*Updated* – The Miami Beaches Market Pulse – 2nd Quarter 2018

Sunrise on Miami Beach
Sunrise on Miami Beach

UPDATED:  Once again my brokerage business and other commitments including working on a NEW version of this blog site have taken substantial priority over my ability to publish the reports in as timely a manner as I would prefer.  As many of you may know, for the last several years my brokerage has maintained a substantial listing portfolio of distressed assets (short sales) throughout Southeast Florida.  What I have observed, in a nutshell, is that it is far more difficult to receive extensions and forestallments from the court, lenders are not as amicable as they once were in their negotiations (even when confronted with an independent general contractor report demonstrating substantial damages to a home they are looking to fetch a retail price for), and a substantial amount of resistance to closing from Sellers who are hopeful the recent upturn in the economy will somehow benefit and save them from having to sell their home and move; my response to the latter is to move on to a new place and start a new chapter in their lives with a property they can afford and do not have a long history of defaulting on.

Below are the usual reports by zip code and each is a snapshot in time as of the beginning of July 2018.  I would also encourage my readers to review the Market Focus report from the Miami Association of Realtors® by clicking here.

To see REAL-TIME Market Reports on most Southeast Florida cities, check out REBroker.Miami’s Market Reports by City.

This re-post is an update to the blog.  I pulled the 3rd Quarter Reports and will be writing my assessment of the data over the coming week.  I am looking forward to completing the newest version of BeachBroker.Miami (some new logo ideas too 😉 ) and launching it for the New Year.

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

33139 – South Beach & The Venetian Islands

Looking north from South Point, Miami Beach 33139
Looking north from South Point, Miami Beach 33139

 

Click here to receive the South Beach Market Report.

Click here to receive the South Beach Neighborhood Report.

 

Sales volume was up nearly 10% year over year with nearly all other data unchanged.  We continue to be in a Buyer’s Market for condominiums and we have transitioned to a Balanced Market from a Seller’s Market in single family homes.

After multi-year declines, it appears 2017 has seen an inflection point occur and Median Sales Price, Sales Volume and Listing Volume have normalized within medium to long-term ranges on the charts.

33140 – Mid-Beach, Bayshore, Sunset Islands, La Gorce & La Gorce Island

Mid-Beach & North Beach, Miami Beach FL
Mid-Beach & North Beach, Miami Beach FL

 

Click here to receive the Mid-Beach Market Report.

Click here to receive the Mid-Beach Neighborhood Report.

 

Listing Volume continues to flirt with 3-year highs and Sales Volume continues to be rangebound after bottoming in last quarter of 2017.  Median Sales Prices for listed properties hover at just over $1 Million, however, overall Median Sales Prices per Public Records (a much greater data sample) is at $500,000.  Newer and renovated properties are listing and selling for considerably more than their older and less updated equivalents.  This is evident when you look at the distribution of the Age Range of Homes Sold in the Neighborhood Report.

 

33141 – North Beach, Normandy Isle, Normandy Shores & North Bay Village

An oasis of neighborhood living in the center of North Biscayne Bay.
An oasis of neighborhood living in the center of North Biscayne Bay.

 

Click here to receive the North Beach Market Report.

Click here to receive the North Beach Neighborhood Report.

Median Home Values dropped 7.7% year over year as both Median Sales Price and Median Listing Prices also traded to the bottom of their 3-year ranges.  Upon a preliminary analysis, it appears a gentrification is in the process as much older properties are being purchased with either the intent of redevelopment or renovation.  I still stand by my position of the past several years that North Bay Village, specifically, offers one of the greatest values for your money when you consider location, community, and long-term investment outlook.

 

33154 – Bal Harbour, Surfside & Bay Harbor Islands

Facing Southwest at Bal Harbour from the over Atlantic Ocean
Facing Southwest at Bal Harbour from the over the Atlantic Ocean

 

Click here to receive the Bal Harbour Market Report.

Click here to receive the Bal Harbour Neighborhood Report.

Listing Volume in Bal Harbour and the 33154 zip code continues to push new highs on the 3-chart as Median Sales Volume and Median Sales Price remain flatlined/rangebound for more than a year (circa 50 Listings and 900K respectively).  Average Time on the market is up over 10% vs the same time period last year while Sales Volume is down 31% compared to the same time period.  The condominium market is weighing heavily on this area as Buyers have pulled back from extraordinary valuations that I cannot see continuing as we head further into a rising interest rate market and a market-wide preference for single-family homes over condominiums.

