all the way back to 2000 like I did in March?  Comments? ), and publish a separate, but related issue covering the Distressed Property Market.  Look for these in early to mid-July!

 

Market Activity & Neighborhood Reports by Zip Code for the Miami Beaches

33139 – South Beach

Median Est. Home Value: $391K, Up 0.2%; Median Est. Listing Price: $275K, Up 1.9%; Median Days in RPR: 120 Up –; Sales Volume: 72, Down –55.6%

Click here to receive the 33139 Market Activity Report!

Click here to receive the 33139 Neighborhood Report!

MLS Sales Volume is at a 3 year low.  Listing Volume is at a 3 year high.

33140 – Mid-Beach

Median Est. Home Value: $493K,  Up 7%; Median Est. Listing Price: $485K, Up 27.8%; Median Days in RPR: 120, Down –13%; Sales Volume: 31, Down –52.3%

Click here to receive the 33140 Market Activity Report!

Click here to receive the 33141 Market Activity Report!

MLS Sales Volume is at a 3 year low.  Listing Volume is at a 3 year high.  

 

33141 – North Beach & North Bay Village

Median Est. Home Value: $267K, Up 6.4%; Median Est. Listing Price: $255K, Up 11.4%; Median Days in RPR: 103, Down –1%; Sales Volume: 45, Down –48.9%

Click here to receive the 33141 Market Activity Report!

Click here to receive the 33141 Neighborhood Report!

MLS Sales Volume is at a 3 year low.  Listing Volume is at a 3 year high.

33154 – Bal Harbour & Bay Harbor Islands

Median Est. Home Value: $676K, Up 19.1%; Median Est. Listing Price: $482K, Up 5.5%; Median Days in RPR: 120, Down –9.1%; Sales Volume: 26, Down –50%

Click here to receive the 33154 Market Activity Report

Click here to receive the 33154 Neighborhood Report

MLS Sales Volume is at a 3 year low.  Listing Volume is at a 3 year high.

33160 – Sunny Isles Beach, Eastern Shores & Golden Beach

Median Est. Home Value: $354K, Up 2.4%;  Median Est. Listing Price: $319K, Up 19%; Median Days in RPR: 113, Down –5%; Sales Volume: 78, Down –53.3%

Click here to receive the 33160 Market Activity Report

Click here to receive the 33160 Neighborhood Report

MLS Sales Volume is at a 3 year low.  Listing Volume is at a 3 year high.

Summary & Conclusion

In all 5 zip codes, MLS Sales Volume is abysmal and at a 3 year low, while listing volume is at a 3 year high.  What we are seeing (or a good part of it), is new construction (as much as 10-15% of units in each new building) are being listed / flipped on to the market by the original Buyers, thus raising the Median Estimated Home Value calculation AND the Median Estimated Listing Price.  I have noticed older units (Existing Homes greater than 1-2 years old), prices have been dropping on a per square foot basis, which explains the reduced time on market for MLS listed properties.  However, listing volume continues to increase monthly, and in order for the market to come into equilibrium, prices must come down, OR, the US Dollar needs to weaken against foreign currencies sufficiently enough in order to spur sales of existing homes and thus reverse the upward trend in listing volume and the downward trend in sales volume.

Recommendations

If you are planning on making a purchase that is 500,000 USD or more, I would recommend Bal Harbour.  It is a thriving and affluent community with great long-term prospects in terms of resilience of home values.  If you are planning a purchase of home and looking to invest less than $500,000 USD, I recommend the 33141 zip code, North Bay Village and North Beach, where I have been seeing some fantastic values / “bang for the buck” (and location); AND condos are selling in some cases for less than what it would cost to construct new.  It is definitely a good time to be buying in this emerging area while it is on the cheap!

This concludes my April Edition of the Miami Beaches Market Pulse.  I will publish May’s results AND year-over-year-over-year comparisons this forthcoming week.

Have a wonderful weekend!

Cheers,

REBroker.MIAMI is a residential real estate search site for property & rentals!
REBroker.MIAMI is a residential real estate search site for property & rentals!

Christopher J. Lazaro, MBA

Licensed Real Estate Broker, REALTOR®

Business Manager

Metro International Investments

Toll Free: 1-800-798-9192 ext. 333

International: 1-305-517-3086 ext. 333

Fax: 305-521-8995

License Number: BK3252123

B: www.BeachBroker.Miami

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W: www.MII.Miami

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Special Issue: The Miami Beaches Market Pulse – March 2016 & 1st Quarter Analysis

Miami Beach
Miami Beach

Hello everyone and thank you for visiting my blog!  I am in the process of catching the blog up (3 months of data collected so I will be making several posts this week and next to bring the blog current).  My focus over the past few months has been largely dedicated to servicing my customers, clients and, especially, my agents in achieving their goals.  We recently hit an in-house brokerage record of 85 listings on the MLS!  Go Team!  Today, I finally resolved to make some time to get back to one of my passions; reporting on the real estate markets of the Miami Beaches.

