South Florida Markets
For years we have tracked the EWM trends for South Florida. Using this site at www.ewm.com/trendx we have been able to follow the change in supply v. demand that is so important to price and marketing times.
Appraisers and other analysts using market datas could see the rise in listings beginning in 2006. There was a lag in the lowering of residential sales prices in early 2007 as sellers had not reduced prices hoping markets would rebound. It took time; however, the market principle of supply v. demand caused prices to drop substantially in late 2007 and 2008.
New construction has come to a screeching halt along with condo conversions. I recall when graduating from the University of Florida, the federal government repealed the accelerated real estate depreciation rules, and commercial real estate sales and new construction slowed.
Properties had to return to basic economics of "return on investment" and the "internal rate of return," for investors to become interested again in buying. It took between six to ten years for the commercial market to rebound in the past due to tax reform.
Supply and demand in our residential markets will eventually fall into balance as the financial markets stabilize, population grows, and buyers find good deals for both residential and commercial properties.
In The Miami Herald (below) I was quoted on "absorption." The reporter was not able to include that absorption times will be shorter, helped in part by the end of both new construction and condo conversions. It is a principle of basic economics that price will fall until the supply and demand are back to normal levels. We saw this business cycle in Miami on Brickell Avenue in early 1980, although it only involved about 5,000 total units.
As of August 2008, the listings and sales are broken down for Miami-Dade County into the following:
According to the EWM data, the total number of combined condo and SFR listings are 42,292 listings with only 974 selling in August 2008. That is a total absorption of 43.42 months or 3.62 years. (Note that in previous markets the normal marketing time was between three and nine months according to Realtors we have interviewed). The data and total absorption is broken down as follows:
Note: This is general data and markets can be looked at individually, and the county can be broken down into sub-markets for further analysis.
Below is the "sub-market" graph for the Village of Pinecrest. It indicates 271 total listings and 9 sales for the last reporting period. This is a reduction from the 18 sales of March 2008 (see my previous post).
The total absorption is 2.51 years, which is less than the county-wide numbers.
It is clear that the "spec" building in Pinecrest has slowed substantially, which will help to tighten the supply. Also, the prices for single-family homes and buildable lots (acres) have dropped substantially.
Below is the data graph of The Village of Pinecrest. Blue represents listings and in red is the number of sales.