Miami Housing Market Slowing in Mid 2022 to Historical Sale Norms
According to the Miami Association of Realtors, when compared to a record July 2021, July 2022 Miami home sales were down year-over-year (2,375 vs. 3,632).
But July 2022 sales of 2,375 outperformed Miami’s pre-pandemic July totals as Miami averaged 2,325 total homes sales in the month of July from 2016-19.
Beating its pre-pandemic sales total with rising rates (from 3% to 6% this year) and low inventory illustrates the depth of demand for Miami real estate. Local demand remains fueled by major companies such as hedge fund Citadel and market maker Citadel Securities moving to South Florida, the return of global buyers, demographic shifts with rising millennial homebuyer and senior populations, high percentage of workforce working remotely, surging rental prices and more.
A recent Redfin report highlighted the Miami Mega Region as the No. 1 U.S. metro where homebuyers want to relocate.
With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers.
Vaccinated foreigners were allowed to resume travel to the U.S. back in November 2021 and that continues to lead to more international investment in South Florida – the No. 1 destination in the U.S. for foreign buyers. Global buyers purchase in Miami for myriad reasons including that Miami is a world-class global city with better real estate prices than other similar global cities. Foreign buyers feel at home with our incredible diversity and inclusion of all cultures, along with all our amenities.
Single-family home sales decreased 27.2% year-over-year, from 1,373 in record-breaking July 2021 to 999 in July 2022, due to lack of inventory and rising mortgage rates. Miami existing condo sales decreased 39.1% year-over-year, from 2,259 record-breaking July 2021 to 1,376 in July 2022, due to lack of inventory and rising mortgage rates.
In July 2021, Miami sales surged to a record-high because of 3% mortgage rates, higher supply (particularly in condos) and pandemic-driven demand.
In July 2022, Miami sales were impacted by higher rates of 5-6% when contracts were established in May and June and lower inventory.
Housing is sensitive to rising mortgage rates. 2018 marked the last time mortgage rates hit 5%. Miami July 2022 total home sales finished 1.9% higher than July 2018 (2,375 vs. 2,329).
South Florida: A Bargain in Comparison to Other Global Cities & U.S. Metros
Miami-Fort Lauderdale-West Palm Beach’s price per square meter is $3,170, far below at least 30 global cities and 13+ U.S. Metros including markets such as Hong Kong ($28,570), New York City ($17,191), San Francisco-Oakland-Hayward, CA ($8,250), Madrid, Spain ($6,173), Los Angeles-Long Beach-Glendale, CA ($4,740) and Seattle-Tacoma-Bellevue, WA ($4,460), according to National Association of REALTORS Profile of International Transactions in U.S. Residential Real Estate 2022.
Miami-Dade County single-family home median prices increased 10.7% year-over-year in July 2022, increasing from $515,000 to $570,000. Miami single-family median prices have risen for 128 consecutive months (10.6 years), the longest running-streak on record. Existing condo median prices increased 11.8% year-over-year, from $340,000 to $380,000. Condo median prices have increased in 130 of the last 134 months.
While median prices have increased nationally so has house-buying power because of a long-run decline in rates before March 2022 and the slow, but steady growth of household income. West Palm Beach (No. 5) and Miami (No. 6) ranked among the Top-10 U.S. metros where homebuyer income grew the most during the pandemic via Aug. 2022 Redfin report.
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Inventory for Miami single-family homes (3.1 months) and condos (3.3 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.
Locally, the greater share of Miami luxury sales is also part of the reason for the large year-over-year increase in median prices.
To battle national inflation, the Federal Reserve has aggressively raised rates this year and has plans for more hikes. High inflation and the Fed’s tightening policy are the main drivers behind rising mortgage rates.
Mortgage rates have risen from 3% in January to near 6% in July. On the same $300,000 mortgage, the monthly payment has risen from $1,265 in December to $1,800 today, according to NAR.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.41% in July, down from 5.52% in June. The average commitment rate across all of 2021 was 2.96%.
The mortgage rate is projected to land at 5.3% by 4Q 2022, according to NAR. That is still low compared to an all-time average of about 8% in the U.S.
