The State of Miami Real Estate

If you want to know real estate in South Florida, you need only to listen to a short list of market experts.  One of the most respected among those experts is Ron Shuffield, President of EWM.

This week, I attended a meeting in which Ron provide a residential real estate 2009 retrospective and an outlook for what he believes is ahead for us in 2010.  The following facts and trends are directly from Ron.  I can’t independently verify this stuff, but I also defy anyone to challenge him.  He is rarely off the mark.

2009 was the year of continued rebound.  According to Ron, the South Florida rebound actually started in the summer of 2008.  Further, he emphasized “that things always go up faster than they go down.”  Sure, the rebound is going to manifest itself in traditionally strong areas first, but the trend is happening across nearly all areas of our region.  So, if you want to buy, now is the perfect time. 

Ron didn’t just say this as a marketing sound bite, he backed it up with data and logic.  And, despite one opinion from a prominent Moody's columnist stating that the Miami area will see another 30% drop in pricing this year, Ron Shuffield simply can not find a shred of data to support that. To the contrary, using MLS data from the past 15 months, Ron showed that inventory levels are down in all sectors.  Sales volume is picking up as well.  As this trend continues, the only logical conclusion is increasing market values.

Just look at these numbers...

  • ALL Dade Single-Family Homes = 11 month supply and 37% increase in sales over Q4 2008
  • Dade Single-Family Homes under $300k = 8 month supply and 53% increase in sales over Q4 2008
  • Dade Single-Family Homes $300k to $1M = 17 month supply and 2% decrease in sales over Q4 2008
  • Dade Single-Family Homes over $1M = 36 month supply and 73% increase in sales over Q4 2008
  • ALL Dade Condos = 18 month supply and 59% increase in sales over Q4 2008
  • Dade Condos under $300k = 15 month supply and 71% increase in sales over Q4 2008
  • Dade Condos $300k to $1M = 30 month supply and 21% increase in sales over Q4 2008
  • Dade Condos over $1M = 42 month supply and 52% increase in sales over Q4 2008

If these facts don't point to a floor on sales prices, I don't know what does.

In fact, pricing for both single family homes and condos in Dade County are edging up.  More important to realize is that interest rates are climbing more rapidly, and many believe much higher rates are in our near future.  "If you look at the combination of price and interest rates alone, you'll see why this is a great buying opportunity.  A one percent increase in interest rate would require a 10% price reduction for a buyer to break even," says Shuffield.  Put another way, unless you are expecting a sharp price decrease from where we are now, you better move now because the banks are starting to put upward pressure on rates.  Put in real terms, Ron stated a 1/4 point increase on a $100k loan means an additional $6000 in payment over 30 years to a home buyer.

Couple this with the government program to provide home buyer tax credits and you have an environment to further support a residential real estate recovery.  Whether or not Ron Shuffield says it or not, the market is the market.  Supply and demand will always rule.  It is clear that inventories are down, sales are up and prices are unlikely to fall further.  So, get off the fence and find a home that can work for you.  Now is an wonderful buying opportunity.