Miami Real Estate - It flew the highest and the farthest during the boom days, and now it is falling the hardest
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The lament of South Florida real estate.
It is heard in the New York Times today as they discuss a new (old) phrase for real estate, sellers remorse. This describes sellers in severely declining markets who failed to accept an offer because they felt it was too low and are now realizing it is better than anything they could get now.
But I love the quote that is in the headline as it describes the boom markets. The markets that rocketed up beyond reason are now falling back to normal boundaries. There was not a market reason for homes to appreciate that high, it was all speculation. Once that bubble burst, so did the pricing.
And what will happen is that the prices will fall below market on the fears of buyers and the foreclosures being liquidated.
But once the market finds it’s bottom we will see a surge as buyers enter and confidence is real estate is reestablished.
This is not idle speculation, it is just market forces. When we are in the middle of these periods we all convince ourselves this time it is different.
Sadly, we are good at fooling ourselves.
“It flew the highest and the farthest during the boom days, and now it is falling the hardest,” said Michael D. Larson, a real estate analyst with Weiss Research, an investing research firm in Jupiter, Fla.
Much of the downward pressure has come from banks trying to offload distressed properties. Foreclosures have received the most attention, but Florida real estate agents also recently added a field in their listings database for “short sales” — properties with an asking price below the amount due on a mortgage, in which the lender often forgives the remaining debt to complete the sale.
As of last week, 24 percent of the roughly 34,000 single-family homes for sale in Miami-Dade and Broward Counties — and 20 percent of the 47,000 condominiums — were listed as potential short sales.
Pangs of Seller’s Remorse in Bruised Miami Market - NYTimes.com.
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Comment by ines on 1 September 2008:
Hi Tom - The Miami Real Estate Market has definitely been hit hard and mostly due to the speculators as you mention in your article. What I’m seeing, as a local agent that does not specialize in foreclosures is that the condo market does have a ways to go, but I’m been seeing positive changes in single-family residential areas with regards to more sales, less inventory and renters beginning to buy.
Knowing real estate is very local - within Miami it’s even more local. There are literally hundreds of neighborhoods and each one is behaving differently.
Comment by Tom Royce on 1 September 2008:
Ines
Sometimes writing on a national scale I forget that real estate is local so thanks for reminding me. Miami must also be hit by the slowdown of relo’s coming from outside of the region putting further pressure on sales. Once Miami is seen as stabilizing folks will start moving down in the past numbers is my guess.
Comment by ines on 3 September 2008:
We’re still seeing relo’s - but now the sticker shock is not as bad as 2 years ago. What we are seeing a lot of is people hearing that the market is tough and wanting to buy oceanfront condos for $200k which is still not happening.
I actually wrote an article last week on the positive changes we are seeing and bottom line is that it’s a beautiful city and Miami will always be MIAMI.