A Continuing Trend Toward A Correction
The Tampa Bay Times reports from Florida. “With interest rates near rock bottom, unemployment down sharply and a Florida economy on the rise again, you’d think homeownership would be on the upswing. But cheap mortgages are not stemming the tide. Homeownership peaked in Florida in 2005-2006 at 72.4 percent of the population. It has been heading south ever since, falling under 63 percent in late 2014. That’s a lower homeownership rate than this state has seen in at least 30 years.”
“And the rising cost of renting only compounds the struggle of younger people trying to save for a down payment. Many young people are less enamored with the ‘dream’ of homeownership after they saw their parents and friends struggle in the recession with mortgages larger than the value of their homes or, of course, foreclosures. Why stretch so far to buy a home — plus pay for property taxes and insurance — only to risk another housing bubble and crash in values?”
“Does any of this really matter? Yes, says Ron Terwilliger, who spent nearly 20 years running Trammell Crow Residential, one of the nation’s largest apartment developers. If renters are unable to ever become homeowners, Terwilliger recently told the Wall Street Journal, who will buy those homes when today’s homeowners need to sell? Nobody. Until those home prices start falling again.”
The Miami Herald. “A delegation of South Florida real estate brokers traveled to Beijing last month hoping to raise interest from wealthy Chinese buyers at a luxury real estate conference. Developers and brokers are turning to buyers from other countries, including China, as a Latin American currency crisis slows the cruciall flow of foreign cash that drives Miami’s real estate market. Chinese buyers make up a tiny fraction of international buyers in South Florida — just two percent in 2014, according to a report by the National Association of Realtors.”
“‘The presence of Chinese buyers in South Florida is definitely growing,’ said Christopher Zoller, president of the Miami Association of Realtors residential division, who attended the showcase. ‘South Florida has long led the nation in international real estate sales, and we feel very strongly that China, the world’s most populated country, will only increase Miami real estate sales to foreign buyers.’”
The Real Deal. “Downtown Miami condo prices and rental rates are leveling out after two years of rapid appreciation, offering another sign of change afoot in the market as supply and demand shift, a new report obtained by The Real Deal reveals. The Miami Downtown Development Authority’s Q2 2015 Residential Real Estate Market Update, written by Integra Realty Resources, shows a continuing trend toward a correction in the market, amid the ramifications of foreign currencies sliding against the dollar.”
“‘Conventional rental rates have remained level [year-to-date] in 2015, as new condo projects are being completed and listed within the rental inventory,’ the report said. Among examples: buyers of BrickellHouse‘s 374 units have listed 45 percent of the units for rent, while buyers of 1100 Millicento‘s 382 units have listed 72 percent of the 171 closed units to date, according to the report.”
“‘The decline in foreign currencies compared to the U.S. dollar over the past 18 months has narrowed the buyer pool,’ the report said. ‘Several brokers have expressed concern regarding the closing ability of mid-level buyers that may not be fully denominated in U.S. currency. There have mean early reports of buyers seeking approval for the assignment of their contract to a third party.’”
The Sun Sentinel. “Average consumers in South Florida would be slightly better off renting a home than buying one — assuming they invest the money they would have spent on a down payment and other cost savings, a new study shows. The Beracha, Hardin & Johnson Buy vs. Rent Index, a creation of professors from Florida Atlantic and Florida International universities, determines whether market conditions favor buying or renting a home in terms of wealth creation and investment opportunities.”
“As of the first quarter of 2015, all 23 metro areas nationwide tracked by the index are moving closer to renting or already favor renting. The South Florida metro consists of Palm Beach, Broward and Miami-Dade counties. ‘There’s no reason not to buy right now,’ said Ken Johnson, an FAU professor and one of the authors of the index. ‘But I would ask for price discounts and evidence that supports the value that sellers are asking. Be willing to walk away from one property to buy another.’”
The Orlando Sentinel. “Five years after Metro Orlando’s distress sales peaked, the region still ranks first nationally for financially troubled house sales, a new report shows. More than 22 percent of all home sales in Orange, Seminole, Osceola and Lake counties were mired in underwater mortgages during March, according to CoreLogic. What has changed in Orlando during recent years is the disappearance of short sales. They were so commonplace four years ago that 22 percent of all Orlando home sales were financially underwater houses. In March, only 4 percent of home sales in the Orlando region were short sales. Before the bubble burst in 2007, few had ever heard of them.”
“Foreclosure sales by lenders, meanwhile, have held steady at about 18 percent of sales during the last four years.”
The Palm Beach Daily News. “Palm Beach developer Robert V. Matthews — embroiled for years in the much-delayed Palm House hotel-condominium project on Royal Palm Way — is facing a foreclosure suit against his oceanfront house. The action filed Wednesday involves the same $24 million mortgage that was the focus of a similar suit filed in 2011 and dismissed early last year by a circuit court judge after both sides consented.”
“Matthews and his wife completed the six-bedroom house in 2006, with nearly 15,850 square feet of living space, inside and out. The foreclosure filing is the latest in a series of legal actions against Robert Matthews that have sought payment for debts related to his ownership, through different companies, of properties that ended up in foreclosure, including two office buildings on Royal Palm Way that later changed ownership. Under construction, the Palm House at 160 Royal Palm Way also is in foreclosure.”