As we closed the first quarter there was a noticeable shift (largely negative) in the media’s coverage regarding the Miami Beaches and Downtown Miami Real Estate Markets.  Despite the optimism we (my firm) were feeling after a largely successful quarter, what appears to be a spike in distressed real estate activity signaled, to me, the coming to fruition of a prediction I made in late 2013 and going into 2014; a bearish real estate market driven by an appreciation in the US Dollar relative to virtually every other currency in the world.  While I am not inclined to believe there will be another “crash” per se (unless we have a currency crisis or some other major event like the mortgage crisis of 2008), macroeconomic activity over the past 24 months has shifted us from a Seller’s Market into what is now clearly a Buyer’s Market.  In my prior article (the February Edition of the Miami Beaches Market Pulse), I referenced several reasons we have seen an ongoing correction, as well as potential threats to the real estate market. I firmly believe a correction in numerous markets is firmly in place and will not finish correcting until listing prices drop sufficiently for sales volume to increase in a manner that will bring the overall market back into equilibrium.  The Miami Beaches, as a whole, may be at or near an inflection point as I am seeing year-over-year data that is far less horrible than the prior year’s year-over-year data.

Fortunately, the Miami Beaches, the City of Miami, and Miami-Dade County as a whole possess a larger & longer-term story than just the short-term ups and downs of the real estate markets.   Numerous areas of the County are growing by leaps and bounds, and the imbalances in the Downtown Miami & Miami Beaches real estate markets will, ultimately resolve.  What imbalances you might ask?  Well, others have written about this (specifically regarding the Downtown Miami market) with data they have gathered so I will not go into a dissertation, however, I will say that it really does seem like half the buildings are empty year round!  A good article that goes into this subject can be found here:  http://www.huffingtonpost.com/jj-colagrande/panama-papers-reveal-miam_b_10030094.html.

As the article points out, this has led to numerous restaurants and businesses closing, all because the anticipated cash flow from having reasonably occupied neighborhoods never happened (this is usually the problem of making projections based on assumptions rather than actual knowledge).  As a result, businesses that opened over the past few years faced a stark reality of having opened in, albeit a brand new, mostly abandoned neighborhood which continues to suffer from a ludicrous level of traffic resulting from all the ongoing construction.  The Miami Beaches, also populated with substantially vacant towers, does not suffer nearly as much because the beaches are a vacation destination and therefore the local businesses benefit from a continuous inflow of cash from vacationers as well as locals; more so than the Downtown Miami (and other) areas of the County.

With that said, I want to refute the negativity I have been seeing regarding the “Doom & Gloom” articles circulating in many papers & trade journals; at least as far as the Miami Beaches are concerned. For the past year I have been discussing a correction in the market and this by no means should be construed as “The sky is falling”.  Corrections are healthy for a market!  In our most recent “blip” (when compared to 20 years), we had and still have a number of factors impacting MLS related sales such as:

  1.  A global currency meltdown relative to the value of the Dollar. (It cannot be understated how much the Miami Beaches benefited from Foreign Direct Investment)
  2. Massive amounts of pre-construction & new construction sales.  This absolutely punishes the sales of existing homes and the related data leading Buyers into thinking they can “catch the bottom of the market”, so they wait and eventually miss the opportunity all together.
  3. Finally!  An uptick in interest rates!  With any luck they will keep rising!  There are still far too many overvalued assets / unrealistic Sellers.  If that were not true, there would not be such a massive (and growing) glut of luxury real estate, both For Rent & For Sale, pouring onto the market.
  4. Regular debate, even still, over how our government intends to screw up or even completely abolish a good thing (Mortgage Interest Tax Deductions).
  5. Tight/Tighter credit despite low interest rates (done by the government to artificially re-inflate home prices)
  6. A trickle of foreclosures (REOs) and a painfully slow short sale process (another government induced strategy to inflate & maintain home prices).  Much of this should have been long resolved by now but rather than let the Free Market takeover, all they have succeeded in doing is prolonging the pain and creating other imbalances in the market with consequences still yet to come.

In this article I am going to demonstrate that the real estate market (so far as the Miami Beaches are concerned) are actually more robust, from a Sales Volume Perspective, now than they were prior to the mortgage crisis.  Pundits will of course argue that the numbers are overinflated by speculative overbuilding and a corresponding demand from overseas shell corporations (a term now synonymous with “Panama Papers”) to hide/park money; but I know from living & working here for the past 14 years that Miami is quickly emerging as a cultural & business epicenter of the world.  So long as that fact & corresponding trend remains true, even if the overseas holding companies have to dump or otherwise liquidate the thousands of vacant units darkening our towers, prices will only correct to a point where real, living, breathing & working people will fill those vacant apartments because they want to live here, work here, start businesses here and raise a family here.  Naturally, there would be the inevitable next wave(s) of speculation as well, both on the way down and on the way back up.

Typically, I only publish the MLS Data in these Market Pulse Reports.  This month, I wanted to educate everyone’s perspective on the subject of Sales Volume (and build upon where I was going in the above paragraph).  In this report I provide the total sales for 1st Quarter of each year since 2000 for all 5 zip codes.  Additional reports like this, with even greater detail & metrics, will follow over the coming year.

Reports by Zip Code

33139 – South Beach

March 2016 versus March 2015 – MLS Data Only

Median Est. Home Value $391K Down –0.3% | Median Est. Listing Price $279K Up 1.5% | Median Days in RPR 119 Down –7% | Sales Volume 126 Down –11.3%

33139 – March 2016 Market Activity Report  –  Of Note:  Overall Sales Volume is down 11.3% from March of last year.  Average listing requires 3.75 months to sell.

