If the Hamptons are the playground of NY's uper middle class, then Key Biscayne is the playground of Miami/South America's upper middle class. Still not time to buy...


By Oshrat Carmiel
July 23 (Bloomberg) -- Luxury home sales in the Hamptons,
New York’s oceanside retreat for Wall Street and Hollywood
luminaries, stalled in the second quarter as the number of
unsold properties swelled and owners cut prices an average of 20
percent.
Only 37 houses and condominiums priced at more than $2.36
million sold in the Hamptons and on Long Island’s North Fork,
appraiser Miller Samuel Inc. and broker Prudential Douglas
Elliman Real Estate said today. Inventory jumped 46 percent. At
the current sales pace it would take four years to sell all 584
luxury homes on the market.

I love looking back at the late 2008 posts...All agents, all, it is a good time to buy. Too funny. Prices going lower and will reach the bottom near the end of 2010 OR 2011.

My belief is that banks will shed REO's at this point. Managment will say things like I don't care just get them off our books. Banks are making a lot of money right now borrowing short term (savings deposits, cd's etc) and investing longer term.

AT THIS JUCTURE they cannot sell the houses they have foreclosed upon as it will cause them to take a hit to EQUITY. And if their equity gets too low they will have problems with their regulator ala BANK UNITED. So as they make money/raise money they can sell. That's not happening quick enough and the FED realizes this fact so rates are to remain low for awhile.

So don't let today's rates and their ability to move higher make you make your decision. The unemployment rate isn't helping either. I'd suggest rent as prices, when they rebound, will not rebound quickly. It will be gradual.

Never catch a falling knife,

John

U.S. Home Prices to Fall Through 2011’s First Quarter (Update1)
By Dan Levy

July 7 (Bloomberg) — Home prices may fall in more than half of the largest U.S. cities through the first quarter of 2011 as unemployment and foreclosures rise, mortgage insurer PMI Group Inc. said.

Thirty of the 50 biggest metropolitan areas have at least a 75 percent chance of lower prices through March 31, 2011, Walnut Creek, California-based PMI said in a report today. The decline is likely to spread to “all regions of the nation” from California, Florida, Nevada and Arizona, the states most affected by the housing slump, PMI said.

“The housing market has been hit by a demand shock of high unemployment and a supply shock of distressed foreclosure sales,” LaVaughn Henry, senior economist at PMI, the fourth- largest U.S. mortgage insurer, said in an interview.

What a surprise! Realtors telling you that now is a good time to buy. The same realtors who said it was a good time to buy when market prices were soaring and interest rates were low. Realtors have a conflict of interest when it comes to answering the question as to whether its a good time to buy. As long as they keep guiding people erroneously just so they can sell houses, the real estate marke will remain a mess and continue to fall for even a longer period of time.

Here is a list of reasons why home prices will continue to fall through 2009 and beyond.

1. Home prices reached during the housing boom were fictitiously set by fraudulent loans and appraisals. The fraud is now mostly gone, so prices will eventually need to come back down to reality.

2. Millions of people have had their credit ruined due to foreclosure, late payments, and other forms of defaults. This will continue to be aggravated by the plummeting economy. Therefore, you have millions of less potential buyers out there, which will cause demand to come down, and prices to continue to come down as well.

3. Millions of people will lose their jobs in 2009.

4. Property taxes have a long way to come down. Many people who want to buy can't because they can't afford the taxes on the property, which in turn will cause home prices to come down.

5. American's wealth has diminished by about 40%, this includes 401k, stocks, home equity, etc.

6. Interest rates will go up, which causes home prices to go down.

7. The days of 1% ARM loans are over, which makes homes much less affordable, thus causing prices to drop.

8. Authorities are cracking down on mortgage fraud, which prevents home prices from going up.

9. Foreclosures and Short Sales will continue to push property prices down.

10. 20% down on LTV has become the norm when purchasing a property, thus eliminating speculative buyers, and causing prices to come down.

