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Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast April 21, 2009

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Page 1: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

Brad HunterChief Economist

(561) 835-9235(561) 573-8351

South Florida Housing MarketCurrent Conditions and Forecast

April 21, 2009

Page 2: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

The Main Factor that is Keeping the Economy Depressed (Locally and Nationally)….?

Falling Home Prices

Talk about a double-edged sword! We want affordable market-priced housing, but it is a painful adjustment!

Page 3: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

South Florida Housing Production is Effectively ZeroAbsorption Has Fallen Too

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09

Un

its

Quarterly Starts Quarterly Move-Ins

Page 4: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

New Home Inventories Are Coming Down (which would normally relieve some downward price pressure)…

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09

Un

its

0

2

4

6

8

10

12

Mo

nth

s

Finished Vacant Under Construction Months Supply

Page 5: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

…But South Florida Job Losses Continue to Erode Incomes and Confidence

(120,000)

(100,000)

(80,000)

(60,000)

(40,000)

(20,000)

0

20,000

40,000

60,000

80,000

Feb-06 Feb-07 Feb-08 Feb-09

Y-O

-Y C

han

ge

in E

mp

loym

ent

Source: Department of Labor

Page 6: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

New Home InventoriesBy County

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

St. Lucie Indian River Martin Palm Beach Broward Miami-Dade

Un

its

0

2

4

6

8

10

12

14

16

18

Mo

nth

s

Finished Vacant Under Construction Months Supply

Page 7: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

The Biggest Source of Downward Price Pressure 2009 and 2010?

R.E.O.

Page 8: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

Miami-Dade Mortgage Foreclosure Filings and Certificates of Title (Banks Only)

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,500

Jan-0

6Feb-0

6M

ar-

06

Apr-

06

May-0

6Ju

n-0

6Ju

l-06

Aug-0

6Sep-0

6O

ct-0

6N

ov-0

6D

ec-

06

Jan-0

7Feb-0

7M

ar-

07

Apr-

07

May-0

7Ju

n-0

7Ju

l-07

Aug-0

7Sep-0

7O

ct-0

7N

ov-0

7D

ec-

07

Jan-0

8Feb-0

8M

ar-

08

Apr-

08

May-0

8Ju

n-0

8Ju

l-08

Aug-0

8Sep-0

8O

ct-0

8N

ov-0

8D

ec-

08

Jan-0

9Feb-0

9

Filings by Banks Certs into Banks

Page 9: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

Broward Mortgage Foreclosure Filings versus Certificates of Title (Banks Only)

0500

1,0001,5002,0002,5003,0003,5004,0004,500

Jan-

06Fe

b-06

Mar

-06

Apr-

06M

ay-0

6Ju

n-06

Jul-0

6Au

g-06

Sep-

06O

ct-0

6N

ov-0

6D

ec-0

6Ja

n-07

Feb-

07M

ar-0

7Ap

r-07

May

-07

Jun-

07Ju

l-07

Aug-

07Se

p-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08Fe

b-08

Mar

-08

Apr-

08M

ay-0

8Ju

n-08

Jul-0

8Au

g-08

Sep-

08O

ct-0

8N

ov-0

8D

ec-0

8Ja

n-09

Feb-

09M

ar-0

9

Filings by Banks Certs into Banks

Page 10: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

Option-ARM Recasts will Trigger the Next Wave of Foreclosures in late 2009

Source: Business Week/Credit SuisseSource: Business Week/Credit Suisse

Page 11: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

11Miami-Dade CountySingle Family Median Resale Home Prices

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Jan-

93Ju

l-93

Jan-

94Ju

l-94

Jan-

95Ju

l-95

Jan-

96Ju

l-96

Jan-

97Ju

l-97

Jan-

98Ju

l-98

Jan-

99Ju

l-99

Jan-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11

Media

n R

esa

le P

rice

Median Price

5% Annual Increase

Source: Florida Association of Realtors

Febru

ary

, 2009

?

Page 12: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

12Broward CountySingle Family Median Resale Home Prices

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Jan-

93Ju

l-93

Jan-

94Ju

l-94

Jan-

95Ju

l-95

Jan-

96Ju

l-96

Jan-

97Ju

l-97

Jan-

98Ju

l-98

Jan-

99Ju

l-99

Jan-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11

Media

n R

esa

le P

rice

Median Price

4% Annual Increase

Source: Florida Association of Realtors

Febru

ary

, 2009

?