33139 – Neighborhood Report -(based on 6 months of data) Of Note:  Listing Volume is at a 3 year high at just over 3000 listings on the market!  Greater than 70% of homes sold ranged from $200-$600 per square foot.

All (total) Real Estate Sales Data per Miami-Dade County Tax Records

1st Quarter 2000 Sales Volume: 93

1st Quarter 2001 Sales Volume: 104

1st Quarter 2002 Sales Volume: 129

1st Quarter 2003 Sales Volume: 191

1st Quarter 2004 Sales Volume: 230

1st Quarter 2005 Sales Volume: 410 (the 2005 real estate market is often equated to the 1999 stock market)

1st Quarter 2006 Sales Volume: 280

1st Quarter 2007 Sales Volume: 235

1st Quarter 2008 Sales Volume: 273

1st Quarter 2009 Sales Volume: 206

1st Quarter 2010 Sales Volume: 295

1st Quarter 2011 Sales Volume: 373

1st Quarter 2012 Sales Volume: 463

1st Quarter 2013 Sales Volume: 567

1st Quarter 2014 Sales Volume: 648

1st Quarter 2015 Sales Volume: 743

1st Quarter 2016 Sales Volume: 662  – Sales Volume, although off by approximately 10% from the same period last year, is still approximately 50% higher than it was at the height of the market in 2005.  We are still pretty far from the sky falling!

33140 – North Beach

March 2016 versus March 2015 – MLS Data Only

Median Est. Home Value: $489K, Up 7% | Median Est. Listing Price: $458K, Up 22% | Median Days in RPR: 117, Down –14.6% | Sales Volume: 69, Up 38%

33140 – Market Activity Report – Of Note:  Strong year over year bounce in existing sales and listed new construction.  Nearly a 15% drop time on the market.  Median Home Value up a solid 7%.  Median Listing Prices are up over 20%!

33140 – Neighborhood Report -(based on 6 months of data) Of Note:  Listing Volume at a 3 year high, just under 1500 listings across the zip code.  Roughly 50% of all homes sold were under $400,000 USD.  Roughly 70% of all homes sold for between $200-$500.00 per square foot.  At least 50% of all homes sold were under 1400 square feet.  Just under 50% of all homes sold were between 40 & 50 years old.

All Sales Data per Miami-Dade County Tax Records

1st Quarter 2000 Sales Volume: 88

1st Quarter 2001 Sales Volume: 95

1st Quarter 2002 Sales Volume: 116

1st Quarter 2003 Sales Volume: 103

1st Quarter 2004 Sales Volume: 128

1st Quarter 2005 Sales Volume: 237 (the 2005 real estate market is often equated to the 1999 stock market)

1st Quarter 2006 Sales Volume: 139

1st Quarter 2007 Sales Volume: 121

1st Quarter 2008 Sales Volume: 183

1st Quarter 2009 Sales Volume: 113

1st Quarter 2010 Sales Volume: 183

1st Quarter 2011 Sales Volume: 207

1st Quarter 2012 Sales Volume: 255

1st Quarter 2013 Sales Volume: 283

1st Quarter 2014 Sales Volume: 271

1st Quarter 2015 Sales Volume: 365

1st Quarter 2016 Sales Volume: 328 – Sales Volume, although off an approximate of 10% from the same period last year, is still approximately 40-50% higher than it was at the height of the market in 2005.  We are still pretty far from the sky falling!

33141 – North Bay Village

March 2016 versus March 2015 – MLS Data Only

Median Est. Home Value: $271K, Up 9.3% | Median Est. Listing Price: $253K, Up 7.7% | Median Days in RPR: 106, Down –11.7% | Sales Volume 72, Down –10%

33141 – Market Activity Report – Of Note: Median Estimated Home Values up nearly 10% year-over-year!  Listing Prices are trending higher.  Average time on the market is 3 1/2 months.  Sales volume continues to trend lower but is starting to flatten.

33141 – Neighborhood Report -(based on 6 months of data) Of Note:  Listing Volume at 3 year high at just over 1500 listings.  Over 50% of all listings sold for under $300,000 USD; while 25% of all homes sold closed at over $600,000 USD.  Two-Thirds of all homes sold were priced at under $300.00 per square foot (I continue to think 33141 is the BEST deal on the beaches going!) with more than half of those under 200.00 per square foot!  Approximately 75% of all homes sold were under 1400 square feet.  363 of the 400+ homes sold were more than 20 years old with 140 of them being greater than 60 years old!

All Sales Data per Miami-Dade County Tax Records

1st Quarter 2000 Sales Volume: 43

1st Quarter 2001 Sales Volume: 67

1st Quarter 2002 Sales Volume: 84

1st Quarter 2003 Sales Volume: 62

1st Quarter 2004 Sales Volume: 124

1st Quarter 2005 Sales Volume: 222 (the 2005 real estate market is often equated to the 1999 stock market)

1st Quarter 2006 Sales Volume: 135

1st Quarter 2007 Sales Volume: 113

1st Quarter 2008 Sales Volume: 115

1st Quarter 2009 Sales Volume: 126

1st Quarter 2010 Sales Volume: 158

1st Quarter 2011 Sales Volume: 210

1st Quarter 2012 Sales Volume: 264

1st Quarter 2013 Sales Volume: 342

1st Quarter 2014 Sales Volume: 335

1st Quarter 2015 Sales Volume: 373

1st Quarter 2016 Sales Volume: 415  – Sales Volume is a a record high for the zip code for Q1 compared over any year in the last 17 years!  One reason for this is venture capitalists are teaming up with brokers to buy up the, largely, 50-90 year old homes and apartment buildings in the area with the intent to demolish and build anew.  This represents a substantial shift in the future of North Bay Village and 33141 in general.  If there was EVER a time to buy there, it would be right now!

