[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller puts in another installation of his Three Cents Worth column, with his unique perspective on Miami's strange real estate market]
I've been on a "rotating gif" tear lately so I took a look at the ebb and flow of Miami sales and price trends since the mid-decade peak and the current market resurgence. I think people get hung up on the idea that prices represent the health of a housing market when they really are a vice. As prices continued to surge during the boom, sales fell sharply and most consumers looked the other way. I contend a recovery is all about sales activity because it leads prices - and Miami is seeing more sales activity these days.
I compiled quarterly data back to 1Q 2006 from the Miami MLS that I use in the preparation of the Douglas Elliman quarterly market reports. The relationship between price and sales trends are inverted with a one year period following the credit-crunch commencement in 3Q 08 when Lehman went under and AIG, Fannie and Freddie were bailed out. Since the credit crisis began prices have been remarkably stable with some recent gains and sales activity continues to gain strength. Falling inventory, low mortgage rates and the influx of international demand continues to keep pricing firm.
Going forward we are going to see an expansion of distressed sales activity after a recent reprieve (more on this when Douglas Elliman releases it's 3Q 2012 report in October).
The fresh off the beach Fed announcement on their launch of QE3 (seriously, lets not bore ourselves with what this is - after all, this is Curbed Miami!) may help keep mortgage rates artificially low and conditions pretty much the same for real estate over the next few years. When rates rise in the future their hope is that the economy will have it's own legs and housing will continue to improve.
Volatility makes these types of charts more entertaining but we've had enough of that in recent years so the idea of modest improvement sounds pretty good to me.
· The matrix [MillerSamuel.com]
· Elliman Report coverage [Curbed Miami]
· Three Cents Worth [Curbed Miami]