Real Estate News: What Happens When Supply Keeps Falling

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July was a solid month for Miami real estate, where the median price slightly increased than a year ago. However, on the sales front, we have started seeing an improvement with the luxury properties and even a slight price increase. This pattern will hopefully propel our home sales which have been steadily going downward for the last four months.

Economists note that sales may have been down because of lower inventory. In fact, the last time there was any substantial increase regarding housing inventory was back when Donald Trump was a mere Republican candidate for president, one among a field of 11.

On a national level, homes for sale have dropped over 12%, which is the most substantial year-over-year decline since back in 2013. In January 2018, there was a 3.1-month supply of homes. Anything less than a six-month supply has not been seen since the beginning of 2012, which makes this rather significant.

West Coast Real Estate

West Coast markets have been the largest recipients of this low-inventory situation. San Jose’s metro area has seen the most significant inventory drop year-over-year. This has also led to the most significant price increase, as is expected. When it comes to the number of houses available on the market, there are less than half as many this October than there were a short year ago. This has pumped prices up over 19% with a median price falling at about $1.05 million. Despite the costs, the lack of inventory has led to homes finding a buyer very quickly, sometimes in just few weeks.

Homeowner Uncertainty

With the House of Representatives and Senate still hacking away at tax reform strategies through the month, many homeowners have chosen to step back from the market until more information is known. This is based on the potential for reduction of local and state property and income tax deductions, along with the possibility of changes to the mortgage interest deduction.

However, others have acknowledged that the implementation of these changes is unknown, so others have been open to buying despite the current uncertainty. Experts believe that once a tax bill goes through, it is likely that homebuyer demand will drop in high-tax states, especially where homes are more expensive. This likely would happen slowly over time.

Competitive Markets

Looking at metro areas, Seattle, Washington leads the pack when it comes to homes finding a buyer. In 2016, it took about 13 days, but in 2017 it is down to only 10. Other markets of note are San Jose with 12 median days on the market and Boston with 14 days. Oakland and San Francisco are just below those with houses on the market an average of 15 days.

Estimates

For off-market homes, the median value was just over $250,000, which is up a little over half a percent from September. Much like 2017, just under half of the houses for sale been priced higher than estimates based on a home’s measured value and predictions about final sales price. This led to houses for sale at just a bit above expert forecasts after analysis.

Could the World Cup Increase Real Estate Sales in South Florida?

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Currently, there is certainly quite a bit of attention on the World Cup, and this excitement over the sport has helped real estate brokers and developers to capitalize on the event. Many have started to find ways that they can increase the visibility of the projects they are working on and trying to sell while using FIFA as a way to connect with potential buyers out there. In fact, soccer has played an important role in a number of different projects in South Florida.

The Excitement of Soccer in Real Estate

At the Paramount Miami Worldcenter, the sales office staff have been watching the World Cup on a video display that measures a whopping 750 square feet. You can also look at the design of this tower to get a better understanding of just how important soccer is to it. Paramount Miami Worldcenter happens to be the only condo that has a soccer field. When the construction is complete for this building, the soccer field will be located on the 9th floor, which is where the amenity deck will be. It turns out that the field was a good idea to help them get some soccer lovers from all over the planet. It was supposedly one of the main draws to people who have bought in the building. In fact, there are several professional soccer players who bought residences at the building because of the field. Already, this building has sold about 70% of the units. The developers credit the international appeal of soccer with the success of their building, as only 12% of the buyers at Paramount Miami Worldcenter are from the United States.

There are other developers and buildings that have taken to celebrating the World Cup, as well. Developer Vlad Doronin offered a four-day trip to Moscow with tickets to the World Cup for the best salesperson from March to June. Doronin is the developer of Missoni Baia, another luxury tower in the Midtown Miami area.

In Brickell, you can even see a massive 10,000 square foot mural of Neymar da Silva Santos Junior on the side of a building at 90 Southwest Eighth Street. Other areas and buildings held kickoff events and viewing parties for brokers and at sales galleries. There is a lot of excitement with the World Cup right now, and it is smart of the brokers and developers to do everything that they can to get more and more potential buyers through their doors. It shows that this is a friendly, multicultural city and that soccer is important here as it is in other parts of the world. Getting people into a good mood with the games and talking about soccer can also be a good tactic in getting them to be more agreeable and want to buy.

It is still too early to tell just how successful this tactic is going to be, but thus far, it does seem to show quite a bit of promise.