Over the Next 18 Months Miami Will Add 20,000 New Condos
Miami Dade-Broward's inventory of housing for sale has exploded in the past year.
Last month 76,000 "pre-owned" homes were For Sale in that area. Just one year ago, that inventory figure was only 50,000 homes For Sale.
Real Estate observers know that the 20,000 "new" condos which will come online in the next 18 months will not be added to official MLS inventory as new homes and condos are sold by developers, not individual homeowners. Hence, inventory rolls will not automatically rise another 20,000 properties. Still that new hidden inventory will be out there along with all the other new homes which have been on the market for over two years now and which are still not on the inventory rolls.
However, as more foreclosures take place (and foreclosures all over Florida are skyrocketing) and as new owners of some of these condos are forced to walk away from their deposits . . . we can be sure that some of these newer units will add to the glut of already existing homes for sale.
Will Tax Cuts for Housing Get the Market Moving Again?
Florida's state legislature is under pressure by builders, Realtors, lenders . . . in short . . . the whole Housing Bubble Cartel . . . to lower taxes on Real Estate. These vested interests of the cartel believe lower taxes will get sales moving again.
My thought is this: if I feel I cannot afford a $500,000 home in the changing rate environments of today (long term rates started going up last week as Fed chief Ben Bernake is now signalling that bailing out Real Estate interests is not America's main interest, but controlling inflation by propping up the dollar is) I will surely not care if Florida Real Estate taxes go down tomorrow.
The main problem with Real Estate is it is too overpriced.
The average man and woman in Florida has not seen their wages and salary keep up with the exploding price of Real Estate. So something has to give.
Either Florida wages and salaries will have to double overnight so we can all afford to begin looking at what is overpriced housing today, or the people who really want to sell their homes will have to lower prices to a realistic point where possible buyers might begin to look.
Jack McCabe, housing analyst, recently gave his thoughts about this magic bullet of lower taxes which the Real Estate Cartel hopes will kill the Housing Crash beast:
Analyst Jack McCabe, who is advising large vulture investors on bulk deals, said big investment groups aren't as worried about tax rates as individuals -- saying such costs can be spread out across big buyers' portfolios.
Last week McCabe announced the completion of the first market-corrected deal he's worked on since the slowdown began. While short on specifics, McCabe said a multibillion-dollar private investment fund bought a substantial block of newly built condominiums from a publicly-held home builder in Florida. His investor client, he said, was chosen because of its ``ability to close quickly in an all-cash transaction, noncontingent on financing.''
Currently, he said the market is too sick to recover from a tax reduction alone. A big property tax cut may reignite buying now, he said, but would effectively create a false bottom.
''Meaningful reduction will slow down the correction cycle but the correction is still inevitable,'' said the Deerfield Beach analyst, who has warned for some time about too much construction going up too fast. ''The market is so sick it will take a while to cure this,'' he said. ``This is not a head cold, it is more like pneumonia.''
But such doomsayers also believe the market is poised for brighter days ahead. McCabe says that barring calamitous hurricanes, the market will have righted itself by 2010 -- just as the first baby boomers turn 65.
''No one is more bullish on Florida long-term than me,'' McCabe said.
It's such thinking that prompted corporate raider Carl Icahn to announce last week that he would continue efforts to buy Bonita Springs-based WCI Communities....
All I will add to McCabe's views is this: it all comes down to Economics 101, the Law of Supply and Demand. When there is too much demand, prices go up. When there is too much supply . . . as we see today all over America with housing . . . prices have to come down.
There is no other way to get Real Estate sales moving again other than for homeowners to "get real" with their pricing today. The longer the sellers continue to drip, drip, drip in their price drops, the longer their pain of waiting for a buyer to come along.
I believe many sellers will soon be caught with their pants down and their skirts up as the Federal Reserve focuses on keeping inflation in check by not lowering rates. And if the Fed Chief raises rates just 50 basis points (one-half of one percent), we will see just how many homeowners were standing naked when the small tide of buyers are sucked out to sea.
Mark my words: one healthy rate increase will end all illusions that Real Estate is a smart "investment". It will also suck money out of our stock markets. But if Bernanke has to decide between keeping bubbles alive or propping up the US Dollar and killing inflation, my bet is he'll raise rates. (And just two months ago, I was one who felt like he'd try and save housing by lowering rates.)
If this prediction turns true, more people will be knocked out of the dream of buying a home at today's prices as lenders will further tighten their rules for borrowers.
Fewer qualified borrowers will mean more inventory building on the market.
As McCabe said about Real Estate's growing inventory and declining sales, "This is not a head cold, this is more like pnemonia. Unlike McCabe, I don't see any bottoming in Real Estate by 2010.
I believe we will see further pain and dropping prices in 2010.
This might take 15 years or more to correct.
My advice to sellers: figure out where you want to be in 5 to 15 years. If you want to move today, drop your price. If you have to take a hit in capital gains or perhaps take a loss on a sale, ask yourself what is more important: getting on with your life with a shred of sanity, or having to do a daily gut check wondering if you can induce someone to look over your overpriced home?
If you want to get on with life, drop your prices.
If you want more of the same indecisiveness which will drive you into a funk, keep sitting on your house you no longer want to live in and continue to refuse to drop your price.
It's that simple.
