Tag Archives: Miami Shadow Inventory

Heard from our Buyers…”I hear the Shadow Inventory is about to hit the market in Miami”

Should Miami Real Estate Buyers be concerned about Shadow Inventory?

Yesterday’s Open Houses…

At the two Miami Open Houses we held yesterday, we experienced a large amount of Buyer traffic (many of whom came with their realtors).  This indicates that those buyers are ready to make an offer once they see a property that suits their needs.  One of our listings priced at $495,000 had 13 groups of people come by.  The other listing priced at $725,000 had 10 groups of people.

 

Concerns from a Couple relocating from Boston…

One couple was just relocating back to Miami from Boston.  They indicated they were ready to buy.  However, their concern is that the Miami bank-owned shadow inventory they’ve heard about will be introduced to the Miami market creating more supply and lowering prices.

 

Jason’s Observation…

We’ve been hearing this for 4 years.  The banks have been cautious not to flood the market with all of their inventory at once.  If they do, market prices are suppressed and the value of their bank owned assets plummets.  This points to continued restraint from banks moving forward as Miami prices continue to appreciate.

 

 

Miami MLS Data Chart (past 5 years)…

 

Additional Observations…

During the last 4 years, the Miami MLS has gone from…

41,794 Miami listings back in July 2008 (28.7  months supply of inventory) to…

11,313 Miami listings today  (3.1  months supply of inventory)

3.1 months of inventory indicates a rapidly appreciating Seller’s market (meaning that if no other listings were to be introduced to the market for sale, the existing supply of homes would be sold within 3.1 months)

A balanced market (neither Buyer’s nor Seller’s market) is 6 months of supply.

 

Opinion…

Quite frankly…shadow inventory would be a good thing for the Miami market right now.  There is very litte inventory for buyers looking to take advantage of today’s historically low interest rates.

 

What this data means for Sellers…

If you have been waiting for the market to improve before listing your home, this is the time to get your home on the market.

What this data means for Buyers…

Even if bank-owned shadow inventory continues to be introduced to the Miami market slowly over the coming years (as it has been for 4 years), Buyers are better off seizing opportunities at today’s record low interest rates (and still low prices) than waiting to see what happens.

 

ShowcaseMiami Realty specializes in assisting homeowners to Sell their Miami home.

(Highest price in the Shortest period of time)

To discuss a strategy for your home, call…

Jason Smith

Broker (Seller Specialist)

ShowcaseMiami Realty

www.ShowcaseMiami.com

786-326-8115

 

 

 

Why was our Coconut Grove townhouse listing just SOLD for $15,000 over appraised value?

This week’s Success Story…

Our Sellers had their Coconut Grove townhouse for sale by owner for almost a year. During this period I kept in touch with them because I knew that they had a desirable property that would sell with the right…

-Marketing
And
-Staging

They were content paying 3% if we brought a buyer. It was the additional 3% for listing the property (total of 6% commission) that they were looking to avoid. Their feeling was that paying 6% commission would reduce their net vs 3% commission. This is the main concern of 95% of the for sale by owners we communicate with. FYI…It has been researched over and over that homes sell for more when listed with a realtor than they do By Owner.

After a year in November 2011, they determined that they wanted us to begin listing and marketing the Coconut Grove townhouse as soon as possible.

My Advice to our Seller…

1). Wait 2 months before hiring our us.
I counseled them to wait until mid-January so that we could put the holiday season slow-down behind us. This way the entry of their listing to the Miami MLS would coincide with the point when all of the buyers were again beginning to look.

2). De-Clutter before you hire us.
Our Sellers took our advice and moved furniture around, sent excess items to storage and threw away other extraneous items.

The Result of Staging…
The home felt like an entirely different space with room to breath. One’s first impression walking through the door (which often
determines whether or not one buys) was that of additional square footage and clear views through the sliding glass windows to their beautifully landscaped outdoor space.

The townhouse SOLD for $15,000 over Appraised value…
As is the case with many of our bank financed deals today, the appraisal came in lower than the agreed upon purchase price between
buyer and seller. Regardless, the buyer determined that the purchase price of the property was fair in today’s appreciating Dade County real estate market.

In my opinion, this was the prudent thing for the buyer to do…
One year ago, very few buyers were paying a penny over appraised value. Today, it is becoming the norm. In today’s appreciating South Florida market, The last 4 buyers of our Seller listings have chosen to pay more than what their lender’s appraiser said the home was worth. Today’s buyers are recognizing that market value (what a buyer is willing to pay) is often higher than appraised value (what value a bank assigns to a property when deciding to underwrite a mortgage).

This deal was truly a win-win for buyer and seller. Both were pleased with the outcome.

Question…
Did the Seller receive value by paying 6% commission to have us manage all aspects of the sale for him?

Please share your thoughts.

ShowcaseMiami Realty specializes in assisting homeowners to Sell their Miami home.

(Highest price in the Shortest period of time)

To discuss a strategy for your home, call…

Jason Smith

Broker (Seller Specialist)

ShowcaseMiami Realty

www.ShowcaseMiami.com

786-326-8115

Latest data on Miami “Shadow Inventory”

It is the #1 factor that will affect the Miami real estate market in 2012.

What is “Shadow Inventory”?

Shadow Inventory is the inventory of foreclosed (or soon to be foreclosed upon) homes held by lenders that has not yet hit the MLS to be sold.

Reason for Shadow Inventory:

The “Robo-Signing” scandal of 2010 and 2011 prevented the banks from processing their foreclosures and subsequently re-introducing them to the market as REO (Real Estate Owned or Foreclosure) listings.  Banks were forced to fix their procedures and several foreclosure mill law firms that represented the banks went out of business.

Forecast for 2012:

Now that the banks have addressed the “Robo-Signing” issues, the expectation is that the pent up supply of foreclosed homes will come to the market in 2012.   The expectation is that this will cause downward pricing pressure on Miami real estate (as well as other markets).

The question is how much of an impact will this introduction of the Shadow Inventory actually have on values in Miami for 2012 and 2013.  According to Miami MLS statistics,  Miami’s real estate market is on a major rebound.  Miami Dade’s supply of housing is 40% less today than it was 14 months ago (14,630 listings in November 2011 vs 24,368 listings in Sept 2010).  I have yet to hear of another market in the U.S. or abroad where housing supply has come down so dramatically!

Michael Lux of Alterra Mortgage sent the data below from CoreLogic:

“Residential shadow inventory is on the decline, falling to 1.6 million units and representing a supply of five months, a new report from CoreLogic shows.

One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units — or 8.4 months of supply.

CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.

Jason’s Opinion:

Sellers will benefit from selling in the first half of 2012 and purchasing or moving up in the second half of 2012 when Shadow Inventory makes its way to the Miami MLS (combined with the fact that the 2nd half of the year is low season for home purchases).  Regardless, it appears that the Shadow Inventory will have less impact than originally thought.  Buyers should capitalize on today’s record low interest rates in the 4% range.  Call Michael Lux at Alterra Mortgage at 954-612-2690 to lock in these rates for your next purchase.

Are you selling?  If so, contact Jason Smith for a no-obligation consultation…

 

ShowcaseMiami Realty specializes in assisting homeowners to Sell their Miami home.

(Highest price in the Shortest period of time)

To discuss a strategy for your home, call…

Jason Smith

Broker (Seller Specialist)

ShowcaseMiami Realty

www.ShowcaseMiami.com

786-326-8115