The Good, The Bad, The Ugly (Again): Miami Rebounds, Foreclosures Stall and Housing Prices Sink
When the real estate market collapsed, Miami’s downtown epitomized the worst excesses of the building boom. Glittering new towers sat mostly vacant. Today Miami’s downtown real estate is booming and bustling with life and commerce thanks to foreign investors and renters.
A report by the Miami Downtown Development Authority indicates that 85 percent of new condo units are occupied. Downtown Miami’s population now numbers about 70,000 compared to 40,000 ten years ago. In spite of Miami-Dade’s 13.2% unemployment rate, downtown bars, shops and restaurants buzz with activity at the end of the workday. Sales at the swank Icon Brickell average 47 units a month.
Clearing the backlog of foreclosures slows again as some delinquent homeowners successfully maintain that their mortgage companies can’t prove they own the loans, therefore forfeiting their right to foreclose. After last fall’s robo-signing debacle, many homeowners are waking up and realizing their banks are guilty of sloppy practices at best and forgery at worst. Oppenheim Law continues to see banks dismiss foreclosures.
And the ugly:
Double Dip Housing is no Ameri-cone Dream
As South Florida housing prices hit a new low, the The New York Times and Wall Street Journal chime in unison with a cherry on top: Goodbye, American Dream. It seems renting is the new ‘black’ in real estate fashion as desperate sellers watch not-so-desperate buyers sit on the sidelines waiting for the bottom to hit; while they rent in Miami luxury.
The S&P/Case-Shiller National Index, released today, indicated prices nationwide fell 4.2% in the first quarter after declining 3.6% in the fourth quarter of 2010, in spite of increases in 2009 after the home buyer tax credit and early 2011.
Today’s news is another blow to the economy as it struggles to gain its footing. Typically, a rebound relies on consumer spending, including home buying, which then triggers large durable good orders like washers, dryers and furniture. But even as the economy reluctantly begins to correct itself, homeownership has continued to decline to levels not seen since 2002. Experts point to obvious factors such as foreclosures, unemployment and underwater mortgages, but also “a change in the American psyche,” meaning even those who can afford to buy are holding off, scarred by the impact of the collapse.
Another 5 percent drop in home prices will push the number of underwater borrowers to 28 percent, says CoreLogic Inc. 23 percent of U.S. homeowners were underwater at the end of 2010. A 10% drop will leave more than one-third of all U.S. homeowners with mortgages upside down.
”Once upon a time,” said Pete Flint, chief executive of the housing Web site Trulia to The Times, “owning a home was a symbol you had made it. Now it’s O.K. not to own.”
If the survey conducted by Trulia and RealtyTrac is any indication, the masses agree. One third of respondents expect the market to recover in 2014 or later.
Economists agree that a full recovery will take years, and require faster growth, decreased unemployment and a return of consumer confidence. Today’s Wall Street Journal points out a bright spot: home affordability is returning to pre-bubble levels in several markets, including Cleveland, Atlanta, and Las Vegas. In addition, mortgage rates fell to their lowest level of the year.
Many industry experts, including our very own From The Trenches guest Pat Sessions, believe last year’s recovery was artificial and we have yet to hit bottom in the real estate crisis. Chief Executive of Radar Logic Michael Feder agrees: “The market showed a little stability that was largely stimulated by the tax credit, but that stability was very short-lived,” Feder told The Journal. “The fact is we have never really started to recover.”