33154 – Bal Harbour

March 2016 versus March 2015 – MLS Data Only

Median Est. Home Value: $684K. Up 23.2% | Median Est. Listing Price: $499K, Up 8.5% | Median Days in RPR: 118, Down –8.5% | Sales Volume: 33, Down –43.1%

33154 – Market Activity Report – Of Note:  Median Estimated Home Values are up a whopping 23% and Listing Prices are on the rise while the average time on the market is trending lower.  Sales Volume, however, is off by more than 40% over the same period last year.

33154 – Neighborhood Report – (based on 6 months of data)  Of Note:  Listing Volume is at a 3 year high! There are extremes in the price ranges of homes sold with more than a third of the homes selling for less than $500K, roughly a third selling between $500K-$1M and the remainder selling for over $1M.  Price per square foot metrics are nicely distributed across all price ranges.  The bulk of homes sold are over 30 years old

All Sales Data per Miami-Dade County Tax Records

1st Quarter 2000 Sales Volume: 54

1st Quarter 2001 Sales Volume: 47

1st Quarter 2002 Sales Volume: 68

1st Quarter 2003 Sales Volume: 69

1st Quarter 2004 Sales Volume: 75

1st Quarter 2005 Sales Volume: 83

1st Quarter 2006 Sales Volume: 71

1st Quarter 2007 Sales Volume: 54

1st Quarter 2008 Sales Volume: 104

1st Quarter 2009 Sales Volume: 69

1st Quarter 2010 Sales Volume: 111

1st Quarter 2011 Sales Volume: 122

1st Quarter 2012 Sales Volume: 404  (bulk real estate & strategic purchases by well capitalized groups account for this major boost)

1st Quarter 2013 Sales Volume: 198

1st Quarter 2014 Sales Volume: 171

1st Quarter 2015 Sales Volume: 271

1st Quarter 2016 Sales Volume: 207

33160 – Sunny Isles Beach

March 2016 versus March 2015 – MLS Data Only

Median Est. Home Value: $352K, Up 2% | Median Est. Listing Price: $300K, Up 11.7% | Median Days in RPR: 111, Down –12.6% |

Sales Volume: 123,  Down –8.9%

33160 – Market Activity Report –  Of Note:  Given how drastic I have seen the numbers in Sunny Isles Beach bounce around for the past few years, I consider this to be a fairly flat/stabilized comparison.  For the better part of last year this particular zip code read a lot like a Stock Market Crash Horror Story (see the May and October 2015 reports)

33160 – Neighborhood Report (based on 6 months of data) – approximately 50% of all sales were under $400K with another 25% selling for over $1M.  Listing Volume is at a 3 year high.  Median Listing Values have risen to their highest level in 3 years.

All Sales Data per Miami-Dade County Tax Records

1st Quarter 2000 Sales Volume: 117

1st Quarter 2001 Sales Volume: 168

1st Quarter 2002 Sales Volume: 156

1st Quarter 2003 Sales Volume: 233

1st Quarter 2004 Sales Volume: 273

1st Quarter 2005 Sales Volume: 363

1st Quarter 2006 Sales Volume: 245

1st Quarter 2007 Sales Volume: 253

1st Quarter 2008 Sales Volume: 280

1st Quarter 2009 Sales Volume: 270

1st Quarter 2010 Sales Volume: 384

1st Quarter 2011 Sales Volume: 479

1st Quarter 2012 Sales Volume: 534

1st Quarter 2013 Sales Volume: 597

1st Quarter 2014 Sales Volume: 595

1st Quarter 2015 Sales Volume: 625

1st Quarter 2016 Sales Volume: 733 (Freshly at a 17 year high overall)

Commentary

As you can readily see, over the past 17 years the total number of sales (Sales Volume) has steadily increased because of the economic development & growth on the beaches.  The same data, when looked at more granularly, can even tell you who to buy next door too 😉

Granted, we are comparing simply the 1st quarter of each of these years, and that at the very least, the early 2000s were “seasonal” on the Miami Beaches.  However, those of you who also live, work & drive here know there is no such thing as an “off season” anymore; and we can all agree there are a great deal more residences on the beaches as well.

While I am perceiving a Buyer’s Market in the luxury arena (more than anywhere else), it should also be noted that the Miami Beaches are a faster moving market than many, if not most.  Fluctuations in the currency markets directly impact the perceived value(s) of Miami Beach Real Estate, and while the real estate market moves slowly, the currency markets can turn on a dime.  For example, I would wager that if the Federal Reserve does not continue its hawkish stance (continue to raise interest rates), the Dollar will tank and overseas currencies will once again pour in like a tsunami over Southeast Florida.  Vice versa, continuing on the current path of rising interest rates will ultimately lead to lower home prices (because mortgages become more expensive).

