CIPS, CDPE, CLHMS, GREEN

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1 July 2009 Newsletter Sean Greco Realtor, CIPS, CDPE, CLHMS, GREEN Certified, TRC, REOS Designations and Certifications are explained at the end of the newsletter Buy the Beach Realty, Cell , buybeach.com Hello from South Florida, Below are brief summaries on key issues that have an effect on South Florida Real Estate, followed by the target market specific data. Click here for graphs of the data to help analyze trends in the market place. Please make note of the trends and data points as this will be key in timing the purchase or sale of a property to your benefit. Also, it is more important than ever that you understand the incentives that might end up being the deciding factor for those whom have been thinking about buying for quite some time. IS THE WORST OVER? Is the South Florida housing market finally touching bottom? The answer, of course, can only be seen in the rearview mirror, but analysts agree that the most terrifying part of the downward slide is behind us. If you look at the yardstick of housing sales, which is a typical yardstick, we are in the recovery stage and we re in the bottoming phases on pricing, said Coral Gables based real estate analyst David Dabby. Sales of single family homes were up by 76 percent in Miami Dade County and 47 percent in Broward County, compared to May of last year. Condo sales also rose by 36 percent and 25 percent in Miami Dade and Broward, respectively. The low prices are spurring buying, which in turn is eroding the supply of homes and condos offered for sale. The number of single family homes for sale in May fell from a year ago by 13 percent in Miami Dade and 36 percent in Broward. The number of condos for sale dropped by 20 percent in Miami Dade, and by 26 percent in Broward. On the pricing front, median sale prices for single family homes in May were down significantly from a year ago, dropping 39 percent in Miami Dade to $194,700 and 36 percent in Broward to $190,000. The Miami Dade median condo price slid 50 percent to $140,300 and 42 percent in Broward to $80,400. Month to month figures, which are important to follow as market dynamics change, show pricing was essentially flat for homes and condos in Broward between April and May. In Miami Dade, the median price actually rose by 10 percent for homes and 5 percent for condos. Prices at Murano at Portofino on Miami Beach have held steady, rising 1 percent in the first quarter of 2009 compared to prices during the peak sales year. Source: The Miami Herald 6/24/09 My editorial Please carefully read the above bolded sections, most importantly the last 2 statements referring to pricing. I cannot stress how important it is to interpret this factual data; especially for those buyers looking for a bargain. SURVEY SAYS MIAMI BEACH CONTINUES TO GET BETTER: According to the most recent Community Satisfaction Survey, a majority (approx 85%) of resident respondents reported that their overall quality of life within the City of Miami Beach is either excellent or good. In addition, the majority (86.6%) also reported Miami Beach as an excellent or good place to live. The goal of the survey, administered this past January to a statistically valid sampling of City residents and businesses, is to identify the city s key strengths and to help develop strategies to improve the community s quality of life and match resources to address identified needs. Impressively, preliminary survey results show that residents and businesses had an increased level of satisfaction over many areas, as compared to the survey administered two years ago. There was an overall average increase of seven percent in each of the areas tracked in the

2 residential survey, and approximately 8.8% improvement in the majority of questions answered by businesses. Some of the positive results show the following: Overall perception of the quality of life in the city increased from 75% in 2007 to 85% in 2009, an increase of 10% Resident perception of overall value of city services for tax dollars paid increased from 46% in 2007 to 65% in 2009, an increase of 19% Resident satisfaction with the appearance and maintenance of public buildings increased from 81% in 2007 to 87% in 2009, an increase 6%. Also, satisfaction with maintenance of parks increased from 76% in 2007 to 85% in 2009, an increase of 9%. 