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A lot has been written about “Shadow Inventory” but a recent Bloomberg news article “Shadow Inventory of U.S. Homes Climbs, Report Says” summarizes it the best.

The term “Shadow Inventory” is used in different ways, but it applies to all of the following:

1. Developer Units – These are properties (Condos, Single Family Homes or Townhouses) listed for sale by the Developer. With very few exceptions, these properties are not listed in your local Multiple Listing Service (MLS) which is not only used by Real Estate Agents, but also serves as the normal source of real estate statistics. Developer units are moving faster than you might think or read about.
2. Foreclosures in Process – These are properties that are in the process of foreclosure and seriously delinquent loans. Keep in mind that some loans may be in the modification process.Foreclosures in Process are a concern today! given the poor visibility/reading we are getting from Lenders. But wishful thinking suggest that the administration and their respective agencies involved in the lending process could surprise us favorably. More favorable news to come.
3. REO’s (Real Estate Owned) in process - Are bank owned properties that have not been put on the market yet.REO’s (Real Estate Owned) in process is a double side sword for Lenders. The speed of growth in REO portfolios has slow down substantially. Lenders are understandably more apprehensive take over properties and then selling them at below market prices. It is a snow ball effect they are trying to minimize.
   
4. Previously Listed for Sale in the MLS – These are homeowners who had their property listed for sale and for one reason or another did not sell. The primary reason being that owners had expectations of getting a higher price for the property. These owners are now waiting for comparable properties that are listed as Short Sale or REO to sell so they so that they may have a better chance at selling their own property at a higher price.Previously Listed for Sale in the MLS is a phenomenon that has always been present. It simply has increase with the current market conditions and will go back to a normal trend as economic conditions improve.
   
5. Undecided Homeowners – These are homeowners who are also entertaining the possibility of selling but are also waiting to list for sale for the same reasons as those owners who previously listed the property for sale on the MLS.Undecided Homeowners is also a common fact of life in the real estate business. Guessing this number is like guessing the lottery!

Does Ben Bernanke, Chairman of the US Federal Reserve, know something about interest rates that the rest of us do not?

Maybe, but the likelihood of higher interest rates in 2010 and beyond is not much of a secret!

In a recent TIME Magazine interview, Chairman Bernanke says he refinanced his own mortgage a couple of months ago at 5%, and switched from a floating rate, which the Fed chairman said “exploded” in cost, to a 30-year fixed.

TIME: Do you have a mortgage?
Bernanke: Oh, yes, we refinanced.
TIME: Oh, perfect. When?
Bernanke: About 5%. A couple of months ago.
TIME: Good time.
Bernanke: Yes. We had to do it because we had an adjustable rate mortgage and it exploded, so we had to.
TIME: So, did you get a fixed rate at 5%? I think this might be the most valuable piece of information. (Laughter.)
Bernanke: Thirty years fixed rate at a little over 5%.

Although the motivations to refinance your home or finance a new purchase may vary from one family to another, it is clear that the low interest rates available today and the strong possibility of higher interest rates into 2010 and for several years to come is a strong motivation.

And for Buyers, lets not forget that low real estate prices will not last forever either.

If you are buying real estate or are considering refinancing your existing property, we can help! Give us a call at 305.450.0036

For more information or if you have any questions or comments, please send me an e-mail to: michael@miamiflorida.com or call me at my mobile 305.450.0036

This article states the U.S. Treasury has finally set the guidelines for their “short sale” plan.  Although there is nothing posted on the U.S. Treasury’s website yet, we are expecting the details to be released shortly at www.financialstability.gov.  Please reference this website for the full details of the plan.

If you have any questions or comments, please send me an e-mail to: michael@miamiflorida.com or call me at my mobile 305.450.0036

The increased percentage of real estate construction loans in delinquency is another sign of bad news not just for commercial real estate but also for the banking sector.

Many argue that commercial real estate prices – which so far have suffered relatively little downward pressure – are heading for a substantial correction in the months to come. And by the way, the banking sector – one that has enjoyed a substantial 6 month rally in its stock prices in expectations of much better times ahead – could very well experienced a second act in troubled loans in the months ahead, specifically in commercial real estate loans.

WHAT IT MEANS FOR HOUSING INVENTORY

In short, get in before is to late.

With sales increasing, the current levels of inventory will eventually be a thing of the past by 2010.

And with limited financing for developers, don’t expect new building projects for several years ahead.

As of last September 2nd 2009, Miami-Dade county had 27,692 properties for sale. That represents a drop of 36% or 15,496 properties for sale in a period of 15 months. Don’t forget that the number of properties for sale in Miami-Dade county peaked at 43,188 properties for sale in June 2008. The drop in the number of properties for sale is expected to continue well into 2010.

Don’t miss on the buying opportunities available today. Prices are stabilizing and before you notice, prices will start to climb again.

Give us a call!

If you have any questions or comments, please send me an e-mail to: michael@miamiflorida.com or call me at my mobile 305.450.0036

Source:
Construction Loans Falter, a Bad Omen for Banks
FLOYD NORRIS
NYT, September 4, 2009
http://www.nytimes.com/2009/09/05/business/economy/05charts.html

See also:
For Commercial Real Estate, Hard Times Have Just Begun
TERRY PRISTIN
NYT, September 1, 2009
http://www.nytimes.com/2009/09/02/business/economy/02office.html

Have you asked yourself what is the best deal out there. Is it on:

a) Bank Owned Property (REO’s)

b) Short-Sale (SSL’s)

c) none of the above

Most BUYERS have focused on REO’s and SSL’s, and failed to recognize that SELLERS of Non-REO’s and Non-SSL’s have increasingly become very competitive in their pricing and/or willingness to negotiate offers.

