HI, Ray, We inherited a house in the Coconut Grove section of Miami and we’re trying to decide what would be the wisest thing to do with it. Given the current Florida real estate market, is it better to sit on the property and continue to pay the mortgage and taxes until the market turns around or should we put the place up for sale now? Thanks, Frank
Hi Frank, There’s no quick answer here as many factors help to determine timing and saleability of real estate. Let’s consider the three major ones: Location, Property Condition and Market Trends.
First, Coconut Grove is a desirable neighborhood where properties are faring better than some other parts of Dade County so that’s a plus . Next comes condition. Today, updated Grove homes in good condition are generally selling at 2001-2004 prices. However, homes that are in poor shape and need updating are selling at very low prices, with buyers re-negotiating heavily after they complete their inspections.
As to current Market Conditions, there is a good chance prices will see little growth in the next couple of years. Downward price pressure will be fueled by bank-owned properties being released to the market in the new year. Finally, when there is hyper-appreciation like we saw from 2000 to 2006, there is usually a steep decline in prices, followed by a trough, where prices can remain stagnant for many years. Historically this is a pendulum swing that may last many years; the last such trough was from 1987 to 1996, approximately 9 years.
So the Answer? If your inherited home is in poor condition and needs updating it makes sense to sell it now and stop throwing good money after bad. But if the place is in good, saleable shape ,the next step I would recommend is to have an analysis done and get the hard facts you need to work with. The analysis should include a site visit to evaluate the condition, a CMA to determine current value, a review of carrying costs, and then run projections on appreciation. With this information you should be able to make an informed decision. I hope this is helpful,