It would be interesting to see Sales Volume as a function of overall available capacity of salable real estate.  That would, amongst other things, just how much of a “correction” there has actually been relative to other time periods.  Another thing to put on my “to do list” for future publications….but I digress…

More to come over these next couple of weeks!  I will be more brief in my next couple of Market Pulse Editions…I have been thinking I should stick to quarterly BIG articles, and limit the others.  Let me know if you have any feedback 🙂

Cheers,

Christopher J. Lazaro, MBA

Licensed Real Estate Broker

 

The Miami Beaches Market Pulse – February 2016 vs. February 2015

The Miami Beaches Market Pulse – February 2016 versus February 2015

The Miami Beaches
The Miami Beaches, Intra-coastal Waterways & North Biscayne Bay

Welcome to this month’s edition of the Miami Beaches Market Pulse!  I apologize for the delay, as it was my original intention to publish the January results circa the middle of February, however, recent business did not allow for the time and concentration required to perform a reasonably decent analysis; and THEN I seemed to have lost all the data files for the month of January!

Recent evidence suggests that the 16+ month long market correction on the beach has even impacted the luxury market.  I witnessed & read an article in February where the both famous & beautiful Anna Kournikova sold her Miami home for a tremendous 2 million under ask price! See Details of this here!  Even the famous “Jills” (arguably the de facto sales associates for the rich & famous) are feeling the pain (from a “typical” commission of 3-6% perspective) of a $60,000-$120,000 dollar  “loss” in projected commission revenue!  This saddens me, of course, as every Realtor® wants to be participating in a thriving market and given the usual Co-Broker nature of the business we generally all want to see each other succeed and make more money.  They are great agents with an excellent reputation, so if you choose not to use me, I would definitely look into using them for your luxury residential real estate needs.

Over the past month I have been speaking to a number of experienced real estate investors and brokers.  The general consensus is that a larger dip in the real estate market is forthcoming after the election.  I will not, at this point venture to guess the future as I am a data driven individual; however, I do see certain underlying, and as-of-yet, unquantifiable threats to the residential real estate market.  These “threats” are, admittedly, in one respect, conjecture; only because none of us are omnipotent, but the possibilities are significant enough to, at the very least, justify maintaining a watchful eye and remain cautiously optimistic at best.  In this issue I begin with the usual publication of the comparative numbers (February 2016 versus February 2015) by zip code, and provide commentary.  Then I go into what I perceive to be the top 4 threats to the South Florida Real Estate Market, something I should have probably expounded upon some time ago.

Reports by Zip Code

33139 – South Beach

Median Est. Home Value: $385K, Up 0.3%; Median Est. Listing Price: $275K, Up 1.8%; Median Days in RPR: 117,  Down –7.1%; Sales Volume: 80, Down –27.3%

Click here to receive the Market Activity Report – 33139!

Click here to receive the Neighborhood Report – 33139!

As I published in the December Report, I saw the market, specifically in Bal Harbour, showing signs that the Beaches were reaching an inflection point.  It does not surprise me that the downward trend in the data has been leveling off, after all, how low can it go?  This is Miami Beach!  However, let us keep in mind that the data you are seeing is suggesting that Sales Volume (for MLS related sales only) is down 27% year over year, and it is currently at a 3 year low.  Last year, this number was showing a drop (from 2014 year over year) as well, into the -30-50% range.  This indicates the Market Sales Volume is actually off by as much as 75% when compared to the Sales Volumes of the years 2013 & 2014.  The long and short of it is: yes, we are seeing an uptick; but to get back to normal conditions we need to see a sustained surge in transactions on existing home sales, which is the benchmark for home valuations.  Valuations being supported at lower volume, to me, indicates weakness in the market and market vulnerability to surges in new inventory.  Current Listing Volume (see the Neighborhood report for this) has passed the 3000 mark, a 3 year high.  So we have the most supply in three years, and the least demand in three years.  For sure, I believe prices are susceptible to further correction, especially if any of the “threats” I discuss later in this article begin to weigh on the market more heavily than they already have.

33140 – North Beach

Median Est. Home Value: $484K, Up 5.3%; Median Est. Listing Price: $426K, Up 20.9%; Median Days in RPR: 114, Down –20.3%; Sales Volume: 35, Down –41.7%

Click here to receive the Market Activity Report – 33140

Click here to receive the Neighborhood Report – 33140

Following suit with 33139, Sales Volume for 33140 is down a whopping 41.7%, a 3 year low; and Listing Volume is at nearly 1500, a 3 year high!  I do not think much commentary is needed given my commentary for 33139.  We are certainly seeing an uptick, which arguably could be seasonal, or due to an influx of retirees etc.  One thing remains certain, the market is nowhere near it’s recent “healthiest” which we saw in 2013 & 2014.

33141 – North Bay Village

Median Est. Home Value: $270K, Up 9.8%; Median Est. Listing Price: $245K, Up 1.7%; Median Days in RPR: 101 Down –17.2%; Sales Volume: 35, Down –66.7%

Click here to receive the Market Activity Report – 33141

Click here to receive the Neighborhood Report – 33141

I stand by my comments regarding this area from my December analysis; this area, I believe, has the greatest potential for long-term gains.  It is ideally situated, and a wonderful town to live in.  It is also the most affordable housing in the Miami Beaches by far.

