The Miami Herald
August 24, 2006
Home Sales Drop; Buyers Await Deals
By Matthew Haggman
Selling a house has come to this: offering a new X-Type 3.0 Jaguar to find a willing buyer. For five months, Victor Peralta tried to sell his four-bedroom, Old Spanish home in Miami Shores. Twice he lowered the price, by $150,000 in all, yet only two people stopped in to see it. Now he's dangling the keys to a $32,000 car before buyers' eyes.
"I had to do something,'' said Peralta, 44, whose house now lists for $1.075 million.
This is the South Florida housing market of today: Prices are easing, sales are plunging and the inventory of unsold homes is rising ever higher. It's a situation that continued in July, according to existing-home sales numbers released Wednesday by the Florida Association of Realtors.
In Miami-Dade, single-family home sales in July dropped 24 percent compared to June and 38 percent compared to the same period a year earlier. In Broward, the number dropped 16 percent from June and 30 percent from last year.
Similarly, condominium sales in Broward were down 23 percent from June and 39 percent in comparison to July 2005. Miami-Dade's condo sales situation was slightly brighter: sales down 14 percent from June and 12 percent from last year.
Such lackluster activity has turned what was a tight sellers' market into one overflowing with houses for sale. In both Miami-Dade and Broward, the number of homes listed for sale has more than tripled in the past year.
Many predict sellers will eventually cave and lower prices to meet buyers now willing to wait it out for a better deal.
"The longer it takes for sellers to recognize the market they are in, the worse the market will become,'' said Manuel J. Iraola, president and CEO of Homekeys, a Kendall-based brokerage that sells homes in Miami-Dade and Broward.
But some real estate professionals still say sellers shouldn't budge and that buyers will eventually adjust up, ending the staredown between them.
For July, it was a draw.
Prices held more or less steady in the single-family home market. The median price for a single-family house came in at $382,200 in Miami-Dade and $380,400 in Broward. In Miami-Dade that amounts to a gain of 5 percent from last year and 1 percent from June. Broward was down 1 percent from last year and flat compared to June. The median price is the point at which half the sales are above and half below.
CONDOS SLOW DOWN
But Miami-Dade's condo market - a closely-watched sector because of concerns about speculation and heavy building - showed signs of weakness. Condo prices dropped to $252,200, down 2 percent from June and 11 percent from a year ago. It was the first double-digit percentage fall since South Florida's formerly torrid housing market started cooling last year.
For Broward, the July median condo price was $209,100 - down 1.5 percent from June but up 4 percent from last year.
"We are no longer a day-trading market; we are now a real estate market,'' said Ardene Clarke, senior vice president at real estate brokerage Coldwell Banker in Broward. "I don't think anyone realized how big a sector was the day-trading sector.''
The nervousness in South Florida reflects a cooling housing market nationwide, as interest rates have risen, investors have fled and prices remain beyond the reach of too many buyers. The question is how long the uncertainly will last and how deep it will go.
THE BRIGHT SIDE
The South Florida market still is far ahead of where it was three years ago. In July 2003, for instance, a median-priced single-family home went for $232,700 in Miami-Dade and $236,700 in Broward.
Furthermore, the underlying economics remain strong: population growth; low unemployment; appeal to international and second-home buyers and relatively low mortgage rates.
Yet even the most optimistic observers who predicted the return of a strong market this year have revised their timeline into sometime next year at the earliest. Lackluster sales have continued through the summer months, said Ronald A. Shuffield, president of Esslinger Wooten Maxwell, which sells homes across South Florida.
"When we saw the price appreciation stop earlier this year we thought it would get everyone back on board,'' Shuffield said. "But there has been such a dark cloud painted over the housing market that it hasn't happened. Everybody gets anxious at a time when a market transitions, we forget that we have been here before.''
Still, homeowner Peralta isn't giving up hope.
"The market is so bad,'' Peralta said. "I would have open houses and no one would show up. "I hope by adding the car it works. If not, I guess I will have a new Jag.''