When John and Edna Deluccia went house hunting to upgrade from their Fort Lauderdale condo, they experienced the new frenzy in the South Florida home market.
“One unit I bid on, a bank foreclosure, went for $480,600 — $94,000 over the asking price,” said John Deluccia, a 39-year-old insurance agent with SWBC. “I bid $10,000 over, and I wasn’t even in the running in the top eight.”
Put simply, lots of people are eager to buy a place in South Florida and fewer are willing to sell.
Say hello again to multiple sales contracts, bids coming in above asking prices, and sellers calling the shots with demands for cash only, quick closings and commitments to buy regardless of whether an appraisal confirms the selling price.
As the summer house-hunting season hits full tilt, a buzz of energy is swirling around South Florida real estate for the first time in years.
“Anything in a desirable area that is priced right is moving so fast, it’s basically a frenzy,” said Deluccia, who eventually found a luxury condo at The Beach Club Hallandale. When he and his wife listed their old place for sale, the oceanfront condo on tony Galt Ocean Mile was under contract the same day, he said.
“People know this real estate crisis is coming to an end, and the market is at a bottom,” said Deluccia, who did extensive research on condovultures.com and trekked with his broker through a string of 10 or more properties all over Broward before nailing a good deal.
Driving the market shift is a sharp contraction in the inventory of homes for sale in South Florida. According to EWM Realty International, the inventories of single-family homes and condos for sale in Miami-Dade and Broward counties have hit their lowest levels in more than six years.
The inventory of single-family homes on the Multiple Listings Service in Miami-Dade plummeted to 4,836 in April, down 72 percent from 17,070 in July 2008, when the selection peaked. In April, Broward’s single-family inventory similarly had dwindled 69 percent to 4,438 homes listed from 14,489 in April 2008.
With some South Florida home prices sliced in half from their peak, there are a lot more people who think it’s a smart time to buy than those who think it’s a smart time to sell.
“We’re not going to sell as many homes in 2012 as we did in 2011 because we don’t have enough inventory to meet the demand,” said Ron Shuffield, president of EWM, who said the tight inventory is a classic scenario for prices to rise.
One factor in the shortage: The region has one of the highest rates of homes under water — meaning owners owe more than they could get for them. There is certainly no incentive for those folks to rush to sell when the market appears to be turning up.
Many signs suggest the South Florida market has stabilized after the wrenching upheaval of recent years. Home prices rose 2.5 percent in metropolitan Miami between March 2011 and March 2012, according to S&P’s Case-Shiller Home Price Indices, even as U.S prices overall fell 1.9 percent year over year.
Preliminary data released this month show the taxable value of Miami-Dade real estate — including residential, commercial, industrial and agricultural — rose 1.48 percent between 2011 and 2012, marking the first increase in value since 2007. Broward County’s taxable value rose 1.24 percent this year.
“The deals you heard of in the past, I didn’t see,” said Douglas Wood, a New York attorney who recently bought a South Beach condo for his daughter, who graduated from the University of Miami law school and began work as an assistant state attorney. “The prices are not as negotiable as I thought they would be,” Wood said. “I was a little surprised. I thought it would be a little softer.”
Dr. Joseph Selem and his wife, Annabel, agree. After he recently started his ophthalmology practice in Miami, the couple began looking for a home around Coral Gables. “From January until we closed [in May], we started seeing an incline in prices and a decline in what is offered for those prices,” Selem said. “It got to the point in February and March, you’d go see an open house and you didn’t have time to think about it. If you didn’t put in an offer right away, it was gone.”
Sensing an urgency to lock in a home, the Selems found a four-bedroom, three-bath house on a double lot in Coral Gables that needed some “cosmetic work.” But when they put in a low offer to test the seller’s mettle, he said: “They turned us away and came down not much at all.”
Denise Sicuso, a broker who manages the downtown Brickell office of EWM, says in many cases, buyers’ perceptions haven’t caught up with the new reality. “Some people are coming still from South American countries saying, ‘Oh, I want to get a deal,’ and on the third failure, they’re asking ‘Why can’t I get a property?’ ” Sicuso said. “We’re saying, ‘Offer full price.’ ”
With many investors from South America, Canada, Russia and Europe plunking down cash, buyers looking to take out a mortgage are at a distinct disadvantage. “Honestly, we haven’t done a deal where there’s financing in a long time,” said Kristy Pineiro Barker, an agent with South Beach International Realty, who deals a lot in South Beach properties.
“Put a 10 to 15 percent premium on the purchase price if you’re financing, because a lot of sellers don’t want to take it off the market for 30 to 60 days,” said Peter Zalewski, a principal at Condo Vultures Realty. “Cash is still really driving and moving the market.”
A big problem for those financing purchases: Appraisals are coming in below the agreed-upon prices. That’s because they rely on historical data and trail the market.
The lower appraisals mean buyers have to ante up larger down payments, because banks won’t lend as much.
“Many houses are selling above the appraisals. Many buyers are learning that if they balk, they lose the house because others are willing to make up the difference out of their own pockets,” said Mauricio Bara, a Coldwell Banker broker and member of the Master Brokers Forum, who sells heavily in Coral Gables and its surrounding areas.
While sales are hot amid slim pickings, the South Florida market is far from healthy in the broader economic sense. Property values plunged more sharply in Miami-Dade and Broward than nearly anywhere in the nation. Florida in general and South Florida in particular have among the highest percentages of homeowners under water.
The foreclosure rates in the region also are among the highest in the country — and more are coming.
Now that banks have clearer guidelines on acceptable practices in carrying out foreclosures, their numbers — which were artificially depressed last year when banks held back because of consumer-protection litigation by various state attorneys general — are expected to continue to rise, according to Daren Blomquist, a vice president at RealtyTrac, an Irvine, California.-based firm that collects and analyzes foreclosure data. Many are expected to be resolved as short sales — that is, sold for less than is owed to the lender — or in other pre-foreclosure agreements.
Blomquist said strong demand for distressed properties in South Florida likely means that they will be absorbed over the coming year or so, holding down prices but not causing major tremors.
Florida’s allure to outside buyers is providing a resilience that many other places hit hard by the real estate downturn don’t have.
Foreign investors continue to pile into the market to make investments, as do New Yorkers and others from the Northeast, many of whom regard Miami as a second home.
Still, the lack of super deals is turning off some bottom fishers.
Rubin Susteras, a Canadian businessman who wants a 2/2 condo in Broward for $130,000 or less, came down last month and perused a half-dozen properties in Pompano Beach, Hallandale Beach and Hollywood.
He left empty-handed and disappointed, not sure whether to adjust his parameters to a single-family house or forget about the purchase.
“There wasn’t anything that was a nice place, ” said Susteras, 55, who lives in Ontario and owns an employment agency. “Some of the lower-priced ones that we saw were really junky and needed a lot of work — nothing like what we wanted.”