According to the Miami Association of Realtors, the Miami real estate market continued to stabilize in April 2014, as prices increased by more narrow margins and active inventory rose while demand remained strong. Median sale prices inMiamiincreased for both single-family homes and condominiums in April. The median sale price for single-family homes increased 8.0%, up to $243,000 from $225,000 in April 2013, marking 29 straight months of growth. The average sale price for single-family homes increased 11.3% from $421,207 in April 2013 to $469,088 last month. “TheMiamireal estate market continues to stabilize and reflect more balance between buyers and sellers,” said 2014 Chairman of the Board of the Miami Association of Realtor Liza Mendez. “Demand remains strong for both single-family homes and condominiums, as both domestic and international buyers continue to be drawn to the unique and vibrantMiamiarea and all the opportunities that the local market offers.” The median sale price for condominiums has increased for 34 consecutive months. Compared to April 2013, the median sale price for condominiums increased by 10.3% to $193,000 from $175,000 a year prior. The average sale price for condominiums increased 12.8% to $375,707 from $332,955 in April 2013.
In April, residential real estate sales inMiami-DadeCountyincreased 2.1% to 2,712 compared to 2,657 in April of last year. Single-family home sales increased 5.6% relative to April 2013, from 1,094 to 1,155. Compared to April 2013, condominium sales remained steady with a negligible 0.4% decline from 1,653 the previous year to 1,557 last month. Miamireal estate continues to sell at a rapid pace and at nearly asking price, indicating properties are being priced right, while buyers realize the need to be competitive in the current market. The median number of days on the market for single-family homes sold in April was just 43 days, an increase of 2.4% from April 2013. The average% of original list price received was 94.7%, down only 0.7% from April 2013. The median number of days on the market for condominiums sold in April was 55 days, an increase of 27.9% compared to the same period in 2013. The average sales price was 93.6% of the asking price, a decrease of 3.7%.
Seller confidence is resulting in more properties being listed for sale. Active listings at the end of April increased 32.5%, from 12,883 in 2013 to 17,067 last month but remains 60% below 2008, when sales bottomed. Inventory of single-family homes increased 23.7% from 4,878 in April 2013 to 6,034 last month. Condominium inventory increased 37.8% to 11,033 from 8,005 active listings during the same period in 2013. At the current sales pace, there is a 5.5-month supply of single-family homes, an increase of 11.4% from 4.9 months in April 2013, and a 7.7-month supply of condominiums, up from 5.7 months in April 2013, an increase of 34%. “TheMiamireal estate market current offers opportunities for both buyers and sellers,” said 2014 Miami Association of Realtors Residential President Francisco Angulo. “Sellers have recovered equity and confidence lost during the downturn, while buyers have many properties to choose from in all price ranges. Further,Miamireal estate remains affordable, particularly when compared to other major US and international markets.” New listings of single-family homes increased 3.3%, up to 2,150 in April 2014 from 2,082 during the same period in 2013. Condominium listings increased 5.3% from 2,928 in April 2013 to 3,082 last month. At the end of the April, total housing inventory nationally rose 16.8% to 2.29 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace.
InMiami-DadeCounty, 59.8% of total closed sales in April were all-cash transactions, compared to 64.8% in April 2013. Cash sales inMiamiare still significantly higher than the national average of 33%. All-cash sales accounted for 44.5% of single-family home and 70.3% of condominium closings, compared to a year earlier when cash sales were 47.1% of single-family home sales and 77.3% of condominium sales. Since nearly 90% of foreign buyers inFloridapurchase properties all cash, this continues to reflect the much stronger presence of international buyers in theMiamireal estate market.
Mobile deposits fraud to grow?
Only a few years ago, the idea of taking a picture of a check with your cell phone and using that image to deposit money into your bank account was a pretty novel idea. Now, nearly two-thirds of financial institutions offer some kind of mobile remote deposit capture, according to a survey released this week of 250 banks and credit unions. Another 33% of respondents say they plan to implement the technology within the next 12 months. “The mobileRDCindustry has truly reached a tipping point,” says John Leekley, founder and CEO of RemoteDepositCapture.com, which conducted the study. With the adoption of the technology comes worries about fraud — notably with fraudster’s double-depositing checks. For instance, a fraudster might deposit a check using his or her phone, and then later deposit the check again at a bank branch. According to the survey, 80% of respondents say they have had no losses with mobile check deposit. But some experts say they expect that number to change as mobile check deposit continues to catch on.
Julie Conroy, a research director with Aite Group who covers banking and fraud, says she’s had a number of conversations with banks that are seeing fraud in mobile check deposit “at a rate that is disproportionately high compared to traditional channels.” Of course, that proportion can be a bit out of whack, given the relatively small transaction value of mobile deposited checks versus other deposit channels, she says. She says different financial institutions are having varying levels of problems with fraud in this area depending on how restrictive their rules are on mobile check capture. “There’s no question that there are gaps in the duplicate deposit detection, and criminals are finding them, though perhaps not in great numbers relative to other attack vectors,” Conroy says. Mitigating risk
Banks are working to mitigate the amount of risk they take on with mobile deposit capture. The Federal Financial Institutions Examination Council has had security guidelines for mobile remote deposit capture since 2009 that many banks use when setting their own practices. More than 8 in 10 banks using the technology set limits on how much can be deposited, while 54% set limits on deposit volume, the survey found. Nearly three-quarters use image-quality analysis to check for fraud, and 43% said they delay the availability of funds deposited through mobile check capture. However, the report also says that “despite concerns about duplicate deposits, only 49% use cross-channel duplicate detection.”
