S. Florida home prices hit lowest level in year
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South Florida home prices may finally be falling enough to tempt some buyers who\'ve been waiting it out on the sidelines.
The median price for existing single-family homes in Miami-Dade dropped to $356,000 in October, the lowest since August last year, according to numbers released Tuesday by the Florida Association of Realtors. In Broward, prices went down to $349,400, the lowest since April last year.
The numbers for condos were not compiled as far back. But there is evidence of weakening -- Miami-Dade condominium prices dropped 4 percent from a year ago and 3.5 percent from January. Broward condo prices were up 8 percent from October 2005 but flat since the start of this year. A median-priced condo now costs $210,100 in Broward and $250,000 in Miami-Dade.
If prices fall further, they could break the stalemate that has frozen the market for months, as sellers refused to come down and buyers like Hunt Deutsch decided to sit them out.
Deutsch, a Miami native, returned from Alabama to South Florida in June and took the job of executive vice president at BankUnited in Coral Gables. But instead of buying, the veteran banker signed a year-long lease and became a renter for the first time in 30 years.
\'\'Quite frankly we did not want to be rushed into an overpriced market,\'\' said Deutsch, 54. Now, he says, there is finally some \'\'rationalization\'\' on pricing.
Nationwide, falling prices are already leading to increasing sales. The National Association of Realtors reported Tuesday that prices made a record drop but existing-home sales climbed for the first time in eight months.
In South Florida, sales have yet to start flowing again significantly, and the numbers for October were mixed.
\'\'The big question is if we have hit that turning point,\'\' said Ronald Shuffield, president of Esslinger Wooten Maxwell, which operates across South Florida. ``I think we probably have a few more months. We will likely not see inventory start to decrease until the second quarter next year.\'\'
Shuffield contends that people who buy now may still see prices go down in 2007, as the market digests the enormous number of homes for sale. However, buyers will get healthy gains over three to five years, he predicted -- especially for single-family homes, which are in increasingly shorter supply than condos in South Florida.
Others say the downturn could go longer and deeper. Yale economist Robert Shiller, who consistently warned of market excesses during the housing boom, said at an October conference in Miami that it \'\'could be years\'\' before the market fully rights itself.
In October, single-family home sales were up 6 percent in Miami-Dade and 5 percent in Broward from a year ago. But sales were down 20.2 percent in Broward and 29.3 percent in Miami-Dade from the numbers of a month ago.
For condos, sales were down 6 percent in Miami-Dade and 21 percent in Broward from a year ago. Sales were also down in each county from September to October.
However, some caution that comparisons to last year may be skewed by Hurricane Wilma, which cut across the region and halted business for an extended period in October last year. Sales comparisons to last year might be a better gauge after the holidays, they say.
Nearly 65,000 homes are now listed for sale in South Florida, from 25,174 a year ago. In recent months sellers have offered an array of incentives to lure buyers. But the antidote, some industry players and watchers say, is still for prices to come down.
With lower prices, the thinking is that buyers will re-enter the market and the oversized inventory of unsold homes may shrink. Many observers say this inventory must go down before prices go up broadly.
Meanwhile, the underlying economic picture is still strong, said John Burford, senior vice president at The International Bank of Miami. The average 30-year fixed-rate mortgage stands at 6.18 percent, according to Freddie Mac. Unemployment is low. And the economy continues to perform well, Burford said.
On Tuesday U.S. Federal Reserve Chairman Benjamin Bernanke said economic growth -- outside of housing -- is expanding at a \'\'solid pace.\'\' However, he warned that the \'\'correction\'\' in the housing market could turn out to be more severe and widespread than expected.
For Deutsch, the Coral Gables banker, high property taxes and insurance remain big issues. Still, he says, the market is reaching a point where he would be more comfortable being a homeowner in South Florida again. He said: ``I absolutely think we will buy in 2007.\'\'
Miami Herald - Posted on Wed, Nov. 29, 2006 - BY MATTHEW HAGGMAN