The real estate market has not experienced favorable circumstances the last three years. Many markets have seen rampant foreclosure and a lack of demand bringing their property values down over thirty percent. But sources in the National Association of Realtors and recent news suggest that the real estate market may be on an upswing.

Lawrence Yun, lead economist for the National Association of Realtors, believe the same domino effect of price dropping that brought the U.S. into their current housing crisis, will reverse and become a domino effect of increased sales. Yun believe the real estate market began its recovery in California several months ago and has set a chain reaction to other states like Colorado, Kansas, Minnesota, Missouri and Rhode Island, who have all seen a steady increase in sales last month.

The President of the National Association of Realtors, Richard F. Gaylord, is also optimistic that the real estate market is seeing a steady comeback. Gaylord believes that affordability of homes is what’s bringing buyers back to the market. Over the last three years homes have dropped over thirty percent in their value in many cities. For example a Miami Beach real estate that cost $350,000 dollars in 2005 could now be selling for $245,000 dollars. Though Yun’s California’s increase in sales effect has not hit Florida yet, the increasingly affordable real estate will likely attract demand back to the market.

While recent positive findings in the real estate market are certainly something to be optimistic about, Lawrence Yun warns real estate enthusiasts that the recover of the real estate market may be subject to “market disruptions”. The credit industries’ woes often negatively impact the real estate market and Yun believes it will cause fluctuations on the real estate markets road to recovery.

SHOULD I BUY NOW OR WAIT UNTIL THE PRICES DROP MORE?

I hear the same line of question from clients and Real Estate agents. The one that catches my attention the most is "Should I buy now or wait until the prices drop more?"

The answer is simple, if you find a great property with the right location and price and you have the means to buy it, go ahead and start enjoying it now. Exclusive and unique properties in prime oceanfront areas are limited. Such a rare commodity that is available today might not be available tomorrow. Of course you may argue that there may be other properties in the future, but if you find "the right one" and the price is within your budgeted purchase price, then why wait?

There may not be so many properties you will fall in love with. But, if you have spent time and effort to find the perfect property for you and your family, my advice is to act now. I will help you with the negotiation process and guide you all the way to closing as seamlessly as possible.

If you decide to wait for the "better deal", the market could suddenly turn around. It's a simple law of supply and demand, such as the price of gasoline and its roller coaster ride we have just witnessed!

Real Estate is highly fragmented. I cannot speak for every area. But I firmly believe that the prices of luxury oceanfront properties in South Florida have bottomed-out.

This is my area of expertise. I am constantly analyzing and visiting properties, getting input from numerous clients and real estate professionals on current market conditions. This gives me the edge on local knowledge - more so than your Attorney, your Accountant, your Banker, or your friends around the water cooler. Some people are waiting for a subliminal sign or an official New York Times announcement that the Florida market "has bottomed-out".

In the meantime, shrewd investors and knowledgeable buyers are picking up the best properties available. There are excellent opportunities to be had right now!

I invite you to contact me now for the best opportunities in prime South Florida's oceanfront locations. As always I am available 24/7 by email at serge@sergekay.com or by cell 786-512-5555. This month I launched my new Mega-Site which is filled with all the information, listings. comparables you will need to acquaint yourself with the area. Please visit at www.sergekay.com

Serge Kay.

Miami & Miami Beach Condo Trends - October 2008

Below, you will find the Miami-Dade County condo inventory and months of supply figures for October 2008. The first box to the left reveals the total number of condos that are currently available for sale on the MLS throughout Miami-Dade County. The second box discloses the total number of closed sales that occurred in the month of September 2008. The third and fourth boxes show the months and years of condo supply in Miami-Dade County. As you can see, the figures are also subdivided into various price ranges to reveal which part of the condo market has been most affected. The % change box will show you how the inventory levels have changed since my last update in May 2008.

The overall supply of condos listed in the MLS in Miami-Dade County has dropped from 25,461 to 24,788 since May 2008. On the flip side, the number of closed sales in the previous month has gone up from 474 to 527 creating a 12.51 percent drop in the years of inventory in Miami-Dade County since the last update. It’s once again surprising that inventory levels have dropped despite the thousands of new condos that have been completed and delivered in 2008.

The following statistics encompass only those condos located throughout Miami (not other areas of Dade County such as Miami Beach, Aventura, Sunny Isles Beach, etc.):

The supply of condos in the MLS in Miami has dropped from 10,281 to 9,903 since May 2008. The number of closed sales in the previous month has gone up from 161 to 192 creating a 19.21 percent drop in years of inventory in Miami since the last update. As you can see, a large portion of these closed sales occurred in the $0-$249,999 price range. The inventory levels of the $500,000+ categories, however, have increased.

The following statistics encompass only those condos located throughout Miami Beach:

The supply of condos in the MLS in Miami Beach has dropped from 4,109 to 3,949 since May 2008. However, the number of closed sales in the previous month has also dropped from 113 to 98 creating a 10.82 percent increase in years of inventory in Miami Beach since the last update. In fact, with the exception of the $500,000-$999,999 price range, the years of inventory has risen for each category.