Following suit (I rarely repeat myself as a practice of good writing, but I have a feeling I will be saying that statement another two times in this article; and I cannot understate, therefore must emphasize, the market action of the past 16 months plus), 33141’s Existing Home Sales Volume for MLS listed homes is off by a massive 66.7%.  Considering that is circa how much it was off this time last year as well, it means the sales volume is off by as much as 80-85% versus the 2013 & 2014 numbers.  The Realtors in the area must be hurting!  Sales Volume is currently at 35, a 3 year low, and Listing Volume is over 1500, a 3 year high!

This begs the question why so many people, when they find out I am in real estate, say “Oh, you must be doing great then!”.  It is truly amazing how long the sentiment created by the bounce of 2010 into 2013/2014 is lasting; and I find it surprising how many are simply unaware of the more-than-a-year-long correction in the Real Estate Market…even other agents & brokers (surely they have to notice they are not making as much money?!).  The fact is that my real “bread & butter” is commercial real estate.  I practice in residential real estate because I truly enjoy it; and residential Realtors® throw parties!  Nothing like a good Broker’s Open House 🙂

33154 – Bal Harbour

Median Est. Home Value: $665K, Up 22%; Median Est. Listing Price: $469K, Up – (flat); Median Days in RPR: 119, Down –7.8%; Sales Volume 31, Down –44.6%

Click here to receive the Market Activity Report – 33154

Click here to receive the Neighborhood Report – 33154

Incredibly, the Median Estimated Home Value is up a tremendous 22% year over year.  How this is possible against the backdrop of a market correction evades me (for right now).  I am going to call my reporting company and see if they can tell me how they are calculating Median Estimated Home Values.  As of right now, I do not know; but I will.  Regardless of this, the same thing holds true in Bal Harbour as it does on the previously reported zip codes.  Sales Volume is at a 3 year low (down by 44.6% year over year) and Listing Volume is at a 3 year high with just under 900 units currently listed on MLS.

33160 – Sunny Isles Beach

Median Est. Home Value: $345K, Down –0.3%; Median Est. Listing Price: $285K, Up 10%; Median Days in RPR: 115, Down –11.5%; Sales Volume: 132: Up 11.9%

Click here to receive the Market Activity Report – 33160

Click here to receive the Neighborhood Report – 33160

Sunny Isles Beach is where I call home.  Surprisingly, Sunny Isles Beach has bucked the trend of the rest of the zip codes on Miami Beach!  Sales Volume is actually up, a first in more than a year of looking at these specific reports.  I believe this may be due to something unusual skewing the data, such as Pre-Constructions and unsold New Constructions being listed on MLS, and therefore when the sales of these new projects ultimately close, they get logged.  Most pre-constructions and new constructions are never listed on MLS as they are typically absorbed by the market via the Builder’s own sales office.

Listing Volume is at a 3 year high, and Sales Volume, while not at a 3 year low, is close to the 3 year low.  Median Sales Price has spiked, markedly from the low 200Ks to the high 700K range.  This tells me that one or more VERY expensive properties sold this past month.  Regarding Sales Volume, please keep in mind that most of last year (you can check my May 2015 report and others) regularly demonstrated, month after month. Sales Volume being off by 50+% every month year over year.  While this spike in activity is encouraging, as I said before, we will need to see a sustained surge in market activity before anyone can begin declaring the market correction is over.

An article in Real Deal recently came out demonstrating how home prices in South Florida are still substantially off of their peak.  It also goes into some of the things I touch on later in this article.  The article is entitled “South Florida Home Prices Still Far From Peak: Report – Price Growth Could Continue To Slow Due To Global Macroeconomic Uncertainty”.

Lastly, I do not believe that Home Values have truly begun to reflect the market correction.  When I find more on how this is being calculated, I will update this article further and, with any luck, have something cogent to share regarding Home Values respective of actual market activity.

 

Potential Market Threats

First and foremost in my mind is the result of the appreciation of the US Dollar against virtually every other currency in the world; and in many respects, currency appreciation is a good thing (unless you are and exporter or producing goods to sell abroad, which equates to your goods & services being more expensive than similar goods and services produced in a nation with a weaker currency).  However, after the mortgage crisis, foreigners “ran towards the blast” (Peter Schiff, Las Vegas Money Show Lecture – 2013).  As a result of this substantial foreign direct investment, our currency has been enjoying a “propping up” effect.  I will explain further but for a really good (and funny) analysis, I recommend clicking the Money Show Link above.  I do believe that this recent boost in the dollar is temporary as our increasingly socialist policies have put the Dollar in a downtrend starting as far back as the 1960s.  Here is a long-term chart of the US Dollar:

US Dollar remains in a long-term downtrend
US Dollar remains in a long-term downtrend

Several years ago there was a deluge of foreign direct investment into the United States (especially in South Florida) as foreign nationals sought to:

1) take advantage of the distressed asset market which was the result of the 2008-2010 mortgage crisis,

2) expatriate capital from more socialist countries where the government risk to their capital is greater (reference the austerity measures in Cypress, where nearly every wealthy citizen with more than 100,000 USD equivalent on deposit in the country saw an overnight, and substantial, haircut out of their bank accounts), and escape ludicrously abusive tax policies to fund their extraordinary entitlement programs,

3) gain permanent resident status (“Green Card”) via the United States EB5 program (or other methods) by investing substantial (at the time, 500K and 1M dollar investments) amounts of capital into the United States.

