As part of our effort to stay as current as possible for our clients, we check on the current inventory in Miami Dade County periodically and record our findings to share with everyone. As a general rule, the higher the months of inventory, the lower the prices of properties will be because it is what we call a “Buyer’s Market” and sellers need to price their properties competitively to get the interest of a buyer who has a lot of properties to choose from. When the reverse happens, and the months of inventory is very low, this is known as a “Seller’s Market” and prices go up as buyers have fewer properties to choose from. Below you will see the current inventory of single family homes and condos for all of Miami Dade County.

Alone, the graphs shown above can only tell us what the market is like right now. Using the Multiple Listing Service (MLS) available to us, however, we track these graphs through time to see what the market is doing long term. After our most recent update, we noticed a trend that we think both prospective buyers and sellers should take a look at and analyze before deciding to buy or sell. Below you will find that the months of inventory have dropped significantly from last year in both the single family homes and condo/townhomes and we are approaching an inventory similar to what we had in 2006 which is considered “the norm.” (Spikes in inventory over the holidays are to be expected as little buying goes on during this part of the year.)

The recent drop in inventory serves as an indicator of what we may have in store in the coming months. Because we might continue to see the inventory drop, the banks that have been holding onto foreclosed properties may begin to slowly release them into the market, in which case we may see a rise in inventory in the near future.

For the time being though, this drop in inventory means different things to different kinds of buyers and sellers.

First-time Homebuyers or Buyers with a Loan: If you are searching in the price range under $150,000, depending on the area, you will most likely be searching for a long time as cash investors who are bidding well above list prices are snatching up the bargain priced inventory. Our advice is to look at many different options at a time avoiding emotional attachment to any one property (patience is key!) and act quickly when you see one come on the market that you are interested in.

Cash Investors: Whether you are investing in single family homes or condos, be aware that the competition for the low-priced properties has intensified with the decrease in inventory. Properties are going under contract in a matter of days (or, in some cases, even hours!) and you are going to have to make decisions on properties as soon as they come on the market. In addition, agents are receiving so many offers on low priced properties that you will have to bid well above list price in order to be considered. This is especially true for properties under $100,000.

Luxury Buyers: The inventory for luxury properties is nowhere near as low as that for low-priced inventory and you do not have to worry about cash investors snatching up all the luxury homes. Whether you are looking to buy cash or with a loan, you will not be facing as much competition and should therefore have no problem finding a home relatively quickly.

Sellers in the Affordable (under 150k) Market: Because the inventory is decreasing, it may be in your best interest to hold onto your property for a few more months (unless you MUST sell) because the market seems to be shifting away from a “Buyer’s Market.” If we continue to see declining inventory over the coming months, sellers in the affordable market will be able to price their properties higher than they can today because buyers will have fewer options to choose from. If the banks do begin to release more of the foreclosures they have seized, however, it may be a long time before you can put your property on the market and hope to make back what you bought it for.

Sellers in the High-End Market: Because the inventory in the luxury market is still high and does not seem to indicate a significant decrease in the near future, luxury buyers have plenty to choose from and you must price your home competitively if you want it to sell quickly. Of course, competitive pricing varies by location, size and condition so it is important to carefully analyze the recent closed sales in your neighborhood before going on the market.

In Miami, because we have a vast real estate market, 6-9 months is generally considered “The Norm” in which prices neither increase nor decrease. To learn more about the Miami market outlook, be sure to check out the two videos we have inserted below! In the first video, Jena discusses how Short Sales and Foreclosures will affect the market in 2011. In the second video, Ron Shuffield, President of EWM Realtors, gives a market update using data as of April 2011.

If you would like to see more of Jena’s and Paula’s videos, please visit www.facebook.com/congdonconnection and you will find the different videos we have made on our wall. To see more of Ron’s videos, please visit www.ewm.com.

Feel free to contact us either by phone or via email if you have any questions about the real estate market or would like a free analysis of what the market is like in your neighborhood. We are always available to help you or your friends with all real estate questions or needs!