My good friends:
A propos of Halloween being just around the corner, our financial markets have become this season’s scariest goblin. Watching investments evaporate into thin air is a frightening prospect; wondering if they will ever re-capture more than a fraction of their original value an even more troublesome prospect. But that’s the risk associated with certain paper assets. In their worse-case scenario as an investment risk they have the potential of being worth scarcely more than the paper they’re printed on.
Not so with hard assets, such as gold, silver and real estate. While the value of these precious commodities is certainly given to market fluctuations, it’s impossible for their tangible touch-and-feel qualities to simply vanish overnight.
As challenging as the real estate market has been over the past few years, your home remains an asset that can never be made worthless by callous acts of corporate greed or blind mismanagement. Regardless of its up-or-down value on any given day you have the inestimable pleasure of enjoying it through good markets and bad. To borrow from an oft-quoted ad campaign that has worked its way into the pantheon of pop culture: What you pay for a home is one thing, what you eventually sell it for another; the joy and comfort you derive from it along the way….priceless.

We would love to hear your comments and suggestions as to what you would like to read in the weeks and months ahead. Please email them to me - c/o serge@sergekay.com.

Buyers from Foreign Sellers of U.S. Real Property Beware
IRS Warns that Disregarded Entities Cannot Certify Domestic Transferor Status
for the Purpose of Withholding under FIRPTA

The Internal Revenue Service (“IRS”) recently issued Chief Counsel Advice 200836029 which reiterated existing policy that an entity which has made an election to be disregarded may not certify that it is the transferor of a United States real property interest for purposes of FIRPTA (an acronym standing for “Foreign Investment in Real Property Tax Act” contained in Internal Revenue Code (“IRC”) Sections 897 and 1445).

The IRS has been made aware that some buyers of United States real property are not withholding the required 10% of the sales price when purchasing from domestic entities which have made an election to be treated as disregarded by their foreign owners. A disregarded entity may not certify that it is the transferor of a United States real property interest for the purpose of avoiding this withholding. The owner of the disregarded entity is treated as the transferor for United States income tax purposes, and as such must provide the certificate of non-foreign status to avoid the withholding.

If the owner of the disregarded entity is an individual United States tax payer, he or she must provide the certificate of non-foreign status to avoid withholding under IRC Section 1445. If the owner of the disregarded entity is another entity, the Treasury Regulations provide a model form for the entity to use, which includes a certification that the owner of the disregarded entity is not a foreign corporation, a foreign partnership, a foreign trust or a foreign estate as well as a certification that the entity is not also a disregarded entity under United States tax law.

If the owner of the disregarded entity cannot or does not certify its non-foreign status and that it is not itself a disregarded entity, the buyer must withhold 10% of the purchase price. As a practical matter, since purchasers of real property may ultimately be responsible for withholding, interest and penalties, the purchaser should obtain a non-foreign certificate which includes representations that the entity is not a disregarded entity for United States income tax purposes when purchasing real property from any domestic entity.

I was watching Channel 7 News last week when a special segment about real estate foreclosures in South Florida aired. I felt badly for the people in this story that are losing their homes but there are two messages in the video segment below which I feel may be beneficial to some.

It is my feeling that foreclosures in general ARE NOT the best buys for one reason: the majority of the foreclosures that are available were originally purchased at or near the “peak” of the market—and the banks have lent too much money on these properties. Since the banks are owed so much money on a typical foreclosed property, they don’t have the ability to sell it at today’s market price. From WSVN’s Foreclosure Forced Out

Auctioneer: “Welcome to the mortgage foreclosure sale.”

Each week, hundreds of properties in foreclosure are auctioned off.

Auctioneer: ”Home Equity Mortgage Corp. vs. Butler.”

On this day, for the first time in 21 years, not a single property sold, the banks had to keep them all.

Luis Valdeon: “The banks lent too much money. They did first mortgage and second mortgages, and they’re completely off of what the price really are, and that’s why everything is so high; you can’t sell them.”

And the foreclosed properties are piling up.

Why The Miami Beach Real Estate Market Isn’t That Bad

This is a five year history for the South Beach condo market for area code 33139. The dark green bar represents condo sales and the light green bar represents condo units on the market.

I know that some of the numbers are a bit hard to read but they really don’t matter anyway. What matters is the incredible amout of inventory (light green bar) that started to accumulate in May 2005. The number of sales are off from the peak, but nothing alarming. The real story here is the amount of inventory on the market. People have not stopped buying here and Miami Beach real estate continues to sell if it is priced right. If you need to sell your Miami Beach condo, PRICE IT RIGHT. If you don’t need to sell your condo, now is NOT the time to sell and you should take it off the market until some of the inventory gets absorbed. More from Foreclosure Forced Out

Barry Habib: “There’s no simple solution.”

Barry Habib is a nationally known mortgage expert. His advice? Get out before you get in trouble.

Barry Habib: “If they have equity in it, they’ve got to find a way to protect that equity. Put the house up for sale. Don’t be greedy. Don’t try and put it up at an unrealistic number. Homes sell, and they sell very quickly if they’re priced right in every market.”

Miami Beach real estate, South Beach real estate, South Beach condos, Foreclosures