5 Year Chart of the Canadian Dollar versus the US Dollar
5 Year Chart of the Canadian Dollar versus the US Dollar

Threat #1 – Currency Risk:  In many cases, international financing was used, typically 50% equity & 50% financing.  When this occurred (for example purposes we will use a Canadian citizen using Canadian Dollars), the Canadian Dollar was par with the US Dollar (meaning one US Dollar was equal in value to one Canadian Dollar.  This has changed significantly over the past couple of years.  Now, the Canadian Dollar is approximately one half the value of the US Dollar.  Understand that US Dollars were borrowed, and now it takes nearly 2 times the number of Canadian Dollars to pay for each US Dollar that was borrowed.  In this non-fiction example, the drop in commodities prices, specifically oil, has crushed the Canadian Dollar versus the US Dollar over the past several years.

The example is +/- true & valid with numerous currencies throughout the world, such as the Russian Ruble (rightwhich “fell out of bed” in late

The Russian Ruble versus the US Dollar - 5 Year Chart
The Russian Ruble versus the US Dollar – 5 Year Chart

2014 into early 2015),  Brazilian Real (rightmajor political upheaval in progress as a decade plus of corruption and embezzlement is being exposed AND the fall in commodity prices, especially sugar, has weighed substantially on their currency, which has also moved into double digit inflation!), the Argentinian Peso (belowwhere long standing socialist policies have made the currency virtually worthless), and the Venezuelan Bolivar (belowwhose chart clearly demonstrates the effects of communism).

The Venezuelan Bolivar versus the US Dollar - 5 Year Chart
The Venezuelan Bolivar versus the US Dollar – 5 Year Chart

To make matters potentially darker, these international loans have a 3-7 year lifespan.  They are NOT 30 year mortgages!  At the very least, even if only 5% of all international borrowers get

The Brazilian Real versus the US Dollar - 5 Year Chart
The Brazilian Real versus the US Dollar – 5 Year Chart

hammered by the result of the Currency Risk they are now getting burned by, we are still looking at thousands of distressed assets flowing onto the marketplace nationwide; especially here in Southeast Florida, which has rapidly grown into a top international destination that has attracted billions of dollars in foreign direct investment!

The Argentinian Peso versus the US Dollar - 5 Year Chart
The Argentinian Peso versus the US Dollar – 5 Year Chart

I should note that my firm’s best opportunities & customers are Argentinian and Venezuelan groups who are, for lack of a more accurate term, “Crowd Funding”, and bringing large amounts of capital into the United States.  These investors are doing everything they can to expatriate money from their home nations and invest in the United States; which begs the question in our own political forum; “If Socialism works so well, why are so many people trying to come to the United States to escape it?”.  It should be obvious in the charts that socialism is not healthy for a nation’s currency.  This leads me to my next “threat”.

Threat #2 – Our Government:  The Democratic Party candidates, Hillary Clinton and Bernie Sanders have either stated (Bernie) or all but stated (Hillary), they wish to lead our nation down the same path (to ruin it would appear).  This year is an election year, and I believe that the United States is at a precipice, and never before has an election carried such weight on both the near and far future of our economy; and socio-economic stability.  These two candidates wish to create and expand entitlement programs, to be fueled by greater taxation and use of our nation’s printing press.  Members of the Democratic Party and Congressmen have floated ideas on doing away with your ability, as a homeowner, to deduct the interest you pay on your mortgage from your taxable income.  To do away with it entirely would be catastrophic to average households throughout the United States!  Others have suggested “modifying” it further than it already has been; and in my experience the government has a short-sighted habit of throwing boulders into a lake not realizing the tsunami it creates at the other side of that proverbial lake.

Consider this, a $200,000 home at 4%, on the first year of purchase, would allow you to deduct $8,000 from your taxable income; and this benefit allows you to essentially save $2,000 on your tax bill if you are in the 25% tax bracket (making between 37,650 and 91,150 if you are a single filer.  See picture for more detail below).  These two politicians would have you believe that the US Economy is recovering due to the policies their party supports; however, data suggests otherwise. Money Magazine published an article in September 2015 entitled “Typical American Family Earned $53,657 Last Year”.  It is good reading and can certainly help put things into perspective, especially when evaluating how, if we should see yet another Democratic Party Candidate ascend to the Presidency, home values & net incomes may be effected.

http://taxfoundation.org/article/2016-tax-brackets
Source: http://taxfoundation.org/article/2016-tax-brackets

This equates to about 3-5% of total gross income FOR THE YEAR for the average tax paying citizen!  That $2,000 is extremely important to many American families; and even if it is not (for some), it has a wide array of better uses than in the Federal Government’s hands!  This is money that can be invested (for college, retirement etc), or can be spent on goods & services, thus further fueling our economy and increasing our economy’s Velocity of Money, which today is abysmally and historically low (see chart from 1959 until end of 2015 below):

The Velocity of Money Chart
Gross Domestic Product Adjusted for Monetary Base
Velocity of Money Chart
Velocity of Money Chart

 The Democrats/Liberals/Progressives/Socialists (all synonyms) claim that the 100+ Billion dollars that would be generated in tax revenues by eliminating deductions for the “rich” could be used to reduce the national debt, and they are correct; those revenues could be used in such a manner.  However, all of them have been pontificating about expanding entitlements and creating new ones.  In my view, should they move ahead with further reforms, they will find new and interesting ways of squandering our nation’s (your) wealth.  In addition, once you start taking money away from the “rich”, a better term for them would be “The Employer Class”, they (the “rich”) begin to pull back (i.e: they start firing people and cutting expenses and limiting new investments which create jobs), and so goes the cascading tsunami across the lake (borrowing from my previous analogy). Furthermore, according to the National Association of Realtors, home values would see upwards of a 15% decline, on average, throughout the country if this is done away with.