33160 – Sunny Isles Beach, Eastern Shores & Golden Beach

Facing South along the coast of Sunny Isles Beach, Florida's Riviera
Facing South along the coast of Sunny Isles Beach, Florida’s Riviera

 

Click here to receive the Sunny Isles Beach Market Report.

Click here to receive the Sunny Isles Beach Neighborhood Report.

 

The Sunny Isles Beach market is percolating with Median List Prices at 3-year highs, Listing Volume at a 3-year High and Sales Volume at the top of its 2-year rangebound channel; however, this is not without consequence; Sales Volume year over year has plunged 15% year over year with average time on the market up nearly 10%.  This is a heavily condominium laden market and Buyers have begun to pull back again as Sellers of existing condominiums pushed prices up to take advantage of the past year’s bounce in existing condo sales; a bounce that I largely attributed to a more robust economy with bargain seekers, averse to purchasing new construction at ridiculously inflated prices, sought to take advantage of the near 4-year slide in existing condo sales and prices.  As interest rates rise I expect to see a further multi-year decline in both price and sales volume.

About the Miami Beaches Market Pulse

The Miami Beaches Market Pulse is a monthly market analysis by Christopher J. Lazaro, MBA & Licensed Real Estate Broker, featuring professional commentary, data & statistics, downloadable market reports & neighborhood reports, of the five zip codes of the Miami Beaches: 33139 (South Beach & The Venetian Islands), 33140 (Mid-Beach, the Sunset Islands, Bayshore, La Gorce & La Gorce Island), 33141 (North Beach, Normandy Isle, Normandy Shores, North Bay Village), 33154 (Surfside, Bal Harbour & Bay Harbor Island), 33160 (Sunny Isles Beach, Eastern Shores & Golden Beach).

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Are Prices too High? Miami Beach Real Estate Transaction Volume Plummets!

Miami Beaches Market Activity Summary for  January 2015 through May 2015

While working with my residential customers over the past few months, I noticed something quite alarming about the real estate market on Miami Beach.  Transaction volume (the number of homes sales closed), when compared to last year, is down by as much as  50% when looking at Market Reports for each of the Miami Beach zip codes.

Starting from the legendary South Beach and working north to Sunny Isles and Golden Beach, the data is as follows:

33139 – South Beach – Median Est. Home Value $390K Up 13%; Median Est. Listing Price $217K Down –17%; Median Days in RPR 97 Down –7.6% Sales Volume 109 Down –46.8%  !!!!

Market-Activity-Report_Miami-Beach-FL-33139_2015-05-12-20-29-24

Given that transaction volume is off by nearly 50%, local Realtors in 33139 must be hurting.  My firm alone closed 4 (soon 5) of those 109 transactions so far this year.

33140 – North Beach – Median Est. Home Value $473K Up 5.1%; Median Est. Listing Price $345K Down –6.8%; Median Days in RPR 106 Up 1%; Sales Volume 60 Down –29.4%

Market-Activity-Report_Miami-Beach-FL-33140_2015-05-12-20-30-25

33141 – Surfside & Bay Harbor Islands – Median Est. Home Value $261K Up 6.7% Median Est. Listing Price $175K Down –23.7% Median Days in RPR 87 Down –13.9% Sales Volume 80 Down –37.5%

Market-Activity-Report_Miami-Beach-FL-33141_2015-05-12-20-29-49

33154 – Bal Harbour – Median Est. Home Value $580K Up 9.2% Median Est. Listing Price $395K Down –2.5% Median Days in RPR 102 Down –20.3% Sales Volume 43 Down –36.8%

Market-Activity-Report_Miami-Beach-FL-33154_2015-05-12-20-29-38

33160 – Sunny Isles Beach & Golden Beach – Median Est. Home Value $349K Up 9.9% Median Est. Listing Price $225K Down –10% Median Days in RPR 98 Down –11.7% Sales Volume 98 Down –49%

Market-Activity-Report_North-Miami-Beach-FL-33160_2015-05-12-20-29-07

In every case, we have home values going up while listing prices are coming down and transaction volume is off by as much as 50% year over year!  This makes me beg the question, have prices gone too far, too fast?  Are we finally at a tipping point where Sellers will begin to come back to Earth with more realistic ideas of their home’s value?  I hope so.

