Low Supply, High Demand Fueling Home Sales and Price Growth
MIAMI – (RealEstateRama) — The Miami single-family home market enjoyed its best August in history, breaking a 22-year record for the most ever August single-family home sales as dollar transaction volume and median prices posted double-digit gains, according to a new report by the MIAMI Association of REALTORS® (MIAMI) and the Multiple Listing Service (MLS) system.
Miami-Dade County set an all-time August record with 1,239 single-family home sales, eclipsing the previous August record of 1,232 set in 1994. Last month’s sales total is an 8.7 percent increase from the 1,140 single-family homes sold a year ago. Total single-family dollar sales volume soared 16 percent to $569 million as median prices jumped 14.5 percent to $300,000. Home prices have risen for 57 consecutive months, a streak spanning nearly five years.
“With a lack of local buildable land, purchasing a Miami single-family home is one of the wisest investments you can make,” said Mark Sadek, a Coral Springs Realtor and the 2016 MIAMI chairman of the board. “Home buyers are increasingly focusing on mid-market priced Miami homes. A significant growth in mid-market sales coupled with increased non-distressed or traditional home purchases catapulted Miami real estate to a historic month.”
Historic low mortgage rates and Miami’s growing population also fueled the sales activity. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.44 percent in August.
Nearly $1 Billion in Total Existing Residential Sales in August
Total sales volume surged to $954.4 million last month, a 3.6 percent increase from the $920.8 million volume a year ago. The sales do not include Miami’s multi-billion dollar new construction condo market.
Total existing Miami-Dade County residential sales — which posted a record year in 2013 and near record years in 2014 and 2015 — decreased 3.3 percent year-over-year from 2,471 to 2,389.
Existing condo sales — which are competing with a robust new construction market — decreased 13.6 percent year-over-year, from 1,331 transactions to 1,150.
Inventory shortage for properties priced below $300,000 continues to impact sales. Inventory has dropped 30.6 percent year-over-year for single-family homes priced below $300,000, from 1,861 listings to 1,292.
Distressed sales comprise a smaller part of today’s market. Total Miami distressed sales have declined 39.9 percent year-over-year, from 637 transactions in August 2015 to 383 last month. Only 16 percent of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 25.8 percent in August 2015. In 2009, distressed sales comprised nearly 70 percent of Miami sales.
Short sales and REOs accounted for 3.0 and 13.1 percent, respectively, of total Miami sales in August 2016. Short sale transactions dropped 49.0 percent year-over-year while REOs fell 37.3 percent.
Nationally, distressed sales were 5 percent of sales in August (lowest since NAR began tracking in October 2008) and down from 7 percent a year ago
Miami Median Prices Rise for All Properties
Median sale prices for single-family homes jumped 14.5 percent, increasing from $262,000 to $300,000. Existing condos experienced 5.7 percent price growth, climbing from $203,500 to $215,000.
Miami real estate home prices have risen for 57 consecutive months, a streak spanning nearly five years. Condo prices have increased in 61 of the last 63 months.
Despite the increased prices, Miami properties remain at 2004 pricing levels and at a major bargain compared to other global cities. A 120-square meter condo in Miami-Fort Lauderdale-Miami Beach cost $149,900 on average, according to the National Association of REALTORS® (NAR). London ($960,840), Hong Kong ($776,280), and New York ($1.6 million) prices are at least five times higher.
Mid-Market Sales Powered Miami Single-Family Homes to Record Month
Sales for Miami single-family homes priced between $200,000 and $600,000 jumped 33.6 percent year-over-year in August, increasing from 633 to 846. The $200K to $600K sector represented 68.3 percent of total Miami single-family home sales in August 2016.
The $300,000 to $399,999 sector was particularly popular in August 2016, posting 284 transactions for a 50.3 percent increase vs. the previous year.
Non-distressed or traditional single-family home purchases posted sizable growth, increasing 26.7 percent from 813 sales to 1,030. Non-distressed sales are a sign of a healthy market.
In the existing condominium sector, luxury sales posted moderate gains. Miami real estate sold 57 existing condominiums priced at $1 million or above in August, which was a 3.6 percent increase from the 55 sold last year.