Page 13: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

13

Miami-Dade County vs. City of Miami

Source: Wikipedia

Page 14: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

14Quarterly Condominium Starts: Miami-Dade County vs. City of Miami

Note: Conversions Not Included

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

Quart

erl

y Condo S

tart

s

Miami-Dade Condo Starts

City of Miami Condo Starts

Page 15: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

15Condo Inventory Comparison: Miami-Dade County vs. City of Miami

Note: Conversions Not Included

0

5,000

10,000

15,000

20,000

25,000

30,000

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

Quart

erl

y Condo I

nve

nto

ry

Miami-Dade Condo Inventory

City of Miami Condo Inventory

Page 16: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

16Quarterly Single Family Starts: Miami-Dade County vs. South Dade*

* South of SW 184th Street

0

500

1,000

1,500

2,000

2,500

3,000

2Q98

4Q98

2Q99

4Q99

2Q00

4Q00

2Q01

4Q01

2Q02

4Q02

2Q03

4Q03

2Q04

4Q04

2Q05

4Q05

2Q06

4Q06

2Q07

4Q07

2Q08

4Q08

Quart

erl

y Condo S

tart

s

Miami-Dade SF Starts

South Dade Starts

Page 17: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

17Single Family Finished Vacant Inventory: Miami-Dade County vs. South Dade

0

500

1,000

1,500

2,000

2,500

2Q98

4Q98

2Q99

4Q99

2Q00

4Q00

2Q01

4Q01

2Q02

4Q02

2Q03

4Q03

2Q04

4Q04

2Q05

4Q05

2Q06

4Q06

2Q07

4Q07

2Q08

4Q08

Finis

hed V

aca

nt

Inve

nto

ry

Miami-Dade Finished Vacant Inventory

South Dade Finished Vacant Inventory

Page 18: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

Condos

Page 19: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

The Good Ole Days (Way back in 2004)

• Projects sold out in a weekend

• People camped out to be first in line

• There was Panic Buying!

• Same group of investors often rolled from one to the next

• Some projects sold first 50% to investor groups who bought in bulk at a discounted day-one price

Page 20: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

Page 21: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

1,658

776

54

1,428

1,180

1,504

2,760

621

3,265

746

385505

1,863

1,184

654

886

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07

Qu

arte

rly

Sta

rts

Quarterly High-Rise Starts

Large Projects started in 1Q06:Axis: 718 startsIcon at Brickell: 700 starts500 Brickell: 633 startsSkyview Lofts/Infinity: 449 startsPlaza at Brickell: 440 starts1060 Brickell: 262 starts

Condominium Units Started in Downtown Miami by Quarter The “Spike” represents sales from 2004/early 05…

Page 22: Metrostudy Brad Hunter (561) 573-8351 Brad Hunter Chief Economist (561) 835-9235 (561) 573-8351 South Florida Housing Market Current Conditions and Forecast

Metrostudy Brad Hunter (561) 573-8351

About the Presenter Brad Hunter, Chief Economist/National Director of Consulting

Brad Hunter spearheads Metrostudy’s current work with the investment community and national developer/builder clients. A large part of his work lately has been with private equity funds, hedge funds, and pension fund advisors. He supervises the bulk of the company’s multi-market studies, and has orchestrated hundreds of site-specific or area-specific housing market studies over the past twenty-plus years. Metrostudy is the nation’s premier advisor on local and regional housing market conditions. With 23 years worth of experience in real estate analysis and local market economic forecasting, Mr. Hunter is a Full Member of the Urban Land Institute, has authored numerous articles and book chapters for ULI, including Market Profiles, and serves on the Housing Market Forecast Panel for the Housing Market Report. He is regularly cited in local and national journals, and has recently been featured in the Wall Street Journal and on Bloomberg News (including Bloomberg’s “On the Money” and “On the Economy” radio shows). He graduated in 1985 from the Wharton School of the University of Pennsylvania with a degree in economics and has been a guest lecturer at Harvard University. Hunter is a speaker at conferences on real estate opportunities and investing, as well as at ULI conferences, and is frequently called upon by key regulatory agencies of the U.S. government for his insights on the housing sector. Hunter has tracked and forecast housing markets and demographic/economic trends at the local level for 23 years.