I believe there are a number of factors in play that have led to this tragic decline in sales volume:

1)  The Russian Ruble has lost more than a third of it’s value over the past 12 months and Putin has put capital flight controls into place making it very difficult for Russian Citizens to transfer money out of country.  Further, what money can be transferred out, is now worth significantly less against the dollar.  This is greatly dampened investment out of Russia over the past 6 months as well as the spirits of an innumerable number of Realtors.

RUB to USD Chart
RUB to USD Chart

2)  The world is sliding back into a global recession; some argue that we never actually got out of it in the first place.  Whatever the case, governments in Europe and South America have been making it either more difficult, if not impossible, for their citizenry to take their money overseas.  To make matters worse, our own government levies taxes on Foreign Direct Investment and given that at least 5-10% of all jobs in South Florida are created by foreign businesses opening their doors here, one would question the sanity of our politicians in not making it easier and less expensive to invest here!

3)   With all the new construction is not unimaginable that at least some number of prospective Buyers have decided to buy pre-construction & new construction deals.  These numbers would not flow into the reports as these properties were never listed.

4)  “Prices have genuinely gone too far” seems to be the most logical conclusion!  Limited supply of great location real estate and large demand originating from the “steals” of 2009 to 2012 (mortgage crisis) drove prices for the past several years.  As prices have gone up, however, the pool of available Buyers has shrunk; and those who would have been in the market for a Miami Beach property have either given up, or have turned their eyes to the north such as Hollywood Beach, Fort Lauderdale, Pompano Beach and Deerfield Beach.

For the sake of brevity, I have concluded here.  There are other factors for sure, but I believe I captured the majority of the macroeconomic factors.  I am very interested in any reasonable, rational comments, contributions, & critiques.

Cheers,

Miami Realtor, Realtor of Miami, Miami Real Estate
Christopher J. Lazaro, Miami Beach Real Estate Broker & REALTOR®

T: 1-800-798-9192 x333

Removing Fear & Greed from the Real Estate Investing Process through Education

I am entering the below article into the PG Real Estate (http://www.RealtySoft.pro/realestate) article competition.  I have been looking at their software for a long time and would love to build a quality real estate website using their platform!

On RealtorMag today I spotted an article that states the obvious, but in my opinion does not go into any detail on WHY the point of the article is true.  As a reference, here is the linked to the original article:

http://speakingofrealestate.blogs.realtor.org/2013/06/12/young-adults-sour-on-buying-study-says-no/

My Response:

    This article is stating the obvious. Anyone, such as a real estate student, will be more likely to want to pursue purchasing real estate once they have become educated. Education dispels fears by providing facts rooted in logic & reason. The two most powerful forces in any market are Fear and Greed. Fear is more powerful. It takes a stock, and typically Real Estate, a long time to appreciate in value relative to how fast it can crash when people lose confidence, fear takes over and everyone heads to the exits at the same time. Markets ALWAYS overshoot more to the downside than they do to

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

the upside. The educated people who had the cash during the real estate bust were the very first into the market in 2008 & 2009, and since 2011 have been reaping the rewards of the opportunities provided by the Greedy; many of which got gutted financially.

       So what really creates the opportunity?  It is a combination of the Fear/Greed paradigm, combined with a general lack of education & sophistication in the general populace.  As soon as something, ANYTHING, starts going up and looks promising, people with any kind of cash start to pour into it, regardless of whether they understand the business or not.  Don’t just take it from me, take it from the most successful investor in US History, Warren Buffett:
1)    One of Warren Buffett’s biggest rules is to never invest in anything you do not fully understand.  If you cannot figure out how a venture makes money, don’t walk…RUN!
2)   Another rule of the great Warren Buffett is a contrarian rule “Be Fearful when others are Greedy, and be Greedy when others are Fearful”.
3)   And according to Warren, the number one rule for building success, wealth and prosperity is NO DEBT!  I, personally, don’t have billions of dollars at my disposal, so for the majority of us, a reasonable amount of debt incurred to accomplish a real estate purchase is often necessary.  I try to keep debt as low as possible and make sure that any debt incurred is for tangible investment and not superfluous, materialistic, nonsense.
      Most people fall into middle & lower income brackets.  They have more of an emotional attachment to their money, and generally speaking,  therefore have a greater predisposition to Fear & Uncertainty, which certainly clouds judgement.  This is not to say that more wealthy people do not share this trait too; after all, these are HUMAN characteristics.  These emotions are experienced the moment an opportunity to either

Miami Realtor, Realtor of Miami, Miami Real Estate
Christopher Lazaro, Miami Real Estate Professional

Buy or Sell occurs while the market is in a state of turmoil (or not, but opportunities generally occur when there is an “inefficiency”, typically created by turmoil), be it on the way up or on the way down.  If you are a person investing in real estate, you should have a long term approach.  It is easy to still get sucked into the mentality of the 2000-2007 market, where people were trading real estate almost as quickly as they could buy and sell a stock.