Miami Real Estate Selling Fast and Close to List Price
The median number of days between listing and contract dates for Miami single-family home sales fell 10.4 percent year-over-year to 43 days. The median number of days between the listing date and closing date for single-family properties dropped 1.0 percent to 101 days.
For condos, the median time to contract decreased 12.2 percent year-over-year to 72 days. The median number of days between the listing date and closing date decreased 0.8 percent to 126 days.
The median percent of original list price received for single-family homes was 96.0 percent in August 2016, a decrease of 0.1 percent. The median percent of original list price received for existing condominiums was 93.9 percent, a decrease of 0.2 percent.
Lack of Condo Financing Continues to Impact Sales
In addition to competing sales from new construction units, the lack of access to mortgage loans is also impacting existing condominiums. Of the 9,307 condominium buildings in Miami-Dade and Broward Counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to statistics from the Florida Department of Business and Professional Regulation and FHA.
National and State Statistics
Nationally, total existing-home sales declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August from a downwardly revised 5.38 million in July.
Statewide, closed sales of existing single-family homes totaled 25,070 last month, up 8.2 percent from August 2015, according to Florida Realtors. Florida’s condominium sales totaled 9,484 last month, up 3.3 percent compared to August 2015.
The national median existing-home price for all housing types in August was $240,200, up 5.1 percent from August 2015 ($228,500). August’s price increase marks the 54th consecutive month of year-over-year gains.
The statewide median sales price for single-family existing homes last month was $225,000, up 12.6 percent from the previous year, according to Florida Realtors. The statewide median price for townhouse-condo properties in August was $160,000, up 6.7 percent over the year-ago figure. Statewide median sales prices for single-family homes and condos have risen for 57 consecutive months.
Miami’s Cash Buyers Represent More than Twice the National Average
Miami cash transactions comprised 40.7 percent of August total closed sales, compared to 49.6 percent last year. Miami cash transactions are nearly double the national average of 22 percent. Miami’s high percentage of cash sales reflects South Florida’s ability to attract a diverse number of international home buyers, who tend to purchase properties in all cash.
Condominiums comprise a large portion of Miami’s cash purchases as 56.8 percent of condo closings were made in cash in August compared to 25.7 percent of single-family home sales.
Seller’s Market for Single-Family Homes, Buyer’s Market for Condos
Inventory of single-family homes increased 9.8 percent in August from 5,777 active listings last year to 6,346 last month. Inventory has dropped 30.6 percent year-over-year for single-family homes priced below $300,000, from 1,861 listings to 1,292. Condominium inventory increased 20.1 percent to 14,055 from 11,703 listings during the same period in 2015.
Single-family homes have a 5.7-month supply, which indicates a sellers’ market. Existing condominiums have an 11.7-month supply, which indicates a buyers’ market. A balanced market between buyers and sellers offers between six and nine months supply of inventory.
Total active listings at the end of August increased 16.7 percent year-over-year, from 17,480 to 20,401. Active listings remain about 60 percent below 2008 levels when sales bottomed. New listings of Miami single-family homes increased 5.1 percent from 1,697 in August of last year to 1,784 last month. New listings of condominiums increased 3.0 percent, from 2,203 to 2,693.
Nationally, total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than a year ago (2.27 million) and has declined year-over-year for 15 straight months. Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in July.
New Construction Market Update
Most Miami preconstruction condo developers require a 50-percent cash deposit on new units. The deposit is not only one of the highest in the United States but is significantly higher than the 20 percent required during the last real estate cycle. The large cash deposits show how committed Miami’s preconstruction condo buyers are to the local market.
Fifty-six condo towers with 5,720 units have been completed in Miami-Dade County east of I-95 since the start of 2011, according to a Sept. 20 report from preconstruction condo projects website Cranespotters.com and MIAMI.
There are 75 towers with 11,736 units under construction in Miami-Dade County east of I-95. About 55 towers with 7,026 units are planned, but have not begun development. About 73 towers with 9,891 units are proposed in Miami-Dade County east of I-95.
To access August 2016 Miami-Dade Statistical Reports, visit www.SFMarketIntel.com
Note: Statistics in this news release may vary depending on reporting dates. MIAMI reports exact statistics directly from its MLS system.