89.4% of residents reported being very satisfied or somewhat satisfied with the City s website overall, and, Resident ratings of whether they feel safe in their neighborhoods during the day increased from 90% in 2007 to 96.3% in 2009, an increase of 6.3%. The city of Miami Beach survey was conducted by the Center for Research & Public Policy. When the final results are available in a few weeks, they will be posted online at Source: Center for Research & Public Policy, The Miami Herald 6/7/09 QUICK HEADLINES: Plans for a public baywalk in South Beach stretching from Lincoln Road south to Fifth Street were unveiled at a meeting last week. A baywalk already exists from fifth street south to the newly renovated South Pointe Park. Source: The Miami Herald 6/28/09 Peru is forecasting the strongest economic growth in Latin America (estimated at 4 percent in 2009). Prudent and consistent policies are being credited with giving the country an edge over neighbors. Ambassador to the United States, Luis M. Valdivieso said Peru had the highest annual average growth in Latin America over the last 15 years, averaging 5 percent per year. Source: The Miami Herald 6/1/09 Miami Dade County remains in the top 3 of the country s major hotel markets in terms of occupancy and room rate. Source: Greater Miami Convention and Visitors Bureau, The Miami Herald 6/24/09 The government says it will soon begin airing radio spots urging people to turn in their unredeemed Series E U.S. Savings Bonds, which total $16.5 billion in unclaimed loot. The record keeping for the government can be burdensome for older bonds, and they just may be worth more than you think. Source: The Miami Herald 6/28/09 DON T FORGET ABOUT THE HOME BUYER TAX CREDITS: There are 2 separate tax credits for qualified home buyers. The most recently passed tax credit for $8,000 that does not need to be repaid, is for those purchasing a principal residence on or after 1/1/09 and before 12/1/09. And on 5/29/09, The Federal Housing Administration released details of a plan in which borrowers who use FHA loans can get advances from lenders that effectively let them receive the credit before they complete their taxes (Source: The Miami Herald 5/30/09). There are income limits and other guidelines, of which the below website will help you understand better. Or you can contact your accountant for more specific details. The other home buyer tax credit is for $7,500 and does have to be repaid over time. It is available for those that purchased a principal residence on or after 4/9/08 and before 1/1/09. Source: CONDO GLUT FADING FAST, REPORT SAYS: The city of Miami wants you to know there are, in fact, plenty of humans living in new condos. And there is more each day as the downtown area quickly fills up with flesh and blood residents.

3 Renters are marching in to help lighten things up, and sales are picking up, too. An occupancy report released 6/10/09, commissioned by the Miami Downtown Development Authority, found that 62 percent of the new condos built since 2003 are, in fact, inhabited. What s selling: good deals. In the past two weeks at Brickell on the River South, 40 new sales contracts have been signed, thanks to aggressively reduced pricing by the developer. Although the rental to sales ratio is now 50 50, averages of 280 new leases were drawn up per month on new units. While some may point to the rental trend as evidence developers overshot their estimates of demand and put up too many buildings, Alyce Robertson, executive director of the development authority, said it makes little difference from an economic development standpoint. Whether people rent or own, they need and demand more shops, banks, bars and restaurants in the area. Robertson said the Downtown Development Authority, a quasi governmental agency that promotes the area, will soon sell the area to prospective retailers based on the results of the occupancy report. The people who haven t been to downtown recently, you really have to come and see because it s really a different place. Craig Werley, president of Focus Real Estate Advisors in Coral Gables, who authored the study with Miami based Goodkin Consulting, said that even though people are moving in, that doesn t mean the market is healthy. But it does point to a recovery that may come sooner than what many people think. Werley said there is a demand for this affordable product. Source: The Miami Herald 6/11/09 Exchange rates play a vital role in Real Estate related