Reprint of email:

Hello,

My name is [redacted] and I work as a producer for the French television France [redacted]. I am writing because our crew is coming to Miami next week to do a story on the real estate situation there and we wanted to illustrate this by interviewing someone who leaves in a almost empty building. I know it is something we have already seen it a lot on American media, but to a French audience, a situation like this is quite hard to comprehend and quite frankly, never heard of. Anyway, I am writing you to see if you know anyone in that situation who would be willing to speak with us.

The single biggest factor preventing prices from stabilizing is the fact that very few Miamians have 20% down payments. Most people in Miami are flat broke and living day to day. If you’ve got $80K laying around for a down payment on a $400,000 condo consider yourself lucky. Click for larger image.

I searched for a news story covering this incident but apparently this has been suppressed and/or just another case of lazy Miami reporting. Here’s a quote I found at a real estate cheerleader’s blog:

“Anyone have any details on the Pace Park murder? I left work early on Monday and was driving home on Bayshore and the cops had the whole basketball court area roped off in yellow tape, couple crime scene vans, tons of cop cars, etc. A saw a bunch of people who must have lived in 1800 or Q gathered around looking too.

I agree, this isn’t good for the reputation of the area.”

Not good for the “reputation of the area” is the understatement of the year. Keep in mind, I reported in November that the charred remains of what may have been a tenant of one of those “luxury” condos was discovered nearby.

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What are real estate futures? From the Chicago Mercantile  Exchange website:  

“S&P/Case-Shiller Home Price (CSI) Indices futures and options are the first comprehensive financial tools that make it possible to manage U.S. housing risk. 

These products provide opportunities for protection or profit in up or down markets, and extend to the housing industry the same tools for risk management and investment that previous CME Group innovations have brought to agriculture and finance.

Market Participants

Businesses whose profits or losses are related to any area of the housing industry

• Property and real estate developers

• Banks

• Mortgage lenders

• Home suppliers

Businesses seeking exposure to an uncorrelated asset class

• Hedge funds

• Commodity trading advisors (CTAs)

• Pension funds

• Foreign investors

Each contract shall be valued at $250 times the CSI Index, e.g., if the value of the index for Los Angeles was reported at 267.74, the contract value equates to $66,936 (= $250 x 267.74)”

Miami is down about 43.5% from peak! Most markets, including Miami have a ways to go. Price declines from peak courtesy of Calculated Risk. CLICK FOR LARGER IMAGE.

The price declines seem to have re-accelerated with some markets seeing 5% decreases.

Note about the Case-Shiller methodology: The Case-Shiller index prices are measured monthly and tracks repeat sales of houses using a modified version of the weighted-repeat sales methodology proposed by Karl Case and Robert Shiller. This means that, to a large extent, it is able to adjust for the quality of the homes sold, unlike simple averages. The Case-Shiller Index is much more accurate and valid than NAR data such as median home prices and average home prices.

Dear readers,

I’d like to assist an Associated Press reporter working on a story relating to condo associations and HOA delinquency rates. How are the new Fannie Mae lending guidelines (which have HOA delinquency rate cut offs for loans) affecting the buildings with high delinquency rates? Common sense implies bad things, but journalists cannot rely on conjecture.  If you have intimate knowledge of a condo association and its financial health please email me through the “contact” link above. I’ll put you in touch with the journalist. You can divulge as much or as little information as you feel comfortable.

Convincing evidence that we are reaching a bottom? Think again.

Here is the BLS rent index used to make to make the aforementioned chart:

This graph is laughable! Anyone involved in the Miami-Ft. Lauderdale rental market, whether it be a tenant or landlord, knows that rental prices are plummeting (and they most certainly are not rising). Here’s a tip: drive around Miami at 9 pm and look into the scores of shiny, new, and completely dark towers - that’s called oversupply.

The BLS wrong? No surprise there. Anyone with a brain long ago realized that BLS stats are practically propaganda (remember when gas prices went up like 25% in June or July and the BLS said energy costs decreased 3%?).

If that isn’t enough evidence, here’s a normalized chart comparing BLS income in the region to BLS rents:

As you can see, rent is climbing 33% faster than incomes from the end of 2001 to beginning of 2008 (sorry, but BLS only provided regional income data for those years) . This is ridiculous! Rent cannot climb faster than income, just as home prices can’t climb faster than income. Or have you already forgotten the housing bubble that just collapsed for that very same reason?

Either rent prices are at temporarily elevated levels due to the overall credit bubble and they are about to collapse OR the stats are just plain wrong. Either way, I’d reconsider the belief that Miami prices have nearly returned to historic levels. We still have quite a ways to go with rents and home prices.