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Miami-Fort Lauderdale-Miami Beach Area
Local Market Report, Third Quarter 2011
Today's Market…
Median Price (Red Line) and One-year Price Growth
$450,000 40%
$400,000 30%
$350,000 20%
$300,000
10%
$250,000
0%
$200,000
-10%
$150,000
$100,000 -20%
$50,000 -30%
$0 -40%
2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
Miami U.S. Local Trend
Price Activity
Current Median Home Price (2011 Q3) $187,600 $169,267
Prices are still down from a year ago,
1-year (4-quarter) Appreciation (2011 Q3) -12.7% -4.3% but the trend is improving
3-year (12-quarter) Appreciation (2011 Q3) -34.8% -16.0%
3-year (12-quarter) Housing Equity Gain* -$100,200 -$32,233 The local housing price correction
7-year (28 quarters) Housing Equity Gain* -$112,300 -$29,733 eliminated all of the equity gained
9-year (36 quarters) Housing Equity Gain* during the housing boom
-$11,800 $2,267
*Note: Equity gain reflects price appreciation only
Conforming Loan Limit** $423,750 $729,250
Most buyers in this market have access
FHA Loan Limit $423,750 $417,000 to government-backed financing
Local Median to Conforming Limit Ratio 44% not comparable
**Note: the 2009 loan limits for FHA and the GSEs were extended through 2010.
State Home Sales (Red Line) and Sales Growth
1,000s
700 80%
600 60%
500
40%
400
20%
300
0%
200
100 -20%
0 -40%
2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
Home Sales Florida U.S.
State Existing Home Sales The sales level is much higher than a
10.6% 17.0%
(2011 Q3 vs 2010 Q3) year ago and growing.
Drivers of Local Supply and Demand…
Local Economic Outlook Miami U.S.
Not
12-month Job Change (Sep) 24,200
Comparable Employment has held up and is on an
Not upward trend
12-month Job Change (Aug) 22,900
Comparable
Not
36-month Job Change (Sep) -117,600 Miami's unemployment rate lags the
Comparable
national average, but has improved
Current Unemployment Rate (Sep) 10.6% 9.1% relative to the same period last year
Year-ago Unemployment Rate 11.7% 9.6%
Local employment growth is strong
compared to other markets
1-year (12 month) Job Growth Rate 1.1% 0.8%
Share of Total Employment by Industry
Miami-Fort Lauderdale-Miami Beach Area U.S.
#N/A #N/A Natural Constructio #N/A #N/ANatural Constructio
Resources n Resources n
Natural Resour 0.0% and Mining
0.5 3.8% Natural 0.6% Mining
and 0.6% Manufacturi
0.0% Manufacturi 0.6% ng
Construction 3.8% 83.9 Governmen
Constru 0.6%
Governmen ng t 8.9%
Manufacturing t 3.3% 72.1 3.3% Manufac8.9%
16.9%
Other
Other 14.3%
Trade/Transpo 22.8% 501.6 Services
Trade/T 18.9%
Services Trade/Tran
4.1%
4.3% sportation/U Trade/Tran
Information 1.9% 40.8 tilities
Informa2.0%
Leisure & sportation/
Leisure & 22.8% Hospitality Utilities
Financial Act
Hospitality
6.8% 150.3 Financi 5.7%
10.0% 18.9%
Prof. 11.6%
& Busin 15.3% 336.1 Profess13.2%
Educ. & Heal 15.9% 349 Information Educat 15.3%
1.9%
Leisure & Ho 11.6% 254.6 Leisure10.0%
Educational
Educ. & Information
Financial & Health
Health 4.3%
Other Service 93.5
Prof. & Activities Other S4.1% Financial 2.0%
Services Services Profession
Business 6.8% 15.3% Activities
Government15.9%14.3% 314.8 96.2% Govern16.9% #N/A al &
Services 5.7%
Business
#N/A #N/A 15.3% #N/A #N/A Services
#N/A #N/A #N/A #N/A 13.2%
12-month Employment Change by Industry in the Miami-Fort Lauderdale-Miami Beach Area (Sep - 2011)
Goods Producing NA Information -2,200
Natural Resources/Mining/Construction NA Financial Activities -700
Natural Resources and Mining 0 Prof. & Business Services 5,800
Construction -3,900 Educ. & Health Services 13,100
Manufacturing -1,900 Leisure & Hospitality 11,100
Service Providing Excluding Government NA Other Services 400
Trade/Transportation/Utilities 3,400 Government -900
State Economic Activity Index Florida U.S.
