News Column

South Florida Home Prices Jump by Double Digits

July 23, 2013

South Florida existing homes sales continue to sizzle in the face of rising mortgage rates and a dearth of inventory.

The median price of a single-family home in Miami-Dade jumped 21.1 percent to $230,000 in June from $190,000 a year earlier, as buyers duked it out over a tight inventory of homes for sale, the Miami Association of Realtors said.

The number of single-family homes sold in Miami-Dade increased 25.1 percent to 1,170 in June from 935 a year earlier but slipped 3.8 percent below May's volume amid the shortage of listings.

The median price of a Miami-Dade condo rose 15.9 percent to $185,500 in June from $160,000 a year earlier. Condo sales rose 5.5 percent in June to 1,499 from 1,421 but down 10.3 percent from May, Miami Realtors said.

"There's so much pent-up demand. Sellers are in control," said Jim Brinker, an agent with One Sotheby's International Realty in Miami Beach. "People are paying full price. There is no supply. There's tons of demand."

The story in Broward was similar, with the median price of a single-family home soaring 23.2 percent to $265,000 in June from $215,000 a year earlier, according to the Greater Fort Lauderdale Realtors.

Sales of Broward single-family homes rose 3.4 percent to 1,356 closings in June from 1,311 a year earlier, the group said.

The median price of a Broward condominium rose 22.2 percent in June to $105,000 from $85,900 a year earlier, but the number of sales closed in June dropped 8.8 percent to 1,355 transactions from 1,485 a year earlier, as fewer properties were listed for sale compared with already-low inventory a year earlier.

Sales of Broward condos plunged 18.2 percent in June from May, when 1,656 transactions were completed. Single-family sales dropped 7.1 percent in June from May.

Greater Fort Lauderdale Realtors cautioned that its data for June may be slightly skewed by a change in Multiple Listing Service providers in Palm Beach County, where some members' Broward transactions are logged. Florida Realtors postponed announcing its statewide data for June Monday while it works out kinks in data in some areas, such as Palm Beach.

In June, 5,962 Broward condos were listed in the MLS, down from 6,120 a year earlier, the Greater Fort Lauderdale Realtors said.

Listings of single-family homes for sale in Broward dropped 14.4 percent in June to 4,225 from 4,935 a year earlier.

Broward had just a 3.4-month supply of single-family homes and a 4.3-month supply of condos and townhouses listed for sale in June, helping to create a sellers' market in which prices tend to rise quickly. Typically a 6-month supply of homes -- or six times the number of homes sold in a month -- is considered a balanced market between buyers and sellers.

Houses for sale in Broward are being snapped up very quickly.

In June, the median time to sell a single-family home in Broward dropped to 29 days from 37 days in June 2012, and condos went in 37 days, down from 38 days a year earlier, the Greater Fort Lauderdale Realtors said.

Realtors say sellers are calling the shots, often getting their original asking price -- and sometimes more.

In June, single-family homes in Broward fetched 96 percent of their original listing price on average, up from 93.3 percent a year earlier; condos and townhouses sold for 94.4 percent of original listing price, up from 93.8 percent in June 2012, according to the Greater Fort Lauderdale Realtors.

In Miami-Dade, single-family homes sold for 95.8 percent of their original listing price on average in June, up from 93.1 percent a year earlier, while condominiums went for 96.9 percent of asking price, up 0.9 percentage point from a year earlier.

The inventory of condominiums listed for sale in Miami-Dade rose 10.5 percent to 8,173 units in June from 7,395 a year earlier, but with the robust pace of sales, the months of supply inched up only slightly to 5.8 months of supply from 5.7 months of supply last year.

While a continued rise in mortgage rates would discourage buyers and sometimes make a purchase too costly -- thereby hurting the housing recovery -- so far, the fast-rising rates seem mostly to be spurring shoppers to step up their searches, Realtors and mortgage brokers say.

"People are trying to get in before prices increase further and before interest rates increase further, said Ron Shuffield, president of EWM Realty International in Coral Gables.

"I definitely feel an increased sense of urgency because of the news that interest rates are on a path to increase. I certainly have accelerated my search because of rising rates -- and rising prices," said Joshua Gold, an attorney who is looking for a house close to the beach near Surfside or Bal Harbour.

While still low by historic comparison, mortgage rates have spiked sharply in response to Federal Reserve statements it will begin to taper its easy-money, bond-buying program, if economic factors warrant.

The rate for a 30-year, fixed-rate mortgage has jumped a full percentage point this year, though it eased slightly this week to an average of 4.35 percent, according to Bankrate.com. Charles Bonfiglio, president of the Greater Fort Lauderdale Realtors and broker-owner of AAA Realty Group in Pembroke Pines, said the rate rise, "if anything, would entice people to buy sooner, rather than later."

Bonfiglio said he heard of one recent transaction in which a buyer working with an agent in his office was affected when "rates went up and they had to add on a co-borrower ... It was suggested they add someone [to the mortgage] so they wouldn't get denied."

Leonard Bridgnauth and his wife Kimmy are set to close on a three-bedroom, two-bath house in Coral Springs within a week, capping a seven-month search.

"I locked in at 4.5 percent" on a 30-year fixed rate, said Leonard Bridgnauth, who lost several potential homes to cash buyers. While rates were hovering around 3.6 percent when the young couple started hunting, "I'm just happy we found something," he said.

"Those who were looking and were not locked in [on a mortgage rate] kind of get a little sticker shock, but they're still buying," said Bette Abrams, a Realtor with Coldwell Banker in Coral Springs.

For the moment, she thinks appraisals coming in low pose a bigger obstacle than do the higher interest rates. "Appraisals have not caught up with the rise in prices," she said. "On higher-end houses, I've seen differences of $50,000."

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Source: Copyright Miami Herald (FL) 2013