The problem with real estate in the Miami area is not only that there are too few buyers, but also that getting a mortgage loan is now very difficult for almost everyone. The banks, which created this mortgage mess in the first place, with the help of unscrupulous mortgage brokers, are now giving loans to only the most highly qualified people. Down payments have to be at least 20%, but are often more like 30% or even 40%, and interest rates are higher for all but those with the highest credit scores.
With the dearth of PMI, private mortgage insurance, which is required by banks for those who have less 20% to put down on a house or condo, loans at more than 80% loan to value have all but disappeared. However, there is a light at the end of the tunnel. There is some very good news for buyers who want to live in places like Miami Beach, where homes and condos were very often unaffordable for all but those with high incomes.
Another bit of good news is that August real estate sales results were recently released, and according to an article today in the Miami Herald, sales of single-family homes rose 22% in Dade County from the same period a year ago, and condo sales rose 13%. In Broward County, home sales rose 13% in August from the same period a year earlier, and condo sales remained flat.
There is still a glut of homes and condominiums for sale in Miami. According to Ron Shuffield of EWM, the over supply of homes and condos remains very high, with Miami-Dade experiencing a 32 month supply of houses, and a 41 month supply of condos on the market for sale. In an even market place, a 6 to 12 month supply of inventory is the norm.