MBA – mortgage applications down
Mortgage applications decreased 1.2% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 23, 2014. The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2% compared with the previous week. The Refinance Index decreased 1% from the previous week. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 15% lower than the same week one year ago. The refinance share of mortgage activity remained unchanged at 52% of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8% of total applications.
Obamacare hitting people with higher premiums
More employees are getting hit with higher health insurance premiums and co-payments, and many don’t have the money to cover unexpected medical expenses, a new report finds. More than half of companies (56%) increased employees’ share of health care premiums or co-payments for doctors’ visits in 2013, and 59% of employers say they intend to do the same in 2014, according to the annual Aflac Workforces Report. It’s based on a survey of 1,856 employers and 5,209 employees at small, medium and large-size companies. Employees are worried about covering their medical costs: 49% have less than $1,000 to pay for unexpected out-of-pocket medical expenses; 53% would borrow from their 401(k) s or credit cards to cover unexpected medical costs; 66% say they wouldn’t be able to adjust to the large financial costs associated with a serious injury or illness. The report notes that the Kaiser Family Foundation finds that health care premiums have increased 80% since 2003, nearly three times as fast as wages (31%) and inflation (27%).
Toll Brothers profit more than doubles
Toll Brothers Inc, the largest US luxury homebuilder, said quarterly profit more than doubled as it sold more homes at higher prices. The company, whose homes can cost more than $2 million, has been able to perform better over the past few quarters than most large US homebuilders as its buyers were less affected by a recent rise in mortgage rates. Toll Brothers said its average selling price rose about 22% to $706,000 in the second quarter ended April 30. The company received orders for 1,749 homes in the quarter, nearly unchanged from the second quarter last year. “We are in a leveling period in the early stages of the housing recovery with significant pent-up demand building,” Chief Executive Douglas Yearley said in a statement on Wednesday. The company’s net income rose to $65.2 million, or 35 cents per share, in the quarter from $24.7 million, or 14 cents per share, a year earlier. Revenue jumped 67% to $860.4 million in the period -well into the spring selling season, which is to homebuilders what the holiday shopping season is to retailers. Toll’s shares closed at $35.64 on the New York Stock Exchange on Tuesday. They have dropped about 2% in the past year, compared with an about 7% drop in the Dow Jones US Home Construction index.
NAR – improvement seen in commercial real estate sectors
The outlook for all of the major commercial real estate sectors is slightly improving despite disappointing economic growth during the first quarter of 2014, according to the National Association of Realtors (NAR) quarterly commercial real estate forecast. National vacancy rates in the office market are forecast to decline 0.2 percentage point over the coming year, while international trade gains continue to boost use for industrial space, which forecasts a decline of 0.3 point. The outlook for personal income and consumer spending is favorable for the retail market, likely leading to a vacancy decline of 0.2%. NAR reported earlier this month in its annual Commercial Member Profile that despite subpar economic expansion, Realtors who practice commercial real estate saw an increase in sales transaction volume and medium gross annual income in 2013. NAR’s latest Commercial Real Estate Outlook offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.
Office vacancy rates should decline from an expected 15.8% in the second quarter of this year to 15.6% in the second quarter of 2015. Currently, the markets with the lowest office vacancy rates in the second quarter are New York City and Washington, D.C., at 9.4%; Little Rock, Ark., 11.5%; San Francisco, 12.6%; and New Orleans, at 12.8%. Office rents are projected to increase 2.5% in 2014 and 3.2% next year. Net absorption of office space in the US, which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 39.7 million square feet this year and 49.8 million in 2015. Industrial vacancy rates are anticipated to fall from 9.0% in the second quarter to 8.7% in the second quarter of 2015. The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 3.5%; Los Angeles, 3.9%; Miami and Seattle, 6.0%, and Palm Beach, Fla., at 6.5%. Annual industrial rents should rise 2.4% this year and 2.6% in 2015. Net absorption of industrial space nationally is seen at 107.8 million square feet in 2014 and 107.1 million next year.
Vacancy rates in the retail market are expected to decline from 10.0% currently to 9.8% in the second quarter of 2015. Presently, markets with the lowest retail vacancy rates includeSan Francisco, at 3.2%;Fairfield County,Conn., 3.8%; andSan Jose,Calif., at 4.7%.Northern New Jersey;Long Island,N.Y.; andOrange County,Calif., all have a vacancy rate of 5.3%. Average retail rents are forecast to rise 2.0% in 2014 and 2.3% next year. Net absorption of retail space is likely to total 11.5 million square feet this year and 19.6 million in 2015. The apartment rental market – multifamily housing – should see vacancy rates edge up from 4.0% in the second quarter to 4.1% in the second quarter of 2015, with added supply helping to meet growing demand. Vacancy rates below 5% are generally considered a landlord’s market, with demand justifying higher rent. Areas with the lowest multifamily vacancy rates currently are New Haven, Conn., at 2.3%; Ventura County, Calif., 2.4%; and New York City; San Diego; Hartford, Conn.; Oakland-East Bay, Calif., and San Diego, at 2.5% each. Average apartment rents are projected to rise 4.0 this year and in 2015. Multifamily net absorption is expected to total 221,400 units in 2014 and 173,100 next year.
