Miami/miami beach market update and analysis
While overall sale volumes have softened nationally in recent months, Florida has experienced an increase in activity. The chart below details how, in the last 4 months of 2008, the volume of closed transactions increased up to 27% compared to 2007.
|
|
# of closed sales 2007 |
# of closed sales 2008 |
% Change |
|
January |
9,360 |
6,737 |
-28% |
|
February |
11,132 |
8,310 |
-25% |
|
March |
12,356 |
9,330 |
-24% |
|
April |
12,358 |
11,200 |
-9% |
|
May |
12,882 |
12,175 |
-5% |
|
June |
12,276 |
11,700 |
-5% |
|
July |
11,498 |
11,492 |
0% |
|
August |
11,282 |
10,847 |
-4% |
|
September |
8,725 |
10,817 |
24% |
|
October |
9,118 |
10,443 |
15% |
|
November |
8,269 |
8,571 |
4% |
|
December |
8,712 |
11,053 |
27% |
Source: Florida Association of Realtors
There are a few factors that are responsible for the jump in volume. If Miami were a small town in Middle America home prices could still be considered overpriced. However as Miami is transitioning into a major global cosmopolitan city, then its prices are to be compared to markets like Honolulu and Los Angeles. Prices are then extremely attractive.
Factors that are driving the Miami market include
U.S. Baby Boomers - Over the next 20 years, a steady flow of wealthy retirees will be flowing into sunny warm weather and some will be willing to pay a premium for ocean views.
Foreign Baby Boomers - The financially successful baby boomers from abroad will demand a piece of the American Dream. It is a status symbol. Many are making a move while the U.S. dollar is weak.
Increase in Bulk Purchases - For many months several vulture funds waited on the sidelines. We know first-hand that bulk purchases are happening, which will reduce the inventory of available homes and condos.
Nouveau Rich - Russia and Kazakhstan are creating newly minted oil barons. Entrepreneurs are springing up en masse in Eastern European countries. A property in Miami and London or New York is the ultimate conspicuous consumption.
Strong Rental Market - Many residents in the state are not qualifying for loans or might not have a 30% down payment. Therefore, most of them are renting property. In most cases we have successfully leased out clients' rentals in the first week they would come on the market.
Improving Insurance - Experts foresee a decrease in insurance rates in the coming years as a result of the large profits insurance companies received in the past few years. According to estimates made by Lawrence Yun (Chief Economist, NAR), high insurance premiums knocked about $30,000 off housing values in Miami.
Improvement in Property Tax - Legislators have begun to take measures to reduce property taxes across the board.
Low interest rates - Rates are low at 5.5%. Our experience in the last few months tells us that banks are lending to qualified buyers.