Its not a housing bubble – its just expensive!

Miami Real Estate | A perspective on the Miami house market.

Despite record home prices in Miami home markets such as: Coconut Grove, Coral Gables, Pinecrest and Miami Beach, the market is nowhere near as bad as it was a decade ago.

Its not a housing bubble - its just expensive!

To quote the July 18th Article in Bloomberg:

“Home prices have hit record highs in some major U.S. metropolitan areas, and house-flippers are behaving like it’s 2005: It’s no wonder people are chattering about another housing bubble.

But residential real estate isn’t in a speculative bubble, industry observers contend. Instead, a low inventory of available homes is driving prices higher—prices, however, will eventually recede as buyers throw up their hands, or as more new homes come on line. The structural issues that led to the housing collapse last decade aren’t present.

“The havoc during the last cycle was the result of building too many homes and of speculation fueled by loose credit,” said Jonathan Smoke, chief economist at Realtor.com. “That’s the exact opposite of what we have today.”

The Miami Real Estate Market is not even near a bubble

This struck me as interesting because back in 2008 when the bubble burst, it was Miami that was the poster child for the economic collapse. Miami was even mentioned and featured in a number of films highlighting the collapse (The Big Short). I read this article with great interest and as I scanned the article for a mention of Miami in the list of Top ten cities in the US with the highest ‘bubble rating’….Spoiler alert. We did not even get a mention!

Click on image to enlarge

Its not a housing bubble - its just expensive!

At the David Siddons Group we spend so much time studying almost all single family neighborhood and talking to home buyers and sellers to get a feel of where their heads at. Although we have certainly seen a softening on some price fronts (check out our soon to be released 2016 Miami real estate report). We are seeing far more of a stabilizing market than a decreasing market.

So should home owners fear that the value of their homes will collapse or that home buyers should be patiently waiting on the side lines to see prices half before they rush in a vulture a deal? Fortunately or unfortunately (depending on your opinion) you wont see the ‘single family markets’ collapsing, but you will see some sectors correcting down, back to a more balanced level.

Why would it not collapse? In short, because so much has been bought with cash and many people still want to move and live within Miami.

Advice to home buyers and sellers.

We have seen a lot of renovations within Miami in the last few years and buyers are paying top dollar for brand new and well renovated homes. There is a still shortage of these, so if you want one you will have to pay a top level market price (but do not go over our recommended ceiling).

Older homes that need renovations? We have seen some sellers still aiming to achieve a high market price.

My advice to buyers: if you see these homes asking high $ per sqft number (For example $450+ in Coral Gables or Coconut Grove), walk away!  You will see these prices come down as sellers wake up to the reality that the market is not going to continue up by 10-15% as it has in recent years. My My advice to sellers: adjust your expectations and be realistic. Otherwise spend some money improving your home, do some light improvements in order to compete against the more polished properties.

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For more specific information on your market please contact the David Siddons Group. I know the Miami real estate market and its numbers like nobody else. Ill be able to give you a good insight into whether you would profit from holding on to your property or selling it

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