By Peter Zalewski
CondoVultures.com
A first sign has emerged that South Florida’s real estate prices may be stabilizing in the short term as pricing in the Vultures™ Database strengthened in August, according to a report by the consulting firm Condo Vultures™ LLC.
August marked the first time in six months that the average price drop for residential properties – condominiums, single-family houses, and townhouses - tracked in the Vultures™ Database were reduced by only 20 percent, or $197,376, from the original asking price. In July, the average price drop was 22 percent, or $223,276. Between March and June, the average price drop was 21 percent, or $231,662.
The Vultures™ Database tracks properties east of I-95 in Miami-Dade and Broward counties in which the asking prices have been reduced by 10 percent or $100,000, and/or have been on the market unsold for at least 100 days. Condo Vultures™ LLC has issued its monthly reports since March 2007.
Stronger pricing raises the concern that the upcoming winter tourism season combined with the existing influx of discount buyers could create a false market bottom, said Peter Zalewski, a principal with Condo Vultures™ LLC in Bal Harbour.
“All of this talk about South Florida residential real estate being on sale at a deep discount is prompting more and more people into the market, even if it is only to window shop,” Zalewski said. “We are concerned that a tremendous number of visitor-buyers are coming to town this winter looking for a deal. This anticipated surge in prospective buyers will most likely create a false sense of optimistic amongst sellers, who in turn will be less likely to negotiate down on their prices.
"Don’t be surprised if we see an artificial bottoming of the market in the months ahead.”
The Vultures™ Database is tracking 3,129 condos, townhouses, and single-family houses that have had their asking prices slashed and have sat on the market for an average of 449 days.
Condos account for 66 percent, or 2,153 units, of the inventory being tracked. Single-family houses and townhouses account for 30 percent, or 976 units, in the database. The remainder of the available product is 129 undeveloped lots that have fallen in price by at least 27 percent, or $419,311. There are 10 boat slips that have been reduced an average of 22 percent, or $133,445.
The areas experiencing the biggest price drops are Oakland Park (-27 percent), Dania Beach (-26 percent), and Pinecrest (-26 percent). Rounding out the five weakest markets are Hallandale Beach (-25 percent), Wilton Manors (-25 percent), and unincorporated Miami-Dade County (-25 percent).
The downward trend is also impacting many of South Florida’s priciest residential areas, including Fort Lauderdale (-22 percent), Key Biscayne (-21 percent), Sunny Isles Beach (-21 percent), Hollywood (-21 percent), Coconut Grove (-19 percent), and Coral Gables (-18 percent).
A typical condo in the Vultures™ Database has had its asking price cut by $153,662, or 20 percent, with an average time on the market of 455 days. By comparison, condo asking prices in July had been reduced by 23 percent, or $183,295, and in June the drop was by 22 percent, or $188,004.
As in previous months, the areas experiencing the biggest reductions in condo pricing are Hialeah (-38 percent), Dania Beach (-28 percent), Eastern Shores (-27 percent), North Miami (-27 percent), and Pinecrest (-26 percent). Of the 25 submarkets being tracked in the Vultures™ Database in August, 17 of the markets experienced price decreases greater than the average drop of 20 percent. Two more markets – Miami and Bal Harbour – experienced a price drop of 20 percent.
Hallandale Beach's condo market is the one bright spot, experiencing a strengthening of pricing as the average drop in that market is now 21 percent, improved from a 25 percent drop in July. Single-family houses and townhouses in that Hallandale Beach are another story, having fallen 23 percent.
The typical single-family house or townhouse in the Vultures™ Database has experienced an average price drop of $294,148, or 20 percent, and has languished on the market for an average of 443 days.
Oakland Park (-29 percent), Wilton Manors (-27 percent), and unincorporated Miami-Dade County (-25 percent) are experiencing the deepest price cut in single-family homes and townhouses, according to the database.
Of the 32 submarkets being tracked in August, 15 markets have experienced a price drop greater than the 20 percent average. Four submarkets – South Miami, El Portal, West Miami, and Homestead – have realized a price drop of 20 percent.
As prices strengthen, the buying activity is also picking up. In August, 77 condos, townhouses, and single-family houses in the Vultures™ Database were sold, raising the total number of completed transactions for the year to 617 properties. In August, the average closing price was $526,306, or 30 percent below the seller’s original asking price of $752,114.
For the year, the average price cut for a closed sale in the Vultures™ Database is 25 percent, or $244,653. The average sales price for a completed transaction is $731,109, or $367 per square foot, compared to an original asking price average of $975,762, or $495 per square foot.
Peter Zalewski is a principal with the consulting firm of Condo Vultures™ LLC and a licensed real estate broker with Condo Vultures™ Realty LLC. Peter can be reached at 800.750.0517.
Copyright © 2007, Condo Vultures™ LLC
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