Miami Real Estate news

In South Florida’s turbulent real estate market, 2011 was a year marked by competing and contradictory trends.

A November sales report released Wednesday by the Miami Association of Realtors highlights a few of the head-scratching trends of the past year, with rising sales volumes, depressed prices, cash-buyers and unprecedented international demand for distressed properties.Consider: • International buyers flocked to South Florida in 2011, spending more than $3.5 billion in cash on discounted real estate, while thousands of locals struggled with underwater homes, a nation-leading foreclosure backlog and a tight credit market.

• Soaring sales and shrinking inventory—two trends that normally lead to price appreciation—were accompanied by low, stagnant prices as the market anticipated a second wave of foreclosures.

• More former homeowners became renters, but that actually helped the home sales sector (which normally competes with the rental market for demand). That’s because investors bought up thousands of distressed homes, renovated them and flipped them into rental properties.

• The supply of homes for sale decreased by 40 percent to about 28,000, but the so-called “shadow inventory” of foreclosure homes not yet for sale ballooned to more than 200,000, thanks to a temporary slowdown in foreclosures.
In pure numbers, South Florida existing home sales in November increased at a slower pace than earlier in the year, but median prices began to show signs of improvement.
There were 1,064 condo sales in Miami-Dade County in November, up about 2 percent from the same month last year and down from 1,202 in October, according to Wednesday’s report.
Single family sales rose 11 percent year-over-year to 755, little changed from October’s total.
In Broward, condo sales fell 1 percent year-over-year to 1,089, and that total was down slightly from 1,150 sales in October. There were 961 single-family sales in November, up 22 percent from last year but down 3 percent from the previous month.South Florida’s sales pace is cooling just as the sluggish national housing market is starting to pick up steam.
National home sales increased 4 percent between October and November to an annual pace of 4.4 million, up 12.2 percent for the year. So what’s on the horizon for South Florida in 2012? Well, the forecasts are as conflicting as the year past

So what’s on the horizon for South Florida in 2012?
Well, the forecasts are as conflicting as the year past. “I don’t think any real rebound is going to happen until at least 2013,” said Jack McCabe, CEO of Deerfield Beach-based McCabe Research & Consulting.
“Right now we have 371,000 open foreclosure files in Florida, and you have 800,000 mortgages that are 60 days late or in default.

I don’t see the market rebounding for at least two years.”Terri Bersarch, Broward County board president of the Miami Association of Realtors, sees it differently.
“Condominium prices in Broward County have risen consistently since January of this year, a very important sign of market strengthening,” she said in a statement.
“Strong demand resulting in limited supply should yield continued market strengthening in 2012.”Only 2012 will tell who’s right. Meanwhile, here’s a look at some of the main trends from 2011, along with forecasts for the 2012 housing market.
• International buyers fuel record sales yearSouth Florida home sales will likely set a new sales record in 2011, mostly because buyers from Latin America have spent record amounts of cash investing in local real estate.
In November, about 60 percent of South Florida home sales were all cash, and most of those involved international buyers.
Buyers from outside Miami are the main reason Miami Beach-based One Sotheby’s International Realty grew its business by 250 percent this year, topping $1 billion in sales, said company president Beth Butler.“We’ve done a lot this year to expand and engage international markets, specifically Brazil, Argentina and Peru,” she said.
In overbuilt areas like downtown Miami, international buyers have helped populate formerly empty condo towers created before the housing bust.Out of 23,000 condos built downtown during the boom, only about 2,000 remain unsold, and international buyers account for more than 80 percent of new condo sales
.Led by Brazilians and Canadians, international buyers spent more than $3.8 billion—90 percent of it in cash—on South Florida real estate in the last year.

2012 Forecast:
The international buying spree is expected to continue next year.
With European markets still turbulent and the Latin American economies thriving, South Florida is well-positioned to benefit from two trends that could lead to more capital investment in the United States.
Anticipating continued demand from Latin America and Europe, several developers have launched plans to build more than 20 new condo towers for South Florida.
South Florida-based buyers have been effectively shut out of the market, due to high unemployment and the sheer number of distressed homeowners who owe more on their mortgages than the properties are worth — a condition likely to continue.

• Prices stay lowDespite a supply of homes for sale that has fallen significantly over the past year, home values remain depressed. The reason: Most of the homes being sold are distressed properties that usually sell at discounts of at least 20 percent compared to non-distressed homes.
In November, more than half of all sales involved foreclosures and short sales. In a normal market, distressed homes make up less than 5 percent of sales.

In recent months, however, home prices have begun to show signs of stability.
Condo prices have increased for four straight months and single-family home prices are close to where they were a year ago.

2012 Forecast:
Overall prices could either continue to strengthen or fall again in 2012, depending on what happens with tens of thousands of currently stalled foreclosures.
If banks ramp up their slowed foreclosure machines, as expected, a deluge of discounted properties could drag down prices further in the coming year. On the other hand, if inventory continues to shrink, prices could finally begin to stage a sustained rebound. “You can look at the falling inventory and see that, especially in some of the far eastern waterfront areas, prices are starting to increase because there’s nothing left to buy,” said Butler.

• Foreclosure slowdownIn 2011, tens of thousands of South Florida homeowners got a temporary reprieve from foreclosure because of paperwork problems that stalled the court repossession process.Mortgage lenders, accused of “robo-signing” court foreclosure documents, slowed their repossession machines this year, leaving thousands of cases in limbo.
There are more than 100,000 foreclosure cases currently pending in court, and some of them have been in litigation for several years.
Those homes are part of the region’s large “shadow inventory,” which industry watchers describe as the true supply of homes once foreclosures and bank-owned properties are included.
The sheer size of that shadow inventory, estimated to be as high as 200,000 in South Florida, has kept prices relatively low this year.

2012 Forecast:
There’s ample evidence that the year-long foreclosure holiday will come to an end in 2012, as banks look to take back more delinquent homes.
Foreclosure filings rose 52 percent in South Florida in October, with bank repossessions nearly doubling from the month before, according to real estate research firm RealtyTrac. As more bank-owned properties make their way onto the market next year, prices could be forced downward, said McCabe.

• Rental market strengthens, fuels salesWith mortgage rates at record lows and home prices down some 55 percent from 2006, owning a home is probably the most affordable it’s been in recent memory.
But the traditional candidates for homeownership —young couples and growing families — are opting to rent in growing numbers.
South Florida’s rental market has seen occupancy increase to more than 95 percent this year, and prices are up between 3 and 7 percent, according to Texas-based MPF Research.Ironically, the surging rental market is helping boost activity on the sales side.Raul de Varona, chief operating officer of Miami-based real estate firm The Solution Group, is part of a new crop of investors buying cheap homes at a fast clip with the aim of converting them into rentals.“We’ve acquired at least 40 percent more inventory than we did last year and our portfolio has really increased, twofold if not threefold,” said de Varona, who often fixes up the homes and sells them to international investors as rental properties. “There is significant interest in U.S. income-producing real estate.”