The economy of Florida is growing
1.3% 2.8%
12-month change (2011 - Sep) more slowly than the rest of the nation,
but improved modestly from last
-6.8% -2.6%
36-month change (2011 - Sep) month's 1.07% change
New Housing Construction
Local Fundamentals Miami U.S.
12-month Sum of 1-unit Building Permits through The current level of construction is
3,562 not comparable
Sep 2011 66.7% below the long-term average
Reduced construction will limit new
8-year average for 12-month Sum of 1-Unit supply to the market, allowing demand
10,711 not comparable
Building Permits to catch up with the inventory more
quickly
Construction is on the rise relative to
Single-Family Housing Permits (Sep 2011)
11.0% -10.3% last year, suggesting that the local
12-month sum vs. a year ago
inventory has stabilized
Construction: 12-month Sum of Local Housing Permits
(Historical Average Shown in Red Dashed Line)
30,000
25,000
20,000
15,000
10,000
5,000
0
While new construction is the traditional driver of supply in real estate, foreclosures now have a strong impact on
inventories, particularly at the local level. Rising inventories, through construction or foreclosure, place downward
pressure on the median home prices.
State Total Foreclosure Rate vs. U.S Average
(U.S. Average in Blue Dashed Line)
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Source: Mortgage Bankers' Association
Foreclosures by Type
Monthly Market Data -
August 2011 Miami U.S.
6.4% 6.6% 4.9 4.1
Market Share: % % The Miami market has been able to
Prime (blue), Alt-A 87.1% 6.4% 6.6% 90.9% 4.9% 4.1% contain both subprime and prime
(green), and Subprime 87.1 90.9 lending issues
(red) % %
The local prime rate fell modestly from
9.7% 3.2%
PRIME: 9.99 9.67 3.43
3.15
March of last year
Foreclosure + REO % % %
%
Rate The current local prime rate is high
Mar-11 Aug-11 10.0% Mar-11 3.4%
Aug-11 compared with the current U.S. average
There was modest increase locally
33.1% 18.9%
SUBPRIME: 33.12 18.8 compared to 6 months earlier
31.39 % 18.1 8%
Foreclosure + REO % 5%
Rate The current local rate is high given the
31.4% Mar-11
18.2%
Aug-11
Mar-11 Aug-11 U.S. average
The alt-A foreclosure rate rose slightly
ALT-A: 31.20 31.2% 15.2 15.2%
30.89 15.1
over the most recent 6 months
Foreclosure + REO % 1%
% 8%
Rate The current rate for Miami is high
Mar-11 Aug-11 30.9% Mar-11 15.2%
Aug-11
compared with the U.S. average
The "foreclosure + REO rate" is the number of mortgages, by metro area, that are either in the foreclosure process or have completed
the foreclosure process and are owned by banks divided by the total number of mortgages for that area.
Source: First American CoreLogic, LoanPerformance data
Prime Foreclosures and Delinquencies in Process
Monthly Market Data -
August 2011 Miami U.S.
