Posted on Thursday, 09.03.2009
The U.S. housing market along with Miami Real Estate is rebounding.
Encouraging reports on pending home sales and manufacturing including Miami Real Estate raised hopes for a wide economic rebound, but as long as consumers remain handicapped by weak pay and job losses, and cautious of ramping up spending, the economy might not be able to sustain a recovery.
In July, pending U.S. home sales including Miami real estate rose more than it has in two years as first-time buyers rushed to take advantage of a tax credit that expires this fall.
On Tuesday, the Institute for Supply Management (ISM) also said in August for the first time in 19 months that manufacturing expanded. The ISM gauge of factories climbed to 52.9 in August, topping the average economist estimate of 50.5. Fifty is the dividing line between growth and contraction.
The day's economic numbers were good, on the surface. But they weren't enough to counterbalance an unstable stock market.
A more in depth look at the data gave some reason for concern.
Analysts said both the manufacturing and housing reports got a boost from government stimulus efforts, including the Cash for Clunkers program that has since expired, which means the recovery in those industries may not continue at the same pace.
In Tuesday, The National Association of Realtors said its seasonally adjusted index of sales contracts for previously occupied homes signed in July rose 3.2% to 97.6. Its 12% above the same month last year and the sixth straight increase.
Thomson Reuters surveyed economists and they expected the index would edge up to 96.5.
According to the Realtor Association of Greater Miami and the Beaches, while there is no index tracking pending contracts locally, the number of pending home sales rose in Miami-Dade County by 3.4% between July and August to 3,722. Pending sales for condominiums rose by 6.9% to 3,848. The outlook for Miami real estate
is starting to look good.
Pending home sales rose by 7.4 % to 3,291, in Broward. Pending condo sales
rose by 10.1% to 3,414, as they took advantage of some of the lowest condo prices in the region.
The median priced condo in Broward has hovered around $80,000 for months.
Normally, there is a one- to two-month delay between a contract and a signed deal, so the national index is a barometer of how sales completed this month and next will turn out.
However, delays in the mortgage approval and appraisal processes have lengthened the time it takes to close a deal in many cases.
As low prices and the looming expiration on Nov. 30 of a first-time home buyers tax credit of up to $8,000 have spurred sales, the U.S. housing market and as well as Miami real estate is bouncing back more rapidly than expected. Home prices in most of the country have started to rise from the depths of the housing slump -- though this trend hasn't yet appeared in South Florida.
When the tax credit expires, analysts predict sales will drop off or if mortgage rates rise from near-record lows. Foreclosures also continue to rise, and banks are forced to sell those properties at deep discounts, pushing prices down.
The Realtors group projects that around two million first-time buyers will take advantage of the credit this year, and says it is spurring 350,000 additional sales that wouldn't have happened otherwise.