After all, if SELLERS do otherwise, they will not be able to sell until the inventory of REO’s and SSL’s is reduced substantially from the current levels. The following chart summarizes the current market.

If you have any questions or comments, please send me an e-mail to: michael@miamiflorida.com or call me at my mobile 305.450.0036

If you are considering buying/selling a home or if you are an investor looking into expanding your real estate asset allocation, look no further that the following presentation; miami-real-estate-31aug09.

This presentation provides you with a general summary of Miami’s real estate market conditions as of 31 August 2009. It covers;

• Inventory
• Historical Prices/SqFt
• Trends in Closed Sales and Pending Sales
• Areas of Opportunities.

Miami’s supply of Condos for sale continues to drop as indicated by statistics published by “Facts & Trends” Trendgraphics.com

CONDO INVENTORY

At of the end of May 2009, Miami-Dade County had 19,923 Condos listed for sale. This represents the lowest number of Condos for sale since the inventory peaked at 24,905 in May 2008. The May number of 19,923 also represents a drop of 5.5% from April 2009.

Lower inventory levels is good news for Sellers and Developers and a strong warning to undecided Buyers who seem to be waiting for X price before they decide to buy.

CONDO SALES

As of the end of May 2009, Miami-Dade County recorded 757 sales of Condos which represents a 99.7% increase in sales from the lowest monthly sales number recorded which was December 2007.

This is another welcome sign for Sellers and Developers who are unloading inventory at fire-sale prices.

AVERAGE PRICE PER SQ FT

Average Price per square foot (SF)  is a better indicator of the state of Miami’s real estate market.

As of the end of May 2009, Miami-Dade County recorded an average price of $205/SF. Although this number is 15.8% higher than the April 2009 number, it is still 44.7% lower than the highest number recorded on May 2007.

SUMMARY

The above Inventory and Sales figures, combined with the attractive average price/sf numbers – certainly an improved picture from several months ago – continues to attract buyers to the unique deals available today.

And although some argue that an increased number of foreclosures could temporarily derailed this recovery – a possibility more evident in properties valued under $300,000.00 – the real estate sales outlook for the remainder of 2009 and into 2010 still favors a Buyers market.

Finally, smart money continues to chase investment opportunities with Developers, its Lenders and their respective unsold Condo inventory.

Don’t miss out on 2009 buying opportunities!

If you have any questions or comments, please send me an e-mail to: michael@miamiflorida.com or call me at my mobile 305.450.0036

Miami parece ser el centro del universo en lo que se refiere a las oportunidades de inversión disponibles hoy día en bienes raíces, al menos para aquellos que residen en el Caribe, Centro y Sur América.

Si usted ha estado siguiendo las noticias de la caída de los precios de las propiedades en Miami y se inclina a invertir en el mercado residencial de Miami, pero por una razón u otra todavía no se decide, le sugiero que lea detenidamente nuestro breve y mas reciente estudio titulado “Oportunidades de Compra en el Mercado Residencial de Miami“. Los datos están actualizados al 31 de marzo del 2009.

Si usted esta interesado en identificar que oportunidades existen de acuerdo a sus intereses particulares, envienos un e-mail a: michael@miamiflorida.com y/o ana@miamiflorida.com

También nos puede llamar al 305.450.0036 cel de Michael P. Schnabel o al 786.210.6578 cel de Ana M. Schnabel (Margare Báez).

Investors looking for buying opportunities in the Brickell Area Condo Market, can look no further than the the following report; click on this link => “Miami Brickell Condos – Buying Opportunities on 0/1 and 1/1 as of 30oct08″ . This first report covers studios and one bedrooms in buildings built since 1990 in the Brickell area. A separate upcoming report will focus on 2 bedrooms and another one on 3 plus bedrooms. 

From a total of 71 units for sale (of which 37 are foreclosures), 55 are one bedrooms (of which 31 are foreclosures) and 16 are studios (of which 6 are foreclosures) 

One (1) bedroom prices per SqFt range from $171 at The Club to $317 at The Sail.

Studio prices per SqFt range from $220 at The Club to $443 at Latitude on the River.

Notice on line 10 of the report, to the extreme right, the numbers 90% (assumes a 90% occupancy rate), 90% (assumes the unit is purchased at 90% of the asking price) and 4% (assumes a 4% annual expenses between property taxes and association fees).

Clearly, Cash Buyers have the advantage. 

Please note that the net returns do not take into account financing cost, price appreciation and/or taxes when sold.

The buildings covered in this report and sorted by the year they were built:

YEAR
BUILT    BUILDING NAME
2007     Latitude on the River on 7th St., west of Brickell Ave.
2006     Neo Vertika on 7th St., off Brickell. west of Brickell Ave.
2006     Emerald on 14th St. east of Brickell Ave.
2006     Sail on 14 St. east of Brickell Ave.
2006     Solaris on 12 Te. east of Brickell Ave.
2005     The Club on Brickell Bay Dr., east of Brickell Ave.
2004     Skyline on Brickell Ave.
2004     The Vue on South Miami Ave., west of Brickell Ave.
2001     The Mark on Brickell Bay Dr., east of Brickell Ave.
1998     Fortune House on 14 Te., east of Brickell Ave.
1991     Brickell Key II on Brickell Key, east of Brickell
1990     Isola on Brickell Key, east of Brickell

If you have any questions or comments, please send me an e-mail to: michael.schnabel@mac.com or call me at 305.450.0036