RealtyTrac – five reasons the housing market is failing
By now the housing market was supposed to be booming. Combine a growing population, low mortgage rates, years of pent-up demand, fewer foreclosures, lower unemployment plus a generally-better economy and the stage should be set for a very nice real estate lift-off. It hasn’t happened — and the result may be very good news for buyers and investors. “After a decade of boom-bust-boom,” explains Bloomberg Business week “the US housing market is going downhill just when many economists thought it would be heading higher.” “Some growth was inevitable after sub-par housing activity in the first quarter,” said Lawrence Yun, chief economist with the National Association of Realtors “but improved inventory is expanding choices and sales should generally trend upward from this point. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”
Here’s another term for “improved inventory.” It’s called “more unsold homes.” There’s now a 5.9-month supply of homes for sale versus 5.2 months a year ago and total existing home sales for 2014 are expected to be lower than last year. With so many bright signs in the marketplace why have home sales stalled? Let’s look at five possible reasons. First, we’re not as cuddly as we used to be. Household formations are down. “Over five years during and after the 2007–09 recession, the number of households established inAmericaplummeted by about 800,000 a year from the previous seven years,” according to the Federal Reserve Bank ofAtlanta. In other words, four million additional household have not formed, a huge problem because new households have traditionally been a major source of first-time buyers. Imagine how different the real estate picture would be if household formations were at normal levels and we had an additional 200,000 sales per year.
Second, fewer of us are entering the real estate marketplace. According to NAR, first-time buyers represented 29% of the market in April. That sounds like a lot but traditionally first-timers make-up about 40% of all buyers. The lack of first-time buyers breaks an essential link in the usual chain of real estate sales. First-time buyers typically purchase entry-priced homes. The sellers of such properties can then move-up to bigger-and-better homes. In turn, the owners of bigger-and-better homes can then move-up to even larger and more wondrous properties but without the usual level of first-time purchasers a lot of entry-level homes take longer to sell or never come to market. The result is fewer move-up buyers and a weaker overall marketplace.
Third, the impact of the foreclosure meltdown is not over. “Contrary to the claims of many observers that the recent rise in housing prices is solving the nation’s foreclosure and related economic crises, millions of families continue to face financial devastation from which many may never recover,” says a new report from the Haas Institute for a Fair and Inclusive Society at UC Berkeley. Entitled “Underwater America,” the report also explains that the financial sting from millions of foreclosures has not been equally shared. “For African Americans and Latinos specifically, between 2005 and 2009, they experienced a decline in household wealth of 52% and 66%, respectively, compared to 16% for whites,” according to the study.
Fourth, lower mortgage rates have not helped sales. The usual understanding is that lower mortgage rates are the surest path to more home sales. Drop mortgage rates, affordability soars and it becomes easier to qualify for a loan at every income level. There’s no doubt that mortgage rates are soft and mushy. They’re not down to the historic lows seen in 2012 but they’re not far off. The result has been a huge rush to refinance during the past two years, good news for borrowers but perhaps not so good for real estate sales. With mortgages locked-in at low rates through refinancing many borrowers are loathe to move and get a new loan at today’s relatively “higher” mortgage levels, rates that are higher than in 2012 and early 2013 but rates which are also ridiculously low by historic standards. In a sense, the historic low rates may well have created a large number of “captive borrowers,” individuals who now have a huge hedge against inflation in the form of long-term fixed rates and not much incentive to give up their current financing.
Fifth, new home builders have missed the mark. With household incomes down it follows that a lot of would-be buyers are not looking for “starter mansions” and yet builders continue to churn out massive homes with big price tags. “The average home size has continued to rise for the past four years, from 2,362 square feet in 2009 to 2,679 square feet in 2013,” said Rose Quint, assistant vice president for survey research with the National Association of Home Builders.
More interior acreage equals higher costs: The typical existing home sold for $201,700 in April, according to NAR while the home builders explain that “as homes get bigger, so does the average sales price, rising from $248,000 in 2009 to $318,000 in 2013.” In a news release, NAHB reports that “sales of newly built, single-family homes rose 6.4% to a seasonally adjusted annual rate of 433,000 units in April, according to newly released data from HUD and the US Census Bureau. The gain builds on an upward revision of sales numbers reported for the previous month.” Sounds great. Oh, wait, here’s what else HUD and the Census Bureau said: April new home sales were 4.2% lower than a year ago.
The Bottom Line: Foreclosures and short sales remain in good supply, mortgage rates are low and because a lot of people are not buying prices nationwide are soft, vacancies are generally down and rents are generally up. That’s about as good a formula for buyer success as can be had.
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