Jesus M. Fernandez
Miami Lakes Market Report- The Real Numbers
Updated: Feb 16, 2021
January, single family sales were below expectation, as mortgage rates hovered near historic lows for almost a year, fueling purchase and refinance activity regardless of the global health crisis and every other crises, we've experienced last year. Last week, interest rates were down from the previous week and have started to fluctuate a bit as political and economic factors drive Treasury yields higher. Fannie Mae, is forecasting rates to remain relatively low this year, as the Federal Reserve keeps interest rates near zero, to help the economy rebound.
While the supply of available single-family homes have risen slightly in January, in many areas of the country, it has not been the case in Miami Lakes. As of this writing there are only 44 single family homes available for purchase, and another 12 which can be purchased with a back up contract. In the multi-family sector that includes townhouses, villas and condos inventory remains very low, with only 13 properties available for purchase and another 16, which can be purchased with a back-up contract. Perhaps the lack of inventory, is partially due to all the recent uncertainty, which may be keeping many Miami Lakers in place, who are waiting to see what happens with the economy, under the new administration.
"An investment in knowledge pays the best interest."
To provide you with some perspective, in a normal or balanced Miami Lakes real estate market, we should be seeing anywhere between 85-115 single family homes and between 35-45 multi-family properties available for purchase, at any given time, which is roughly a six month supply of inventory. We've been under three months of inventory, of single family homes, since November of 2019 and since March of 2015, for townhouses, villas and condos.
Even as house prices increased at the fastest rate we’ve seen in years, in many areas of the country, ironically, it was not the case in Miami Lakes. You would naturally think that being in a strong seller’s market locally, would mean higher sales prices and that would be normally true, unfortunately it’s not the case for our small town and for those who own single family homes. However, the owners of townhouses, villas and condos did much better, with values increasing year-over-year, roughly 12%.
I study the Miami Lakes real estate market for a living and it's particular dynamics. I religiously keep tract of the “actual numbers” and analyze them, to provide my clients with real-world , on the ground information, unlike most online websites, which are all over the place, with property value estimates, of our 6.5 mile town. Most online portals simply aggregated the numbers, then put them through computer generated valuation models and spit out results, which don’t tell us the whole story, about Miami Lakes real estate. Point inn fact. How can those models explain that although we are technically in a seller's market, property values and sales have been sluggish, over the last few years ?
The hard and unvarnished truth is that in actuality, if you factor last year’s inflation rate of 1.9% and subtract that from the average property value increase of 2.3%, Miami Lakes property values actually increased only .04%. Crazy, right? You would think from what you read in the news and online portals, is that property values are high and rising everywhere, and that is simply not true. Miami Lakes single family property values have risen only 5.27% over the last 24 months, without calculating for inflation. That is the cold hard fact.
There are many reasons, why Miami Lakes home values have not appreciated as much, and they have nothing to do with the quality of life issues or lack of interest in people moving into our hometown. In fact, many families I talk to, want to live in Miami Lakes. Unfortunately however, many can't afford to do so.
One possible explanation for the low property value increases, in the last two years, even in a low inventory seller's market, is the affordability of the area. When you consider household incomes of nearby areas, where the most likely buyers of Miami Lakes property come from, you can clearly see how the income gap, plays a role in the affordability of the town, for many.
We have some of the best public schools, in Florida. This alone, attracts many young parents, to our town.
Consider that the medium single family property value in Miami Lakes was $545,000 in January, compared to $515,000 in Pembroke Pines, $400,000 in the Country Club area and $350,000 in Hialeah. Our higher property values, make a affordability a real issue for many buyers, who wish to live in our fair town and now live in these nearby areas. It's important to consider that real estate values are driven by location and sometimes the economic realities of the "most likely buyers", which again, usually come from the surrounding areas. Affordability, also plays a role in the rise and fall of property values. It's an economic reality.
What is ahead for Miami Lakes real estate? People ask me all the time, where do I see the real estate market going? They ask if we are in a real estate bubble or will there be a crash, soon? All I can say is that there are mixed views among the real estate gurus. Some are optimistic, while others are all doom and gloom. I think that right now, property sellers and buyers should proceed with prudence and understand or at least be aware of some of the market forces currently at play, which may negatively impact property values, in the near future.
There are early signs of some pull back in the market over the last two months. November, saw a 3% drop in mortgage applications, and December, saw a 4% drop. The low number of sales in Miami Lakes, in January, was unexpected and may be a further sign that there is some cooling-off. Only 8 single family properties sold, in January. It was the lowest sales month, in the last 27 months. December 2020, was not much better, with only 9 sales.
Looking ahead, many economists have mixed views on what is ahead for 2021. It was just announced by the CDC that moratoriums on rents and mortgages will be extent to March, and possibly beyond. This may result in the postponement of an avalanche of foreclosures in the near future, or in the next 18 to 24 months, if the economy does not recover and unemployment remains high.
As of this writing, more than 2 million homeowners are past due 90 days or more, and another 4 million, are presently delinquent. Those are real numbers and they are highly concerning. Additionally, 5.56% of all mortgages are are now under some type of forbearance agreement with lenders. If these homeowners can't continue to make their mortgage payments, once their forbearance period ends, there is a real potential that the foreclosure numbers will surpass those of 2008.
Being in the real estate industry for so long, I know that most people purchase and sell real estate, for personal reasons and not because of market conditions or low interest rates. If you could use some honest real-world advice as to whether it's a good time to sell or purchase, give me a call and I will help you explore your options.
Jesus M. Fernandez, has been a REALTOR, since 1995 and specializes in Miami Lakes
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