Lastly, these candidates have a “print more money” policy, as if this does not have consequences.  Every nation in the world has begun hedging away from the US Dollar as it is nearly obvious to anyone with a reasonable amount of education that The Dollar’s status as a Reserve Currency is in serious jeopardy.  The media deliberately does not put this in front of you, but the fact remains you can only print money for so long before it becomes valueless.  If the United States continues on this path, it will eventually find itself (sooner than later many reputed economists believe) in the midst of a Currency Crisis.  To explain this; if I had a way of turning all the sand of Florida’s beaches into gold, how valuable would gold be?  I conclude “Threat #2” with the chart below which depicts the United States Money Supply.

The United States Money Supply has gone hyperbolic!
The United States Money Supply (our monetary base) has gone hyperbolic!

Threat #3 – New Construction & Glut of New Inventory

Last summer I read an article in the Miami Herald.  It is entitled:  At least a dozen new South Florida condo projects in limbo amid changing market conditions.  I have been hearing rumblings that pre-sales have slowed, and while it could be the market pulling back to do some digesting, it could also be the “inflection point” they mention in the last paragraph of the article; meaning we have possibly seen the peak of this real estate cycle.  In either case, we have many thousands of new units on hand in inventory, and should it be the end of the most recent boom in the market, developers will rush to finish their projects as fast as possible and dump the new inventory on the market.  If we are not at the end of the boom, we have already seen over 3000 new units come online, over 10,000 more currently being built, and a projected 28,000 in the planning stages.  Should all of these come online, it will only put further pressure on the existing home sales, and in my opinion, drive prices down as listing volume rises and sales volume continues to plummet due to already deteriorating global macroeconomic fundamentals.

Threat #4 – The Weather

Hurricane Wilma in the Gulf of Mexico, October 23rd 2005
Hurricane Wilma in the Gulf of Mexico, October 23rd 2005

I believe I am stating the obvious here, however, it is worth mentioning as it is a factor.  It has been over 10 years since the last major hurricane struck South Florida.  In that time tens of thousands of people from all over the nation, and the world, have moved here to make Florida their home.  I was here during the 2000s, and I can tell you that after Hurricane Wilma (October 2005), the entire South Florida Real Estate Market completely stalled, as the shock and awe of the event set in to the population.  I am fairly confident that a strong Category 2, to (God forbid) a Category 5 hurricane making landfall between Homestead, FL and West Palm Beach, FL would create a rush to sell in this region as there are many people who will be panicked after such an event, and currently cannot comprehend the vast power of one of these storms.  Following such a storm, they will strongly reconsider their wanting to live in a place where such a beast is possible.  While I hope the current pattern holds and these storms continue to remain out at sea, we are fast approaching Hurricane Season 2016 (beginning in June).

That concludes my analysis for this month.  If you have any questions, comments, feedback or would like to explore purchasing a home; give me a call any time.  Keep in mind you can always use http://REBroker.Miami to browse Homes for Sale and For Rent on the Miami Association of Realtors MLS.

Social Media Usage & Broker’s Liability (Updated May 2015)

I updated an article I posted back in 2013 with current information and tips regarding Social Media Usage.  Click the link below to go to the updated article.

Social Media Usage & Broker’s Liability (Updated May 2015).

 

Cheers,

Miami Realtor, Miami Real Estate Professional
Christopher Lazaro, MBA – International Realtor of Miami

Response to a Response: Defining 21st Century Real Estate – On Purpose Magazine

On the wonderful website On Purpose Magazine, I just replied to a response by a Keller Williams Realty Associate (but I have no way to truly confirm that they are indeed working for Keller Williams) and it seemed more promotion; but also the person indicated that, in a nut shell “all we do is real estate”; and I believe the antiquated models of the Old World of Real Estate are becoming increasingly difficult to survive in.  I published this response:

Christopher Lazaro | February 27, 2013 at 9:08 pm 

We are more of a boutique brokerage than Keller Williams and as such have expanded our interests to finding sources and buyers of hard/physical commodities such as Iron Ore, Sugar, Gold, Silver & Oil. We have repeatedly come across the opportunities while working with investors seeking to sell/acquire large commercial real estate assets.

We also have no problem brokering legitimate business opportunities and joint ventures regardless of whether they are real estate related. We are more than simply real estate agents; we are trusted business consultants with decades of expertise in banking & finance, information technology, commodities, and energy as well as residential & commercial real estate.

The global nature of the market place has shown us new avenues for growth both personally and commercially speaking and in our view we can provide our clientele a greater scope of opportunities and possibilities by having this flexibility.

It was for this reason that our group came together to form Metro International Realty (and the DBA, Metro International Investments). Our transition to the new company/venture from TM Realty Associates. Inc is nearly complete and we are very happy that our fearless leader & commercial broker, Mark Moldoff, a 42 year veteran of real estate development and brokerage opted to partner with us and continue leading the group 

Cheers,
Christopher Lazaro