         As Michael Douglas points out in the movie Wall Street, “Greed is Good”, or at least it can be.  We all desire more money and greater prosperity for ourselves and those we care about.  The very idea of investing is to, bottom line, make money; even if that investment is tied to something “Socially Responsible”, which is completely secondary in the majority of people’s minds.  It is Greed that puts us into a position where we are presented with an opportunity to make an investment.  Without the desire to make more money, there would be no desire to consider making an investment in the first place.  It is at that point where people not only feel the emotions of Fear & Uncertainty, because they are emotionally tied to their money, but while they are sorting through those emotions, they are also trying to contend with what is known in Economics as “Opportunity Cost”; meaning, if I spend my 100K in savings on buying this investment property, I will be giving up the ability to put that 100K to work elsewhere should an opportunity avail itself, or already be considered as an alternative.
      It is here where emotions must be put to the side and the would-be investor needs to perform an analysis (actually a set of them).  Generally speaking, they should be performing a SWOT Analysis:  Strengths, Weaknesses, Opportunities & Threats.  If you do not understand HOW you will make money, scrap the opportunity until you fully understand How and all of the Issues, Risks, Actions & Obligations that will come with the investment.
      In order to answer under each of those columns in SWOT, additional analyses are needed, such as Market Analysis: pulling comps, doing inspection(s) of the property and getting a rock solid idea of what it can rent for and/or sell for versus the total cost of ownership.  You must know what your ROI (return on investment) and your CAP rate (Capitalization Rate is what you get to keep after Taxes, Dues and other expenses on the property are paid for) will be.  Be sure to include the cost(s) of Commissions, Rehab and Satisfaction of any Liens associated with the property. This is typically done via a Pro Forma.
     While considering the choice (or choices, in which case you may have several Pro Forma documents in front of you) of an investment, you then need to compare it to other types of investments.  For example, if I take my 100K and buy an investment property with it, my ROI might be 10% and my CAP rate might be 7%.  I might weigh similar opportunities with similar numbers.  But I also should look at the “What if I simply invest it in an REIT (Real Estate Investment Trust), that pays a Dividend of 10%?  Right now (2013), that looks “better” because even if I am making over the 400+K a year where the tax becomes 20%, I still get to keep a full 1% more (meaning it would be an 8 CAP) than if I owned property and I have none of the management & ownership & general upkeep headache of a property.  However, the savvy investor should consider that a physical piece of property can be borrowed against (so I can invest in yet another property, possibly as much as doubling my ROI and absolutely increasing my ROE (Return on Equity).  The additional “cost” associated with this would be whatever the mortgage debt associated with the borrowing would be and this too, can be clearly put on paper and calculated in a Pro Forma.  In addition, income generated from the property or properties, can be offset with not just taxes & other expenses, but rental properties can also be Depreciated (this is an additional “Deduction”).
      The vast majority of would-be investors, in my experience, have little to none of the above knowledge or expertise, and while I have given a pretty solid synopsis, it is simplified and incomplete.  A complete dissertation on the subject itself is beyond the scope of my response.
      Circling back to the original point, and concluding: given all of the above that I have written about proper investment analysis, there is no mention of emotion playing a role in the decision making / evaluation process, and “gut instinct” has absolutely nothing to do with a legitimate analysis; NOR DOES LUCK! This is where the value of a qualified (and by qualified I mean BEYOND simply licensed to practice real estate) Real Estate Professional can be of tremendous value to an Investor; and a be a provider of “Luck”.
Note:  Be prepared to either pay a TRUE real estate professional for properly done Analyses & Pro Forma, or at the very least sign a Buyer-Broker Agreement.  As a Real Estate Professional I get paid Fees as well as Commissions, and dependent on the transaction at hand, I have deducted my fee(s) from the total Commission(s) paid on property closings.  Be wary of agents “working for free” or not requiring a commitment.  The best Brokers & Agents I have met in the business get paid, one way or the other (or both) for their services; and they have a lot of repeat business.
Cheers,
Christopher Lazaro
I can be reached at:
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