Bursting Bubbles
The winds of change have finally blown through the real estate market in South Florida. Listening to the media- one could image the world coming to an end. But inside the real world of real estate, things are looking pretty good.
Truth is, according to the MLS statistic from the Realtor Association of Greater Fort Lauderdale, average prices are hovering. A point higher this month a point lower last month, over all with in 2% of last year. The great crash of the real estate market purpertuated by the media is not existent here in South Florida. Yes, the days of 20%-25% annual increase in property values is gone. But, prices are holding their own.
What does this mean?
For Sellers-If you must sell your home now- you must a) price it competitively, b)market it aggressively c) stage it properly. This means, you can no longer ask 10-20% over market value for your home. You need to choose an agent who will utilize a comprehensive and aggressive marketing plan. And you will need to paint, landscape, clean and prepare your home for showings. If done correctly, you can and will get a good price and a reasonable amount of time.
For Buyers - Now may be the right time. It is unknown how long prices will remain level. Nor, do we know how long a wide selection of inventory will be available. Interest rates are still fabulous. Now may be the right time to make your move. Today- you have a choice in homes, neighborhoods and incentives. Tomorrow - the winds may change.
The future for South Florida is a bright one. We are still experiencing extremely low unemployment, extremely high population growth and a severe lack of developable land. These unique features are what will continue to keep the South Florida market as desirable as out sunny beaches.
Yes, the winds have changed. But, unlike Wilma's winds, they are not bursting any bubbles. Merely, placing a small pinhole of leak to remove some of the hot air that was over inflating the real estate market. In spite of the media's "the sky is falling" reports - the real estate market in South Florida is still warm and sunny.
Real Estate Market Update - The Real World
Every news media venue has an opinion on the real estate market today. Here's the scoop from the trenches.
Prices: Prices have leveled market wide. Increases in some neighborhoods is modest. A few communities are showing some slight falling of prices. As expected, most price decline is found in areas with high inventory such as investor heavy condo communities.
Activity: Activity is starting to pick up as buyers are coming back to the market. Summer is just around the corner and we expect increase in activity as school end approaches. Average market time for a properly priced home is 30-90days.
Investors: Most investors are looking to more modestly markets. This factor alone has caused much of the market slow down. The buyer pool consists of owner occupants.
Commissions: Expect commissions to rise as cost of marketing is increasing with extended time on market.
Overview:
The market is returning to a "normal" condition. YES, 2-4 months market time is NORMAL. Sale prices similar to recent sales is NORMAL. Advertising and marketing to find a buyer is NORMAL. Give and take negotiating is NORMAL. Choice and selection is NORMAL.
What this means to you?
Buyers: You have a choice and selection. You can negotiate a fair market price. You need a good Realtor® to help you find the right home at the right price.
Sellers: You will have to market your home. You will have to prepare/stage your home. You will have to negotiate a fair price.
Future pricing: YES, prices will go up. Not as quickly as we have seen in the past, but they will go up. Factors such as a lack of developable land, increase in population, low unemployment, sunshine will continue to influence our market. YES, interest rates will rise. Today's rates are still fabulous.
Want to know more? Contact us to discuss your real estate goals and how we can help.
954-383-4091
Home Buyer VS. Developer - New Trend
Several years of a sizzling real estate market has created some interesting trends. The past few years, developers creating new construction have enjoyed long lines of eager buyers sleeping on sidewalks for nights waiting to be able to throw their 5%, 10%, 20% deposit checks at the sales reps. This extreme demand for new construction has allowed many [not all] developers to become arrogant, insensitive, rude, even greedy. Many developers took advantage with allowing grand opening frenzies, inflated price points, higher deposits, reduced amenities and finishings and a take it or leave it attitude.
The bad press on these scenarios has caused many developers to discover gentler, more amicable ways of marketing their products. More and more, developers are finding ways to respect the buyer who is willing to plop down 20% deposit for their 12-36 months construction time frame. But a few developers have not seen the light.
