Posted by Jonathan J. Miller -Friday, May 4, 2012, 8:16 AM
[click to expand]
I wanted to illustrate how little of the Miami housing market today is financed with a mortgage. And despite that, sales activity is trending higher. Counter intuitive but a reflection of its two drivers of demand: investor at the lower end and cash buyers, often foreign, at the upper end.
Any thoughts on the FHA, Conventional financing cross over back in 2Q 2011?
I’m slowly starting to build our Miami chart archive.
Posted by Jonathan J. Miller -Thursday, April 26, 2012, 3:39 PM
Miami-based Douglas Elliman has had my Miami market report handiwork translated to both Spanish and Portuguese to better serve their South American clientele. Market demand from South America has been a significant force over the past year and a half. The weak US dollar continues to be one of the factors driving housing demand in Miami and one of the key reasons why the non-distressed market continues to thrive.
Elliman Report: Miami Sales (Spanish)Elliman Report: Miami Sales (Portuguese)
[click to open reports]
I took five years of French in high school so it’s a bit disorientating to see my analysis translated, but very cool at the same time. We are expanding our South Florida market analysis significantly over the next several months (no, France is not on the rollout list…yet).
Posted by Jonathan J. Miller -Wednesday, April 25, 2012, 9:28 AM
Quest Magazine asked me to write an intro piece on the luxury housing phenomenon i.e. “Real Estate Renaissance” followed by a number of housing types from the markets they publish within. Quest is a beautiful magazine with some interesting editorial perspectives and great visuals on high end real estate.
Here’s what I wrote (I’m arguably the driest writer in the magazine, but hey, it’s how I think):
Real Estate Renaissance: Jonathan Miller – April 2012
One of the primary characteristics of the U.S. coastal housing markets, after the dust settled from the collapse of Lehman Brothers, has been a sustained period of high-end market strength. Trophy properties are seeing new demand.
The sudden end to an era of reckless bank underwriting and subsequent entry into a period of fiscal austerity was expected to disproportionately crush the luxury housing market. Easy access to credit allowed for many consumers to live beyond their means.
The onset of the credit crunch led to the overnight evaporation of the secondary market for jumbo mortgages, too large to be purchased by ailing Fannie Mae and Freddie Mac. While the federal government focused on the former GSEs, little attention was given to improving access to mortgage financing for high-end housing. Banks now have to hold jumbo mortgages in their own portfolios rather than offload the risk to investors hungry for bigger returns. The much tougher jumbo mortgage financing requirements were expected to bring a collapse of high-end housing prices and grind sales activity to a halt. But that isn’t how it played out. The price spread between high-end and starter homes has expanded over the past several years despite irrational mortgage underwriting standards for jumbo mortgages. In fact, a remarkable number of home purchases at the high end of the market have been paid with cash rather than obtaining mortgage financing at commercial banks, thereby bypassing the lending industry’s legacy of poor lending decisions in the prior decade. The global accumulation of wealth during the global economic boom enabled many investors after its end to seek out luxury housing in the U.S., helping coastal markets outperform others.
The weakness of the U.S. dollar against other foreign currencies, specifically in Europe, South America, and Asia has brought investors to U.S. soil in droves. Initially, this was viewed as a currency play where wealthy foreign investors were simply taking advantage of the sharp discount for U.S. housing. While the favorable exchange rates may have tipped the balance towards the acquisition of U.S. assets like housing because of the perceived discount, investors were also moving their assets into a relatively more politically and economically stable environment.
Will the use of cash in housing purchases continue? It seems likely, perhaps out of necessity. Rational jumbo mortgage underwriting standards and the creation of stable secondary market for jumbo markets is not expected to return for years. Once those problems are eventually resolved, the widening gap between luxury housing and the balance of the market could very well widen further.
Posted by Jonathan J. Miller -Friday, April 13, 2012, 11:30 AM
We published our report on the Miami sales market for 1Q 2012 this morning. I’ve been authoring this report series for Douglas Elliman since 1994 and added this regional report last year (but have historical data back to 2006).
The reprieve from foreclosures a la robo-signing mortgage services/49 state AG agreement is probably over and we expect a ramp in market share. Currently non-distressed and distressed sales have a 50/50 share but should go back to 2/3, 1/3 over the next year. Still, the housing stock for typical distressed sales are much smaller on average so its not appropriate to rely on a “throw it all in one bucket” view of the market because of the shift in the mix. Non-distressed price indicators are are showing modest increases.
Here’s an excerpt from the report:
The Miami housing market continued to be
largely two different market segments: distressed
sales, defined as short sales and foreclosures,
and non-distressed sales. The “robo-signing”
scandal in late 2010 and the recent settlement
agreement between the major loan servicers
and the government has kept a large supply of
distressed properties from entering the market over the past year-and-a-half. However, we
anticipate an increase in distressed sales activity
over the next few years. While distressed and
non-distressed sales are not separate types
of housing, distressed condos and 1-family
property sales averaged 26.3% and 31.1% more
square feet, respectively than their distressed
sale counterparts in the first quarter.
I’ve got a tool to build custom data tables on the Manhattan rental market. I will be updating the chart section shortly. In the meantime you can see other market areas and some other generally cool housing market charts (IMHO).
Posted by Jonathan J. Miller -Thursday, January 12, 2012, 7:51 AM
We released our report on the Manhattan rental market for 4Q 2011 this morning. I’ve been authoring this series for Douglas Elliman since 1994. Douglas Elliman Florida is making waves in Miami. This report is the first of it’s kind, providing neutral insight for both the distressed and non-distressed housing markets (hint: they are different).
Overall prices increased largely because lower priced distressed sales continued to lose market share as the “robo-signing” scandal of late 2010 caused foreclosure volume to drop sharply as lenders and servicers got their paperwork act together to show they actually had the right to foreclose. It’s a temporary situation as volumes are expected to rise over the next several years. The US Dollar continues to drive demand for new development.
Here’s an excerpt from the report:
The lack of differentiation between the distressed and non-distressed markets continued, despite the significant difference in housing stock. In the fourth quarter, the average size of a non-distressed condo sale was 24.7% larger than a distressed condo sale, and the average size of a non-distressed single family sale was 34.1% larger than a distressed single family sale.
There were 4,568 sales in the fourth quarter, the second highest fourth quarter total since the mid-decade market peak, and 6.1% less than last year’s fourth quarter. The average seasonal decline from third to fourth quarter has averaged 5.7%, yet the prior year quarter showed a 2.2% increase. This was likely due to the rush to close at the then end of 2010 out of concern that the Bush tax cuts might be eliminated.
The data tables will be updated shortly, if not by the time you read this. The chart section on the new site remains a work in progress.
The Elliman Report: 4Q 2011 Miami Sales [Douglas Elliman Florida]
The Elliman Report: 4Q 2011 Miami Sales [Miller Samuel]