decisions for foreign buyers or sellers, a good source to track currency exchange rates is: The below chart is data from the past 90 days for Condominiums, ending 6/30/09. The data is taken from South East Florida s Multiple Listing Service (MLS) for the cities and townships of Miami Beach (South Beach, Mid Beach, & North Beach), Surfside, Bal Harbour, Bay Harbor Islands, and Fisher Island. The paragraph below the data will explain in more detail what is included in this analysis. Please don t hesitate to pose any questions you may have, or simply give me a call or send me an to discuss Real Estate in general. This data will help to analyze market conditions from month to month. Price Range Active Closed Listings % Listing % Sold Avg DOM Average Discount New vs Resale $0 - $199, % 16.84% 100 7% 5 vs. 154 $200,000 - $249, % 14.72% 118 8% 7 vs. 37 $250,000 - $299, % 10.10% 117 8% 11 vs. 28 $300,000 - $349, % 12.20% 167 8% 10 vs. 20 $350,000 - $399, % 7.17% % 3 vs. 20 $400,000 - $499, % 8.89% % 15 vs. 17 $500,000 - $599, % 7.77% % 14 vs. 9 $600,000 - $699, % 4.90% 133 9% 5 vs. 5 $700,000 - $799, % 7.59% % 7 vs. 4 $800,000 - $899, % 4.67% % 4 vs. 1 $900,000 - $1,179, % 12.42% $ 17 vs. 3 $1,180,000 - $1,399, % 5.41% % 6 vs. 0 $1,400,000 - $1,799, % 4.79% % 5 vs. 2 $1,800,000 - $2,199, % 3.45% % 3 vs. 0 $2,200,000 - $2,699, % 4.17% % 3 vs. 0 $2,700,000 - $3,199, % 3.77% % 2 vs. 0 $3,200,000 - $3,999, % 5.00% % 3 vs. 0 $4,000,000 - $4,999, % 6.67% % 2 vs. 1

4 $5,000, % 7.35% % 4 vs. 1 Totals: % 10.41% % 126 vs. 302 As you can see, I have broken the data into price ranges, and then you can see the amount of Active condos for sale, how many Real Buyers Closed on a condo for sale, how many of those listing agreements unsold, then further calculated what percent of the Active condos for sale and Sold. Then I calculated the Average Days on Market (Avg DOM), which is the amount of days it took the condos that sold to obtain a Real Buyer. Then I show the Average Discount, which is the percentage the Listed Price was discounted to the Actual Sale Price for all Closed Sales. The last column is for Closed Sales that were newer construction, which I considered to be anything built after 1995, versus older buildings built before I track this data for Condominiums and Single Family Homes separately due to their differences. I also track the data for the more luxurious buildings of South Beach, please feel free to or call for that data. The next set of data below is the same information for Single Family Homes. The one difference is that the last column is the Average Age of the homes Sold. Listings % Listing Avg DOM Average Discount Price Range Active Closed % Sold $0 - $399, % 25.64% % 1944 $400,000 - $499, % 9.09% 72 2% 1932 $500,000 - $649, % 28.21% 176 8% 1949 $650,000 - $799, % 15.22% 131 9% 1942 $800,000 - $999, % 9.62% % 1952 $1,000,000 - $1,299, % 4.08% 88 11% 1948 $1,300,000 - $1,599, % 11.76% % 1964 $1,600,000 - $1,999, % 9.09% % 1948 $2,000,000 - $2,999, % 5.80% % 1945 $3,000,000 - $3,999, % 7.50% % 1941 $4,000,000 - $4,999, % 0.00% n/a n/a n/a $5,000,000 - $5,999, % 0.00% n/a n/a n/a $6,000,000 - $6,999, % 0.00% n/a n/a n/a $7,000,000 - $9,999, % 0.00% n/a n/a n/a $10,000, % 2.94% 94 29% 1992 Totals: % 9.87% % 1951 Average Age Don t forget to look at the overall data I have been collecting and determine for yourself what trends, etc. you see; please click here to take you to some graphs that should prove to be very insightful: If you are a bargain hunter looking for distressed properties, please contact me so that I may setup an automatic short sale or foreclosure search notification for you. I have found that the best deals usually go the quickest, and to be proactive in your distressed property search is the best way to go about finding a bargain. In the course of continually researching and familiarizing myself with the inventory of the very localized market in which I practice, along with the banking relationships I have cultivated, I have been able to do a lot of the research and legwork recognizing the best potential values in my target markets, or in some instances in other specific buildings or locations where there is excellent value for the product. Please understand that this service I provide adds significant value to the process, and only contact me if you are serious about buying and planning to be loyal. Please don t hesitate to contact me directly for any such information.