The past few months have seen buyers fighting back. Recently several law suites have been filed claiming developers unable to complete projects, raising prices mid contract or misappropriating deposits. These cases include claims for damages that reflect not only the funds tied up during "construction" but also the market value increase of the property. How the courts, judges and juries will react will be interesting to watch.
Not all developers have acted in this manor, some more so than others. But, marketing and contract performance should be done with a modem of respect for the buyers that are buying the product. Koodoos to the developers that play fair, honest and provide a good product as contracted. Shame on the developers that take advantage of the demand.
It seem the buyers are saying "We are mad as hell and are not going to take it any more!" We say "It's about time!"
A Brand New Year
The question of the season is what will happen with the real estate market in 2006? The market has changed so drastically in the past few months - it is near impossible to speculate. But, there are facts that cannot be disputed and will have intense effect.
Low Unemployment: South Florida is enjoying one of the lowest unemployment rates in the country. This will force employers to offer higher salaries and better benefits. This gives the employees confidence that their job is secure, their salary will rise and their ability to purchase or upsize their home is possible. It also will draw employee from other areas of the country, increasing our population and absorbing current housing.
Lack of Land: Indisputable, we have a lack of developable land. Consumers love new construction homes. The trend to tear down and rebuild or total refurbish will continue to fill the need. More and more high density housing will come available - condos and townhomes. Single family homes will appear from time to time at a premium. The lack of available land will force land costs to increase - making new construction more costly than ever.
Cost of Construction: Not only is land costs increasing, but so is material costs. With the international shortage of concrete and rising fuel costs, materials to build that new building are rising quickly.
Florida Dream: Many folks around the country and around the world still dream of living in the sun and fun of South Florida. Baby boomers, young families, foreign nations keep Florida at the top of their lists of preferred places to live. It is reported that 1100 people move to Florida every day.
Negative factors include rising interest rates, rapid conversion of condos, rising insurance costs, high property taxes and of course - hurricanes.
What will we see in 2006? No one knows for sure. My prediction is prices will continue to rise, but at a more moderate rate - 12%-15% annually. Inventory will be a bit more balanced giving buyers an opportunity to choose and negotiate their home. Sellers will need to prepare their homes and invest in a good marketing program with a highly skilled and knowledgeable real estate consultant [like me!!]. Frenzies for new construction will continue, but condo conversions will slow.
These are just predictions, educated guesses, researched analyses. No one can truly predict the future.
If you have questions or are considering buying or selling real estate in 2006, let's talk. Let's sit down and discuss your goals and the current market and how we can best assist you.
Christine Pardo, PA
Realtor®, e-PRO
Broker Associate
Kroll Realty
Reg. Appraiser Trainee
Appraisal Source
Storm Effects
Once of the prices we pay to live in paradise is hurricanes. In the Ft. Lauderdale area we have been very lucky for over 50 years. But this year we had Wilma give us a personal visit. We are still recovering and many folks are cleaning debris, chopping up their favorite tree, securing their roof and praying for continued sunny weather. Even if we have power, water and a solid roof at home, each day we travel out on to the roads and experience visions of downed giants, blue tarps, leafless bushes, and backed up traffic at lightless corners. There is no escaping the effects of Wilma.
The big question every asks- how will the market react. Normally we experience a slow down in September and October. Katrina and Rita and their destruction in the Gulf seemed to further slow the market in this area as many watched the folks of Alabama, Mississippi, Texas and Louisianna struggle to survive. Maybe it was fear, maybe it was familiarity from Andrew, maybe it was just shock. Now we find ourselves facing many of the same storm effects. The market seems to have come to a standstill. Rightfully so as most folks are more concerned with their homes, family and finding normalcy than house hunting and investing.
Is this the burst of the infamous bubble. Unlikely. More like a breather, a chance to stop, think, appreciate what we have, before moving forward with our lives. My crystal ball is still on the blitz, but I believe we will see a strong market return. It may not be appreciating as rapidly as before with 20%-30% annual increases, maybe more reasonable 10%-15% increases are in the future.
