South Florida property market looking up?

The Miami Herald featured an article a couple of weeks ago (my apologies for not getting round to blogging about it sooner!) about a possible ray of sunshine emerging from the clouds for the South Florida property market. A couple of recent factors indicate that the market may be very close to recovery mode and subsequently on the up.

Recent figures show that the number of properties sold is increasing (the ninth such month on month increase) which is good news - despite the underlying reason for this increase not exactly being ideal.

And what is that "underlying reason"? Well, the increase in the number of properties sold is actually being driven by current low prices and what is termed "distressed sales" - i.e. sales of foreclosed properties or short-sales. (Where the property is sold for less than the amount owed on it.)

To give you an idea of the level of the market - sales of houses increased by 76% for Dade county and 47% for Broward; the condos, sales increased 36% in Dade and 25% in Broward. However, as much as 60% of all these properties sold were "distressed sales".

This increase in sales (which, in turn, is eating up some of the current oversupply of properties) isn't yet causing any substantial effect on prices - a comparison of median prices from last year to this still shows a large fall. However, month to month figures which show a small up and down fluctuation each month indicate that price falls may be slowing...which would turn into a price rise at some point. The main problem is the difficulty in predicting when exactly this "at some point" will happen.

The article finishes by saying the condo sales may not recover as quickly as house sales. The vast number of condo developments that were built in recent years means that there's a huge oversupply supply - the article mentions that by the end of this year, developers in just downtown Miami will still be holding 10,000 unsold units.

Article: Is the worst over for South Florida housing market? (24th June 2009, Miami Herald)