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S. Florida Condo Resales Rise 4th Straight Month, Still Trails '07 Total

By
Real Estate Broker/Owner with Condo Vultures® LLC

Condo resales in the South Florida region and the state as whole increased by volume in May for the fourth consecutive month while median sales prices in the region fell slightly, according to a Condo Vultures® LLC analysis of industry data.

South Florida experienced 1,714 closed resales of condominium units in May, up from 1,576 closings in April in Miami-Dade, Broward, and Palm Beach counties. In March, there were 1,536 resale condo closings, 1,132 in February, and an additional 1,012 closings in January, according to data from the Florida Association of Realtors.

Statewide, condo resales reached 4,018 in the month of May compared to 3,900 closings in April. There were an additional 3,207 closings in March, 2,765 closings in February, and 2,252 closings in January for a total of 16,142 transactions in 2008. By comparison, there were 20,244 condo resales in the first five months of 2007, according to the Realtors association.

"Condo resales in 2008 continue to increase in volume on a monthly basis," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. "Some people are going to view these numbers as a clear sign of an improving condo market in South Florida and the state as a whole. Before jumping to any conclusions, we would remind everyone that the total number of condo resales this year, while up on a monthly basis, is still fewer than the total sales in 2007, which in turn is fewer than the total number of closed transactions in 2006."

As South Florida condo resales pick up, the median sales price for closed transactions continues to fluctuate as many buyers pursue below-market pricing on short sales, foreclosures, and Real Estate Owned (REO) by banks which is dragging down the overall average.

The median sales price for a South Florida condo resale in May was about $193,133 compared to $193,800 a month earlier in April. The median sales price for a condo resale in March was about $183,167, in February $197,433, and in January $198,233, according to the report.

Statewide, the median sales price of a condo resale in May was $181,800, up from $179,200 in April, $176,300 in March, $175,600 in February, and $190,200 in January, according to the Realtors association.

On a county basis, Palm Beach County is experiencing the strongest activity in year-over-year total condo resales both in terms of quantity closed and median pricing. It is worth noting that much of the product closing in Miami right now was purchased directly from developers, and is not included in this report.

Closed resales in Palm Beach have steadily increased from 303 total transactions closing in January to 655 deals concluding in May. On a year-over-year basis, the number of closings in May 2008 was 7 percent greater than the 613 closings in May 2007.

Palm Beach condo pricing also continues to strengthen with the median sales price in May increasing to $159,800 compared to $156,400 in April. Palm Beach County's year-over-year pricing, however, is down -26 percent compared to 2007 when the median sales price was $217,400.

Fort Lauderdale is the market in South Florida where the greatest number of condo resales have occurred. Between January and May 31, Fort Lauderdale has experienced 2,714 condo transactions out of the 6,970 total South Florida condo resales, which represents 39 percent of the regional deals. Palm Beach County experienced 2,652 condo transactions or 38 percent of the regional total. Greater Miami has had 1,604 condo resales close in 2008, which represents 23 percent of the regional total.

Miami's condo resales are the lowest by volume in the region, yet the area's number of transactions has increased in three of the last four months. In May, there were 420 condo resales in Miami compared to 318 transactions in April, 333 deals in March, 235 closings in February, and 298 sales in January, according to the Realtors association data.

According to the data, the median sales price of a condo in Miami has strengthened in four of the last five months. In May 2008, the median price of a Miami condo was $280,770, up 3 percent from $272,000 in May 2007.

In April, the median sales price of a Miami condo was $275,000, up 3 percent compared to $268,000 in April 2007. The median sales price in Miami was down in March by -11 percent, but up in February by 5 percent and in January by 11 percent, according to the Realtors association.

"The best explanation for Miami's increasing median sales price is that many of today's buyers are opting to purchase only the best quality product, which tends to have a greater overall purchase price even with a discount," Zalewski said.

Florida's Two Largest Banks Face Hurdles

With 22,000 new condo units coming online in Greater Downtown Miami, according to Condo Vultures® Official Condo Buyers GuideTM, two of the state's largest institutions that participated in financing this product are faced with some hurdles.

BankUnited, Florida's largest locally headquartered bank, is scrambling to raise capital to shore up its balance sheet as the real estate downturn begins to create havoc for the Coral Gables-based institution with $14.3 billion in assets. BankUnited is pursuing a plan to raise capital by issuing 500 million more shares of stock, up substantially from an original plan to issue 200 million shares.

Down the street at Ocean Bank, Florida's largest state-chartered commercial bank, the leadership announced Friday that 104 jobs - including three executive positions - were being eliminated as part of a cost-cutting measure to strengthen the balance sheet. Ocean Bank, a Miami-based institution with $5.1billion in assets, lost $63.5 million in 2007.

Peter Zalewski is a principal with the consulting company Condo Vultures®LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter's blog at CondoDump.com . Don't forget to sign up for our weekly Market Intelligence Report.

Copyright © 2008, Condo Vultures® LLC

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