Many of the factors that fueled the market prior to the storm season are still in play: lack of developable land, continued rapid population increase, low unemployment, strong diverse multi industry infrasturcture, continued influx of Latin population and investment dollars, etc. But one factor that may be changing the landscape is the rapid rate of condo conversions.
What to do?? That depends on your goals and financial plan. I am a firm believer in long term real estate investments. Over time, real estate is almost always a strong investment as teh amrket cycles through buyer markets and seller markets. If you have invested for teh short term profits, now is a good time to review your strategy. If you invest in your home or a long term plan a quick check may be in order, but a change is unlikely to be needed.
Please call us if you wish to sit down and discuss how today's market effects you and what options are available. We will take an honest, realistic view into your current properties and your real estate goals.
I just finished watching 20/20 tonight. I was appalled at how John Stossel attacked the Realtor commission. Many well qualified real estate experts spend thousands of dollars and thousands of hours gaining the tools, experience and education to best serve our clients. Should the professional with these tools, the experience and the education not earn a living providing this service.
Here is a link that shares a glimpse into some of the overhead expenses professional, full time career real estate agents have to cover in this profession.
http://realtytimes.com/rtcpages/20051007_careercosts.htmWhen a Realtor earns a commission, what they actually take home at the end of the day is much less than most understand. First off the listing commission is usually split 50/50 with a buyer's agent. If the listing is through a discount or flat fee brokerage, this amount is in addition to the flat fees. Then the commission is split between the broker and the agent - often this split is from 50/50 to 90/10 with additional transaction or desk fees. The since agents are self employed, the income taxes on the commission is at a rate of 7.5% - 15% over standard income tax rates. Now consider advertising costs, supplies, dues, educations, gas, etc. It is not unusual for many agents to only be making slightly better than $10-$12 per hour.
All this with the added competition of over 1.2 million Realtor® in the US (26,000+ in South Florida alone) -that'ss only 4.4 transaction side per Realtor® per year.
And yes, commissions are negotiable. But so are the services of an attorney, plumber or doctor. But as we often learn the hard way - you may get what you pay for.
Why am I whining? Well, I don't mean to whine, but rather to defend the hard workingknowledgeablele, dedicated professionals who are trying to cut our a living as a real estate agent.
Is South Florida real estate market hitting the brakes??? Maybe.
One of our key indicators - inventory levels has been drastically increasing recently. 6 months ago there was 2.4SF/ 2.2 condo-TH months of inventory on the market [number of currently active listings divided by the number of past month's closings]. Today there is 4.5 SF/4.2 condo-TH months of inventory on the market. This is a drastic shift. Is it a trend or a reaction? Time will only tell.
How will this effect the buyers and sellers? Seller will need to present their homes more favorably (yes, this means you will have to pick up the dishes and paint that wall), price their home more competitively and be more negotiable with buyers. Buyers will have more choices and options. Buyer are more likely to get the community they are looking for.
Will prices go down? Will the bubble burst? This market watcher does not think so. Prices are more likely to level off and see more reasonable increase of 5-10% annually. In South Florida we are still experiencing a land shortage, increasing population and solid ecomonic growth. This will continue to fuel the upward trend of prices, but most likely at a slower pace.
Is this all definative- no! Only time will tell.
Chris
Realtors are People too!
Most Realtors live and breath real estate. It dominates most of our conversations, it is the topic of most of our reading material and we will stay up late at night for a news special on the real estate market. Real estate is about as far as you can get from a 9-5 job. We often work day and night 7 days a week.
But we a people too! We have families, lives, friends and interests outside our real estate world.
Why am I making that point? Because again I cancelled my plans for the holiday so I can meet with an anxious buyer to discuss a new project. After several conversations and reminders - I sat alone waiting for a no show on this holiday afternoon. No call, no reschedule, nada. Another holiday away from my family for nothing.
This seems to be happening more and more often. Calls for minor information late in the evening. Unkept appointments. Extensive research only to be told Aunt Jenny will be writing the offer. Brain picking questions about value and marketing only to find they sold it them selves. All with out even a thank you much less conpensation.
