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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!

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

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

The most common question Realtors are asked today is, “Is it time to buy?”

It doesn’t matter if you are looking for a single family home, a townhouse or a condo, a specific location and/or neighborhood, if financing rates are close to historic lows or even if you are a foreigner with a very favorable exchange rate vs the US Dollar.

Clearly there are so many things to consider when you are planning to buy a property, but the one thing that matters the most to Buyers these days is Price, and price only will determine if it’s time to buy.

But what about Price vs Value.

“Price is what you pay. Value is what you get”. This is a famous quote from Warren Buffett – the Chairman of Berkshire Hathaway, the holding company that ultimately owns Esslinger-Wooten-Maxwell, Inc., Realtors®.

From a monetary perspective, Value is define as: “What something is worth to you compared to the price paid or asked for it”.

Keep this Value definition in mind the next time you plan to buy a property.

2008 is becoming the year for opportunities with Excellent Value!