11. Banks will continue to become extremely strict when it comes to handing clients a mortgage loan.

I can go on forever with a slew of reasons why prices will continue to fall in 2009. There were a lot of people who got burned in the beginning of 2008, thinking that prices were reaching a bottom then. We are in the worst housing crash since the Great Depression, and it is turning out to be worse than the one we experienced during the 1930's, which took us 20 years to recover from.

I think that prices will stabilize at 1996-1998 levels, although they really should stabilize at 1999-2000 levels, but we will overshoot the bottom. The reason for this is due to the fallout from the crash, which will force prices to drop more than expected.

We have politicians giving out money and borrowers / stakeholders are accepting it with a warning - "Thank you for giving me this money but please understand that I may not repay you at all and may demand more."

Will the prices fall? If Obama is elected - we will see repeat of four years of Carter administration. If McCain is elected, we will see first four years of Regan presidency.

We do not want and do not hope for the $5.00 / gal Gasoline to return, we cannot expect 2006 housing prices to return.

History teaches us that whenever the governments have tried to manipulate the asset pricing, they have failed. Markets far bigger than government and do not have emotions. They work on simple supply and demand principles.

In uncertain period when deadbeat citizens do not want to honor their debt, should not be rewarded. Mortgage interest rates should be about 18% to reflect the reality. Instead our government is trying to find ways to give more loans to these deadbeats so they can go out and spend - to avoid recession. Once they have finished spending for Christmas, then what? Isn't this what they call downward economic spiral?

If the prices do not fall to 1999 levels in 2009 then we may be looking at 1997 levels in 2010.

Hold on to your money. You may be able to rent a 3-bedroom penthouse in South beach for $1000 a month. (which was allegedly owned by J-LO or Paris)

Ish,

This is a good but very complex question... one that is not easily answered.

Since the real estate market is regional in nature, market conditions can vary within a community. From one development to another, between complexes, from neighborhood to neighborhood.

So in locations where prices have already dropped drastically, there may be less of an additional decline in price compared to a location that has resisted the declining price movement and homes have held their value. In short, to provide a ball park percentage would be misleading and unfair to both you and the property.

If you are trying to get a feel for a specific location we would recommend getting in touch with a real estate professional in this location. They will be alble to provide you with the necessary information.

Here is a little tip: no matter what the bailout plans do home prices will have to come down more depending on where you live. If people can't afford the prices of the homes it doesn't matter How much monet they have to loan. I am in san diego and home prces still have a long way down to go.

Even if the banks have money to loan they cannot go back to lending practices that got us here in the first place (a trend that can be blamed on Obama's Finance chairwoman Penny Pritzker but i digress)..

Traditional lending put a max on a persons home price range to 3-4 times their annual salary.. We must go back to this.. So if the average income in your area is $60,000 then the average home price will need to drop to at least around the $240,000 range for buyers to qaulify..

The Average income in SD is $50 - $55000 and the avg home is still $350,000. I would say expect prices to fall more in general...

Now is the time to look. If you are buying a house I would be looking. Buying a condo the prices will probably still be going down in 2009. Why wait. Find what you want now, subtract a percentage and buy while there is so much good inventory-Pam Mayers-EWM

These are kind of deals people are showing and talking about: Vue at Brickell (2004)
1250 S. Miami Avenue, #1113, Miami, FL 33130 (1B/1B 737 SQ FT)
Bank owned - asking price $115,899

Last sold May 2006 - $490,000.

Yes!!! Last sold May 2006 for - FOUR HUNDRED NINETY THOUSAND AMERICAN DOLLARS.

Now being offered for ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED NINETY NINE AMERICAN DOLLARS.

What a discount. Rushing to buy it? Ask yourself - why the realtor/s not snapping it up?

Check the monthly maintenance (HOA fees) and upcoming special assessments. This property is worth about $60,000 at this time.