Just a hint, in case you are new to the real estate world. We work on commission. We are willing to work as hard and effectively as you need us to. We are continuously training, learning and researching to provide you with better services. We will search every nook and cranny to find you the right home - no matter how long it takes. We will market you home every way possible making sure we get you every possible dime for your sale. - We just ask for a little respect.
We are people too.
Real Estate Property Taxes
One of the issues that is fueling our severe lack of inventory of available homes is property taxes. One of the benefits of living in Floridaare homestead tax benefits. When your home is homesteaded (claimed as your primary residence) you enjoy the benefit of the assessed value only rising a maximum of 3% per year - no matter how much the market increases. This means your property taxes will only increase slightly each year. This is a major cost savings to home owners - especially in a rising market.
The problem comes in when a home owner wishes to move to another home in Florida. If the home owner has owned their current home for several years, their current taxes are quite low.
When a buyer purchases a home, the assessed value is reevaluated and assessed. This mean the new purchased is reassessed at the current market value and that value is taxed.
For example: Home owner has been living in their house for 10 years. They originally purchased for $100,000. They taxes today should be approximately $1700. That home is now worth $350,000.
This same owner sells his home and buys a nice condo for $350,000. Logically his monthly over head should be the same. But because his new purchase will be reassessed befor his new homestead benefits apply - his taxes will be appoximately $7500.
The good news being that from there, they will rise only a small amount each year as long as the new home is homesteaded.
This drastic jump in annual tax payment is what keeps many of home owners from selling and buying a larger, smaller or in different communities.
Actually city/county tax miilage rates range from 1.9% to 2.9%. As a homeowner, while living in the proerty, the homestead benfits are a great savings. But if you are looking to down size, upsize or relocate to another community - the tax implications can be unaffordable.
What can you do?? Contact your state legislature. Ask them to enact a resolution that will allow you to affordably relocate with in the state of Florida.
Why are pricing rising so fast?
Latest surveys show local real estate prices rising more than 24% annually. That's 2% per month or .5% every week!!!!
Why??
First off- Sunshine, beaches, warm winters, nearby attractions, etc,etc,etc still draw many family, baby boomers, young professionals, international immigrants and retirees to South Florida. That's easy to understand - day at the beach or shovel 2 ft of snow off your driveway. No brainer there.
But now add in low unemployment (3.91%), lack of devlopable land, easy international and national travel from several major and executive airports, multi industry economy and mutli cultural atmosphere.
Mix in low interest rate, desirable exchange rates, poor international markets and rising property values them selves and you have the perfect recipe for fabulous real estate market growth.
Compared to other major metro area, we are still reasonably priced. But, many folks looking to move from small towns can not afford our rapidly rising prices.
Will this rapid growth continue?? No one knows for sure. Personally, I believe we will see some leveling off in the near furture as housing prices far exceed salaries and interest rates slower increase.
Will we see a "bursting bubble" ? Doubtful. All the other factors will not disappear with a few points higher interest rate. Besides, the sun will continue to shine on our beautiful beaches. And I believe the sun will continue to shine on our growing real estate market.
Christine Pardo
Kroll Realty
954-383-4091
Discount Real Estate Services
6%, 2%, $2995, $695
How much does it cost to market and sell your home?
You have heard the ads and it seems there is a different commission rate for every company. Bottom line is you want to get what you pay for. When interviewing agents - the most important question is what does your commission fee include? - How much are they offering to the cooperating (buyer's agent) broker. What type of advertising will they provide? What type of services will you receive? Will they put all that in writing? How will all of the above effect you proceeds?
Back when almost all commissions were 6%, interviewing agents was easier. Commissions were pretty much the same, then it was "what are you going to do for that commission". Now, you need to sort through all the details and compare apples with apples. Depending on your home, price range, type of community etc- you may need more marketing or less marketing.
For example - if your home is in high demand - all you may need is to be listed in the MLS and good professional guidance. This may warrant a lower commission.
But if your home is a high end or unique property with a limited buyer prospect list - extensive and creative marketing may be needed. This may warrant a higher commission plan.
