Miami May be on Verge of Another Housing Bubble
Housing prices in four of the country’s largest cities – including Miami – have been deemed overvalued, potentially setting the stage for another housing market bubble. Prices for homes in Miami, Houston, Washington, D.C. and Denver are now considered too high for long-term sustainability. That’s according to a new report from CoreLogic, which contrasts current home prices to what are known to be viable in the long term, weighing elements like local disposable income. A market is considered “overvalued” if prices of homes are at least 10 percent above what is deemed to be that sustainable mark. In this most recent analysis, none of the top 10 markets were deemed undervalued, as they were just a few years ago, following the housing crisis. Six were considered “at value.” But Miami was among those in the top 10 considered overvalued.
Market researchers say affordability is going to be an ongoing challenge in the years to come, until either more houses are built (increasing the supply) or there is another bursting bubble and prices fall again. Nationally, prices of homes climbed about 7 percent this past June compared to the year before. That was a slightly bigger increase than what we saw in May. At this juncture, prices for homes have risen 50 percent from where they were at the very bottom following the collapse of the housing market in March 2011.
Now, we see a sharp rise in home prices as the number of homes that are affordable are in short supply. Realtor.com reports the total number of homes for sale was almost 11 percent lower than it was this time last year. The percentage of unsold homes as of the most recent quarter of the year was at less than 2 percent – the lowest it’s been in more than three decades.
Still, some markets across the country are cooling off. For example, New York City saw values increase by about 3 percent, but that’s still within range of what is considered sustainable and it’s not unheard of for that particular market. In San Francisco, prices increased by little more than 5 percent, which is typical for that market. Meanwhile in Denver, there was an annual gain of nearly 9 percent.
Another recent report from Case Research indicates Miami condos in particular are creating a troubling situation. Monthly sales are down, but inventory has nearly doubled over the last four years. So far, that hasn’t made them more affordable, and investors have taken to flipping properties. Fox Business News reported earlier this year that foreign buyers in the Miami condo market have been willing to pay record prices, but the market is posed for a steep drop, which means many investors and homeowners could find themselves underwater on these properties.
All of this potentially could mean we’ll see another spate of foreclosures in Miami, especially if we begin seeing an influx of subprime loans. Although there has been reticence since the 2008 market crash to back risky loans, the government still does so – including those that require only 3.5 percent down payment through the Federal Housing Administration. Another troubling factor is that housing prices have risen, but salaries have not.
Miami foreclosure defense attorneys are committed to helping those who are underwater on their homes.
If you’re battling debt collection or foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.