The Miami Herald
February 26, 2008
Home Prices in South Florida Sank By Double-digit Percentages
By Monica Hatcher
Home prices in South Florida sank by double-digit percentages in January, posting some of the steepest declines since the housing market slowdown began more than a year ago. Amid growing fears of a national recession, buyers remained timid. The number of homes sold fell markedly, despite the growing number of foreclosures and bank-owned properties for sale at deep discounts.
For existing single-family homes in Miami-Dade County, the median price tumbled 15 percent in January to $336,800 from $395,900 the year before, monthly figures from the Florida Association of Realtors showed Monday. In Broward, the median dropped 14 percent to $314,200 from $364,500.
The condo picture was mixed. In Broward, the median condo price dropped 23 percent year-over-year to $153,000 last month. But Miami-Dade condo prices rose 11 percent, a likely result of the number of $1 million-plus units still selling to wealthy buyers.
Despite lower prices, the number of properties sold in both counties barely budged as thousands of new homes hit the market. ''People are being very cautious because they think there will be a recession. It makes them hesitant,'' explained Jack Winston, a principal with data analyst Goodkin Consulting in Miami. Speculation that prices have yet to hit bottom plus concerns that loans are difficult to get also are keeping buyers on the sidelines, he said.
Loans formerly offered to borrowers with marginal credit and to those who couldn't fully document their income -- a large sector of South Florida's self-employed workforce -- have largely vanished in the credit crunch. Lower costs on conventional loans have failed to materialize, despite rate cuts by the Federal Reserve. And having flagged South Florida as a particularly volatile market, most lenders are now requiring much higher down payments from borrowers, further winnowing the pool of would-be buyers.
The number of single-family homes sold fell 48 percent in Miami-Dade, while the number of homes listed on the market increased 45 percent over the year before. In Broward, sales slumped 33 percent over last year, while inventory grew 18 percent.
Nationally, sales of existing homes fell for the sixth straight month in January, dropping to the slowest sales pace on record. Median home prices were also down. The numbers were seen as evidence that the steepest slump in a quarter-century has yet to hit bottom.
''In this market, volume speaks louder than median pricing because no matter which way prices are going, the lifeblood of markets is activity,'' said Grant Stern, principal broker of Miami-based Morningside Mortgage Corp. ``People are willing to sell for less because there is less activity.'' These ingredients augur further price declines through at least the third quarter of this year, Winston predicted.
The dearth of buyers forced seller Mari Redondo to mark down her Virginia Gardens home $70,000 over the last seven months. She is now asking $330,000 for the four-bedroom -- just enough to pay off her mortgage. ''It's been horrible. The only thing I see is people renting because they can't afford,'' Redondo said, ``In about a month, I might put it up for rent.''
The price of Broward condominiums -- the median is the price at which half of the units sold for more and half for less -- dropped 23 percent from $199,200 to $153,000 last month. Sales were down 26 percent.
''Broward County sales are still very soft, prices are declining. The buyers are very selective,'' said Richard Barkett, head of the Realtors Association of Greater Fort Lauderdale. ``The single-family home market is in the same scenario, but not as desperate as the condo market.''
In what some called a market glitch, the median-priced condo in Miami-Dade jumped 11 percent, rising to $284,000 from $256,400 over the same month last year, despite a 46 percent drop in the number of units sold. In December, the median fell by 10 percent. The price spike is likely the result of the sale of high-priced luxury units, which can pull up the median figure.
Kevin Tomlinson, a real estate agent who specializes in luxury condo sales in South Beach, said that in January he sold six units worth more than $1 million each to New Yorkers and Europeans, and several for even more. ''The wealthy still have money and nothing has really changed for them, so we're going to continue to see the median condo price seesaw . . . depending on what actually sells that month,'' Tomlinson said.
``The inventory continues to back up, especially in the lower-end or entry-level condos because that's where the bulk of inventory lies.'' The number of condos listed for sale rose 19 percent in Miami-Dade and 11 percent in Broward. Across the market, sellers are now competing head to head with lenders, pressing prices down further, some in the industry said.
In January, lenders took back 641 properties in Miami-Dade from borrowers in foreclosure, a 252 percent increase over the same month last year, according to analyst firm Condo Vultures. Broward figures were not available. After buying back foreclosures at auction, lenders will immediately relist the property at a slashed price.
''You are having to compete against properties that are $50,000 to $100,000 less than yours is. So, you don't have a good chance of selling before they do,'' said Dee Del Castillo, a real estate agent who focuses on Southwest Miami-Dade County. Her phone finally started ringing in January from potential buyers. All, she said, had asked to see bank-owned homes or foreclosures.