Long term, the hope is higher rates will lead to more days on the market (gives buyers more choices). Higher rates will eventually lead to a moderation of the growth rate of pricing. With the growth rate of pricing cooling, total inventory could grow later. Historically, inventory expands six months after rates rise, but today’s market is unlike any other.
Miami Single-Family Home Inventory Rises Year-over-Year for Third Consecutive Month
Inventory of single-family homes increased 26% year-over-year in July 2022 from 2,957 active listings last year to 3,727 last month. Condominium inventory decreased 26.3% year-over-year to 6,246 from 8,473 listings during the same period in 2021.
New listings of Miami single-family homes decreased 1.6% to 1,639 from 1,666. New listings of condominiums decreased 19.1%, from 2,607 to 2,109.
Months’ supply of inventory for single-family homes increased 40.9% to 3.1 months year-over-year, which indicates a seller’s market. Inventory for existing condominiums decreased 32.7% to 3.3 months, which also indicates a seller’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Total active listings at the end of July 2022 decreased 12.7% year-over-year, from 11,430 to 9,973.
Nationally, total housing inventory at the end of July was 1,310,000 units, an increase of 4.8% from June and unchanged from the previous year. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 2.9 months in June and 2.6 months in July 2021.
Miami Real Estate Posts $267.2 Million Local Economic Impact Just in July 2022
Every time a home is sold it impacts the economy: income generated from real estate industries (commissions, fees and moving expenses), expenditures related to home purchase (furniture and remodeling expenses), multiplier of housing related expenditures (income earned as a result of a home sale is recirculated into the economy) and new construction (additional home sales induce added home production).
The total economic impact of a typical Florida home sale is $112,500, according to NAR. Miami-Dade County sold 2,375 homes in July 2022 and had a local economic impact of $267.2 million.
Miami total dollar volume totaled $1.8 billion in July 2022. Single-family home dollar volume decreased 24.1% year-over-year, from $1.4 billion to $1 billion. Condo dollar volume decreased 39.3% year-over-year, from $1.3 billion to $789.2 million.
Miami Distressed Sales Keep Dropping, Reflecting Healthy Market
Total Miami distressed sales decreased 14.6% year-over-year in July 2022, from 48 to 41. Short sales and REOs accounted for 0.2% and 1.5% year-over-year, respectively, of total Miami sales in July 2022. Short sale transactions decreased 72.2% year-over-year while REOs increased 20%.
Only 1.7% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.3% in July 2021. In 2009, distressed sales comprised 70% of Miami sales.
Miami’s percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented approximately 1% of sales in July, essentially unchanged from June 2022 and July 2021.
Miami’s Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 23,705, down 22.9% year-over-year, while existing condo-townhouse sales totaled 9,341 down 30.7% over 13,481 in July 2021. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2% (6.03 million in July 2021).
The statewide median sales price for single-family existing homes was $412,303 up 16.1% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $305,000, up 20.6% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
Nationally, the median existing-home price of all housing types in June was $403,800, up 10.8% from July 2021 ($364,600), as prices increased in all regions. This marks 125 consecutive months of year-over-year increases, the longest-running streak on record.
Miami Real Estate Attracting Multiple Bids, Buyers Going Over-List Price
The median percent of original list price received for single-family homes was 99% in July 2022, down 0.6% from 99.6% last year. The median percent of original list price received for existing condominiums was 99%, up 2.1% from 97% last year.
The median number of days between listing and contract dates for Miami single-family home sales was 17 days, even from last year. The median time to sale for single-family homes was 62 days, a 4.6% decrease from 65 days last year.
The median number of days between the listing date and contract date for condos was 20 days, down 53.5% from 43 days. The median number of days to sell for condos was 64 days, a 26.4% decrease from 87 days.
Miami Cash Sales 72.1% More than National Figure in July 2022
Cash sales represented 41.3% of Miami closed sales in July 2022, compared to 38.9% in July 2021. About 24% of U.S. home sales are made in cash, according to the latest NAR statistics.
Cash buyers are not deterred by rising rates. The high percentage of cash buyers reflects Miami’s top position as the preeminent American real estate market for foreign buyers, who tend to purchase with all cash as well as some moving from more expensive U.S. markets who can buy more with their profits from real estate sales.
Cash sales accounted for 51.2% of all Miami existing condo sales and 27.7% of single-family transactions.
