NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI). The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway. The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions. The three series are employment, house prices and single family housing permit growth.
For the eleventh release , 80 markets are classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Miami-Fort Lauderdale-Miami Beach, Florida metropolitan statistical area (MSA).
The turnaround in the Miami economy and its housing market is due to many factors including a steady rise in traffic at the Port of Miami, the world’s largest cruise ship port, and its position as a major television production center and the most important city in the US for Spanish language media. Miami also benefits from its proximity to South America, and the relative affordability of housing in Miami compared to many of the major cities in South America and Europe. The recent up-tick in tourism and cruise ship activity along with the presence of the University of Miami, the largest private employer in the MSA, the growing bio-tech sector and its position as a large international and regional healthcare center are also part of why Miami is recovering. In addition Miami is home to the National Hurricane Center and the US Southern Command, responsible for all military operations in Central and South America.
According to home builder Ray Puzzitiello, President of Puzzitiello Builders, LLC, “there’s a lot of pent-up demand among buyers in their 50s, 60s and 70s. These buyers are not getting any younger and have now put their plans on hold for years and are tired of waiting. In addition, many of these buyers want a new home or condo and are not prepared to deal with all the problems and delays that inevitably come with a short-sale. As a matter of fact, interest in buying new is so strong that as you move progressively closer to the water we are witnessing short-sale-tear-downs where older smaller houses are being removed to make way for new larger ones. Similarly, many buyers are now willing to wait for a house to be built rather than buy from the existing stock.” He concluded by saying “another reason why things are doing well here is because house prices in the northeast are stabilizing and even rising so snowbirds are now more confident about selling their homes in CT, NJ, NY and PA, and are also more willing to borrow given historically low interest rates.”
According to Richard Burton, Partner at the Burton Firm and the driving force behind The Foreclosure Project, “prices in Miami, Fort Lauderdale and Palm Beach are a bargain to the many Brazilians, Canadians, German and Russians who are now buying. In some cases they are buying with an eye to living here part of the year while others simply want to park their money in a safe location and take advantage of the rapidly strengthening rental market. The key is to find the right price-point in the right location and this is just as true for luxury buyers of waterfront condos as it is for first-time homebuyers.” Whatever the cause, house prices are definitely firming. They are up 0.4% since the trough in November 2011 and look to continue rising through the end of this year and into 2013 and beyond.
Improving economic conditions have resulted in payroll employment being down less than 8% from its peak in August 2007 and up by 2.7% since the trough in January 2010. Single family permitting activity is up a strong 4.1% on a seasonally adjusted monthly average basis from the trough set in April 2009. While new homes are being built in many parts of the tri-county Miami MSA, activity has been primarily centered in Boynton Beach in Palm Beach County, the Parkland area and downtown Fort Lauderdale in Broward County and in downtown Miami, the Design District and in Aventura in Miami-Dade County.