5 Also, please contact me should you want to seriously discuss in more detail opportunities for distressed sales of multiple units. This market presents unique opportunities that very well may never be seen again in one s lifetime. Please give me the opportunity to help you take advantage of this situation. PROPERTY TAXES & INSURANCE: As a property owner or potential property owner, I urge you to keep up to date on the various progress, legislation, and proposed legislation in order to help you better understand how these important issues affect you; please see the below link that will take you to the Florida Association of Realtors Legislative Center, which will help to explain the numerous moving parts concerning these issues: INTEREST RATES & RELATED NEWS: It is important to note that different types of loans are pegged to different rates, so please make sure to stay in touch with your mortgage broker or banker to keep up to date on interest rates, as this can directly affect many Real Estate related decisions. In addition to the lowered rate when securing a mortgage to buy property, another common question you will see throughout the upcoming year with lowered rates is whether or not it is a good idea to refinance. This discussion might be a good one to have with a reputable mortgage broker or your banker and see if this would make sense financially. Or feel free to visit my website and the Mortgage Center for more helpful information. This is the website to the Federal Reserve s Monetary Policy section: I would like to illustrate an example of how important an interest rate can be in one s decision to purchase when financing. Suppose you were to have purchased when Interest Rates were around 4.75 percent, as opposed to waiting for 8 months time because you felt prices were going to be 5 percent lower, but in that time interest rates rose 1 percentage point. You wanted a 30 year fixed rate mortgage: 4.75 Percent Interest Rate 5.75 Percent Interest Rate Purchase Price $300,000 $285,000 Loan Amount with 25% Down $225,000 $213,750 Monthly Payment $1, $1, Months worth Principle $2, $0 8 Months worth Tax Deductible Interest $7, $0 8 Months worth of Rent Saved $8, $0 8 Months worth of Expenses Saved $0 $3, Interest Rate Savings 8 Months $ $0 Interest Rate Savings 2 years $1, $0 Interest Rate Savings 7 years $5, $0 Interest Rate Savings 30 years $26, $0 This example is meant to show you that there are important factors that go into trying to time the bottom and in turn, consequences. No one can predict the future and I want to stress that this is merely an example to show the potential amount of savings one could realize due to the nature of the interest rate affecting the bottom line payment for what could be a mortgage you have for 30 years. Plus, it illustrates the opportunity costs of sacrificing a lower rate for the uncertainty of an additional drop in prices. One must consider how long they feel they will be in this property, personal financial situation and credit score, opportunity to refinance if rates go lower but sacrificing that opportunity should rates never go that low again, and other items such as these. I did not tabulate any sort of totals in an attempt to have you analyze the numbers based on your personal situation to decide for yourself what your best decision would be. Please click here to take you to the mortgage calculator I used for this example. Again, this chart is strictly meant as an example of some various considerations that you should think about if you are contemplating a real estate purchase.

6 I hope this finds you well and looking forward to comparing this month s data with last month s data to spot trends and decide for yourself the status of the local Real Estate market, of which I work within 24/7. You are receiving this because we have been in touch about Real Estate here in the South Florida area, most likely property at the Beach. As you read the newsletter from month to month it will contain data that will help you to analyze market conditions. In addition, it is an unobtrusive way to stay in touch with you regarding my Real Estate Consulting Services. That is all for this month s newsletter and I welcome suggestions, feedback, and of course I am here if you or anyone you know is thinking of buying or selling property here in South Florida. If you wish to further discuss any of the above issues in more detail, or any other Real Estate related topics, please don t hesitate to call or . I would like to leave you with the following quote by Winston Churchill: The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty. DESIGNATIONS AND CERTIFICATIONS: These Designations and Certifications were specifically chosen by me to give my effort, time, and money, as well as meeting the required experience because I feel that this shows my dedication to continually learning and evolving as a Real Estate Consultant. Plus, the market that I practice in is a natural one to achieve such designations to separate myself from the other professionals within my field. Keep in mind these not only prove education but also transactional experience in order to obtain the designations and certifications. Realtor Membership in the largest professional association known as the National Association of Realtors or N.A.R. C.I.P.S. Certified International Property Specialist, member of CIPS network; Designation shows education and transactional experience in the International Arena of Real Estate. C.D.P.E. Certified Distressed Property Expert, member of Distressed Property Institute; Designation shows education and experience in the continually evolving and complicated short sale and foreclosure markets. C.L.H.M.S. Certified Luxury Home Marketing Specialist, member of Million Dollar Guild; Designation shows education and transactional experience in the top tier level within my market, Million Dollar Guild is the highest level of membership with proven experience in numerous $1M+ transactions. GREEN Certified also known as GCREP GL, Green Certified Real Estate Professional Green Leadership; Certification shows education and leadership within the Green Real Estate Industry. T.R.C. Transnational Referral Certification; Certification shows education in researching Real Estate throughout the world and allows me to refer and to be referred from 28 International Real Estate Organizations in the Global marketplace. R.E.O.S. Real Estate Owned Specialist, shows extensive experience and knowledge in the distressed property class known as REO, also known as foreclosures or bank owned properties. If you wish to be removed from this mailing list, please REPLY to this placing REMOVE in the subject line.