Miami Resales Up, but How Desirable Are the Homes?

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Miami home resales are hot and have been driving the market upward for about the last year and a half. But the condos and houses that are the force behind the upswing aren't the most desirable of the lot. There are several factors affecting the recent drop in prices and boom in resales which often are not detailed in what's being reported.

A recent MDA DataQuick report claimed that home sales in Miami were up 7.1 percent from May to June, without presenting many specifics about the source of the surge.

Miami Realtor Jesus Menendez with Coldwell Banker shed some light on the subject, giving some specifics on what specifically is affecting these jumps in resales.

"It's important to remember that these numbers are affected by both short sales and REO (real estate owned), which are corporate or bank-owned properties -- basically, homes that banks have had to take back into their portfolio and resell," Menendez told HousingWatch. "What's bringing the prices down is that, due to the lack of inventory, what's left is the scrap that no one wants and these are going for nothing. Investors are going to town on these."


Here's a comparison from the current inventory to, say, June 2006. Four years ago the inventory was four times what it is today. Then there were 52 months of inventory, and now it's lucky to have 10 to 11 months' worth. In addition, the stats that are recorded are often national not local, meaning that they represent a generalization and don't take the specific markets of that state into account.

There's a 4.8 percent decrease in the median price paid for resale condos from June 2009 to June 2010. But what is the ratio of sales to inventory? Where exactly are the numbers coming from? According to Menendez, we are still in a declining market so, again, that figure is affected by the REOs.

"The 4.8 percent probably includes REO properties, which are the best value for a buyer," says Menendez. "These are going to be the best deal."

Yet another issue with the bank-owned properties is the mountains of red tape that accompany these sales. Often, the banks haven't sorted out the legal issues with these homes, whether it's the foreclosing attorneys or the recording department of the county's Clerk of Courts having a backlog of paperwork.

As far as flipping homes goes, it's still being done. But the Federal Housing Administration, which regularly updates its rules and regulations, has recently instituted new laws to keep savvy investors from buying, fixing and selling them to an FHA buyer for a significant markup. The FHA buyer is putting very little money down and getting government help; the sale is made at a higher price than it should be. The buyer then has the benefit of getting into the house.

To see the latest FHA rules and regulations for flipping visit www.hud.gov.


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