Be wary of one size fits all marketing programs. Be careful that the listing office does not overly discount the co-of fees to the buyer's agent or your home may not be shown as often as it should be. Be sure you will receive good, professional guidance - this may be priceless since liability can often extend well beyond the closing date.
If you are looking for a professional Realtor to help market your home, give us call. We will sit down, look at what it will take to maximize your proceeds, discuss your goals and develop a marketing plan to meet your budget. Let's talk about. No pressure, no obligation.
Chris Pardo
Kroll Realty
954-383-4091
For Sale By Owner
For Sale by Owner [FSBO] means just that. It means the seller is selling with out the guidance, assistance or professional services of a real estate professional. As a buyer dealing with a FSBO - you may be asking for more trouble than it's worth.
Often a FSBO chooses to go it alone because they did not like what the real estate agents told them their house is worth. More often than not, FSBO's ask higher than market value. You as the buyer have limited access to current data to know truly what the property is worth until you invest hundreds of dollars for inspections and appraisals.
FSBO's often do not give a complete picture of the properties condition. They may or may not be aware of the state's disclosure laws.
FSBO's often do have all or proper contracts and forms. This may lead to legal and liability issues through closings or beyond.
FSBO's often insist, legally or illegally, on terms in the contract which may be major problems for the buyer.
How can you be sure you do not get taken if you want to buy a FSBO? Contact your Realtor and discuss the situation with them prior to making an offer. Most real estate agent will be happy to negotiate a small fee to guide and protect your interest. Often, that fee may be paid by the seller or can be worked into the sales price.
If you have seen a FSBO you are interested in, give us a call. We would be happy to discuss how we can help you.
Chris Pardo
Kroll Realty
954-383-4091
Christine Pardo
Two new condo conversions are opening this week. Fairway Greens in Pembroke Pines and Aventine in Miramar.
Contact us for more information at 954-383-4091 or Info@ChrisPardo.com
What is the madness over all these condo conversion? Almost every neighborhood in South Florida has an apartment building going condo. Why? Tenant occupancy is low. Owners and developers can cash out in the market boom. Developers stand to make a pretty profit.
Why is this a benefit to you? Because first of all, you actually have a choice of units. In this market very few listings are available. Those that are have multiple offers. A condo conversion opens from 100 to over 500 units at one time. This give your- the buyer a choice.
The other benefit is that condo conversions "usually" deliver the unit in great to excellant condition or may give incentives for purchasing as-is. This usually includes new carpet, paint and may even include new appliances.
Another benefit is these community usually have liberal rental restrictions. This is great news for investors.
Availability of less expensive 1 bedroom units is yet another benefit. As prices are skyrocketin, 1 bedroom condos may be all a new home owner can afford. Previously, one bedroom units were only available in higher price beach or downtown area. Condo conversions are bringing 1 bedroom units to every neighborhood.
The down side? Prices are usually higher than the local market. Usually the pricing is $10 - $50/sf more than local similiar resales.
Most units come with a tenant whose lease may not be up for several months after you close. The rent a tenant is paying is often a bit less than what your mortgage and maintenace fee will be. Depending on your goals - this may be a concern or a major issue.
Another issue is conpetition and getting best pricing on new condo conversions. To truly maximize your equity you need to know and be ready to buy on the VIP events, which often are not publically advertised. [We can help there. We can get our clients in on almost all VIP events]
Market effect? Fewer rental units available. This will raise rental prices which have been quite stagnant for the past several years. Increase inventory - all these new conversions will eventually leed to more inventory on the market - albeit at a higher price points.
If you think condo conversions are for you, let us know. We would be happy to discuss your real estate goals and opportunities.
Welcome
Those that know me, know I am not one to keep quiet. Speaking my mind has been a beloved charcteristic of mine. So, what better way to say what I feel needs to be said than to blog it!!
So check back often, learn more about what the real world of South Florida real estate is really like. Get inside scoops. Learn what I see from the inside. Get to know South Florida real estate from the inside out.
