Saturday, June 30, 2012

Miami-Dade property values rise for first time in four years - Miami-Dade -

Miami-Dade property values rise for first time in four years - Miami-Dade -

In a small conference room just outside County Hall’s commission chambers, Property Appraiser Pedro J. Garcia explained how county real-estate values rose almost 2 percent, to $190.7 billion, from a year ago, the first year-over-year increase since the real estate market slide began in 2007 – and a slight increase over his earlier estimate in late May.

“What we are seeing is a recovery period for Miami-Dade County,” Garcia said.

Nice to see some good news for a change.


Fred Pilot said...

Miami condos are a hot commodity. Mostly foreign investors are buying them for cash.

Anonymous said...

> Miami condos are a hot commodity.
> Mostly foreign investors are buying them for cash.

On November 28, 2011, this blog linked to a story about "Social Market Housing for the USA: Dream or Nightmare?", comparing housing policy in the United State to Singapore.

The original story noted that

How have the Singaporeans achieved such high ownership rates
despite having the richest economy in South East Asia? Many
factors come into play. Singapore has an aggressive building
program achieved through a public body - the Housing Development
Board (HDB). HDB apartments can only be sold to Singapore
citizens and those with permanent resident status, so their
prices cannot be inflated by foreign speculators.

I wonder if many of the problems with the U.S. housing market can be traced to thinking of homes as investments, rather than as places to live. And the resultant policies that favor investors over "traditional" homeowners (ie, the American families that live in the houses).

Saith Lord Romney: "ROMNEY: Are there things that you can do
to encourage housing. One is, don’t try and stop the
foreclosure process. Let it run its course and hit the
bottom, allow investors to buy homes, put renters in them,
fix the homes up and let it turn around and come back up.
The Obama Administration has slow-walked the foreclosure
processes that have long existed, and as a result we still
have a foreclosure overhang."
Note that Lord Romney has not a word to say about the people
who bought and live in those homes with their spouses and
children. He is concerned about the Important People.
That would be the "investors."

Anonymous said...

The increase in property values was explained by the libertarian Cato Institute back in 2005.

In "What Are Private Governments Worth?" (200 KB PDF) (HTML) (SSRN), Amanda Agan and Alexander Tabarrok wrote that :

Theory does suggest that HOAs increase home value.
. . .
Surprisingly little work has been done to test this theory. One of
the few empirical attempts to ascertain the value of HOAs appeared
in a recent issue of Regulation ("Accountability and Private
Governments," Spring 2005). In that article, authors Laura Langbein
and Kim Spotswood-Bright ask the right question: "Do homeowners
associations affect property values?" Unfortunately, they fail to
answer that question.

Langbein and Spotswood-Bright argue on theoretical grounds that
the governing boards of HOAs can become dominated by special
interest groups and thus fail to maximize the interests of most
owners. While their arguments are well-taken, all governments,
public and private, face the same problems. Nor do they acknowledge
that developers of HOAs have incentives to minimize special interest
politics and can do so in part by designing constitutions with
property restrictions, supermajority voting, and quorum rules.
. . .
Thus, they are unable to answer the fundamental question. Instead of
testing whether HOAs raise or lower sales prices, the authors look
at the effect of association fees on sales prices, and they find that
higher fees are associated with lower prices. We believe their model
is misspecified and misinterpreted. Without going into those problems
in detail, consider that Langbein and Spotswood-Bright find that
associations that provide more services have lower sales prices, even
after holding fees constant. We should he suspicious of any empirical
model that produces results at such variance with economic theory
and common sense.
. . .
we find that HOAs raise house value by 5.4 percent.
. . .
The typical house within an HOA during the time period we studied sold
for $255,000. We thus estimate that membership in an HOA increased house
value by nearly $14,000. In an efficient market, the annual fee for HOAs
would be capitalized in the sales price, so the $14,000 increase in home
value is the net value of living within an HOA, i.e., the increase in
value after all the benefits and costs of HOAs are summed.

Examining the other coefficients, we can express the value of an HOA in
another way. Holding all else equal, we estimate that consumers value a
three-bedroom home in an HOA about as much as a four-bedroom home without
an HOA. We suspect that most people consider this a significant increase
in value, which helps to explain why HOAs have become so popular.
. . .
It is also worth noting that we find that HOAs increase value by at
least 5-6 percent. Competition tends to push prices down to marginal
costs, so as the privatization of local government continues, the
estimated price-premium may fall even as consumer benefits from HOAs
. . .
Our data indicate that houses in HOAs in Northern Virginia are worth,
on average, more than 5 percent more than similar houses in the same
neighborhood but outside of HOAs. Given those large advantages, it is
not surprising that HOAs are growing rapidly.

We have shown that HOAs increase house value...