41.1% 41.4% 40.4% 26.6% 27.8% 27.5% The local 60-day delinquency rate fell
41.36 27.8 over the 6-month period ending in
Prime: 60-day 40.44 %
41.09 27.5
0%
% % 2% 26.6 August suggesting that 90-day
Delinquent 0% delinquencies will decline in the near
Aug-10 Mar-11 Aug-11 Aug-10 Mar-11 Aug-11 future
13.7% 13.6% 12.6% 5.8% 6.2% 6.3% Miami's 90-day delinquency rate
13.60 13.66 6.25 6.24 climbed faster than the national average
Prime: 90-day 12.56 % % % % 5.82 over the most recent 6-month period
Delinquent % % suggesting a bulge of foreclosures in
Aug-10 Mar-11 Aug-11 Aug-10 Mar-11 Aug-11 the future
The increase in the 90-day delinquency
9.7% 10.0% 8.7% 3.2% 3.4% 3.2% rate over the most recent 6-month
Prime: 9.99 9.67
3.43 period suggests a near term increase in
8.71 % 3.17 % 3.15
Foreclosure + % % % % the foreclosure rate, which should then
REO Rate shrink as the decline in 60-day
Aug-10 Mar-11 Aug-11 Aug-10 Mar-11 Aug-11 delinquencies moves its way through
the system
Source: First American CoreLogic, LoanPerformance data
Affordability
Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income
(Local Historical Average Shown in Red, U.S. Average in Green)
30%
25%
20%
15%
10%
5%
0%
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Monthly Mortgage Payment to Income Miami U.S.
Ratio for 2010 11.0% 15.1% Historically strong and an improvement
Ratio for 2011 Q3 9.6% 13.9% over the second quarter of 2011
Historical Average 16.4% 22.0% More affordable than most markets
Recent Trend - Local Mortgage Servicing Cost to Income
(Historical Average Shown in Red Dashed Line)
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3
Median Home Price to Income Miami U.S.
1.8 2.4
Ratio for 2010 The price-to-income ratio has fallen and
is below the historical average
1.6 2.3
Ratio for 2011 Q3
Historical Average 2.1 2.7 Affordable compared to most markets
Ratio of Local Median Home Price to Local Average Income
(Local Historical Average Shown in Red, U.S. Average in Green)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
The Mortgage Market
30-year Fixed Mortgage Rate and Treasury Bond Yield
280 7.0%
240 6.0%
200 5.0%
160 4.0%
120 3.0%
80 2.0%
40 1.0%
0 0.0%
2006 Q3 Q1 2007 Q3 Q1 2008 Q3 Q1 2009 Q3 Q1 2010 Q3 Q1 2011 Q3
Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis)
After a soft second quarter, the economy was shocked by three events that came together nearly within the same weak; a
deadlock in Congress and near miss on the budget extension, renewed concerns about the Greek debt crisis impacting
the US, and a sharp, downward revision to 1st and 2nd quarter GDP estimates. The result was a 15% or more correction
in the equity indexes, which sent investors into US Treasuries seeking a risk free asset. The yield on the 10-year
Treasury reached near record lows and the 30-year FRM followed suit, slipping under 4% multiple times. However, the
gap between the 10-year Treasury and the 30-year fixed opened up as the risk to MBS investors of increased refinancing
rose, creating resistance for falling mortgage rates. Fuel prices eased in the 3rd quarter and are likely to do so through
the fall. At the same time there is little core inflation pressure, which combined with the Federal Reserve’s “operation
twist” that is intended to flatten the yield curve putting downward pressure on long-term rates, should sustain a near-
record low mortgage rate environment through the fall.
A Closer Look…Local Rental
Vacancy Rates
U.S. (blue) and Local (red) Rental Vacancy Rates
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Rental Vacancy Rate Florida U.S.
Ratio for 2010 10.1% 10.2%
Ratio for 2011 Q3 13.6% 9.8% Data for Florida Not Available
Historical Average 10.1% 8.6%
#N/A
Geographic Coverage for this Report
The Miami area referred to in this report covers the geographic area of the Miami-Fort Lauderdale-Miami Beach metro
area as officially defined by the Office of Management and Budget of the U.S. Government. The official coverage area
includes the following counties:
Broward County, Miami-Dade County, and Palm Beach County
More information on the OMB's geographic definitions can be found at http://www.whitehouse.gov/omb/inforeg_statpolicy/