I agree with the opinion that prices will go back to 1999 or 2000. This has been said by all the economists since 2006. If one stays on top of the market all of this is OLD news. BUT... there are some people desperate enough, have enough equity, are in short sale or foreclosure, and you can buy at 1999 prices. You may lose that chance next year , or the property you love may be sold by then. So always is a good time to research and look. It's free for you to try.
Debi Quade

Thanks god you asked this question in 2008 not in 2007. Back then it was inconceivable that the home prices could actually drop. All these experts are on record to that effect. Given the crisis situation in this country - highly educated, experienced decision makers like Fed Chairman and Treasury Secretary are telling us that without bailout of banks you may not have money in ATM machines let alone buying houses. Over next 3 years about 25% of South Florida homes & condos will go through foreclosure.

Talk is cheap when it is your six percent is to find way in to other person’s pocket.

Prices in Miami will keep dropping till they reach levels seen in 1999-2000 or earlier. Once they reach that level, they will remain there for a long time.

Rule of thumb – if it cannot be rented for 1% of purchase price, price is too high.

That's a great question ,
Looking at the latest statics there have been 22% more single family homes sold since August 07 and 13% more condo sold.
We know today's interest rates but we don't now tomorrows.
My advise is : if you find the property you love, go for it,don't wait .

In the Lake Tahoe/Truckee market area we are seeing some neighborhoods enter into a stabilizing pattern while other areas continue to decline in value. The major reason for stability in some neighborhoods and declining values in other neighborhoods is due to amenities, views, inventory supply, and price point. We are seeing neighborhoods with lakefront HOA amenities doing fairly well, while neighborhoods without these amenities have declined. Large view properties are also doing well in our area. So I guess that the old adage is correct: location, location, location. Please visit my blog for more information on the Tahoe/Truckee real estate market: http://aaginc.blogspot.com/

Sorry to also burst Non-Realtor's bubble (no pun intended) : in some areas, we already seeing a steady increase in sales. Even so, there will be condos and other sub-markets which will fall, but have you considered what interest rates will do? You might shoot yourself in the foot by waiting for a lower price and then paying a much higher interest rate in a year's time.
Best of luck.

It will differ from state to state, city to city, neighborhood to neighborhood and even specific complex to complex. On average prices are falling 2% a month, some area's have started to level off. multis and condos are getting hit the worse. it also depends on teh condition of the property, mint properties are not falling at near the rate houses that need tons of work are falling, i would expect next spring for sales to pick up in our usuall spring market as long as teh banks start loaning money again.

Sorry to say to NON-REALTOR that some areas of Dade County have appreciated this year. Watch the stastics and go by them. You may lose an opportunity to buy a short sale, while they still exist, or a bank owned property before the banks go into the renting business.
Debi Quade
Carson Realty Group

I'm guessing that Miami was overpriced by 70%. So it has more falling to do. Wait another year to buy, save another 25%. Good Luck

Dear Ish,
What a great question. If you were to ask 10 people, you would get 10 different opinions. You need to have a Realtor research your community, your price range, and your needs. Then you and only you can make an educated guess.
Good luck.
Regards,
Debi Quade
Carson Realty Group
Debi@DebraQuade.com

Good afternoon. The May 2008 issue of Money Magazine and several other sources do predict that our prices will continue to fall into 2009 at the rate of about 2% per month. However, this does not mean that the price of any individual listed house needs to be reduced. Many currently available homes are already priced to be excellent values. We also have micro-markets within Miami-Dade that have already stabilized and even increased.

In addition, interest rates are predicted to rise, and loan downpayment requirements are getting stricter. They have eliminated the 'down payment assistance' programs, PMI insurance is going to be suspended for Miami-Dade and Broward County (which means you will have to have 20% down for a conventional loan) and FHA intends to increase their minimum downpayment to 3.5% in January. In other words, even with home prices continuing to fall into 2009, you may want to buy now because waiting may actually cost you more in downpayment and interest later.

Give me a call if you would like a copy of the article referenced or any other information about the current real estate market: 305-801-3133
Web Reference:

In some areas prices MAY fall 50% and in other areas prices MAY increase 50%. Nobody has a crystal ball and nobody really knows the answer to your question. Prices are already starting to stabilize and in the Greater Miami area some communities are already on the rise.