Coconut Grove home prices rise 21% in a year

Coconut Grove’s residential market remains in high demand as the median price for single-family homes increase 21% due to lack of inventory.

In September, October and November, said Ron Shuffield, president and CEO of Berkshire Hathaway HomeServices EWM Realty, “the median price of a single-family home in Coconut Grove, zip code 33133, was $2.05 million. If you looked back just one year prior for that same three-month period … the median price was $1.7 million.”

Twenty-nine homes sold for the median of $2,050,000 while 36 sold for the median price of $1.7 million the prior year. This increase in value is above the overall county gain, as the median sale price for single-family homes in the county had risen from $565,000 to $613,000.

“We saw a 21% increase in the value of a single-family home [in Coconut Grove] but we have to keep in mind when I’m looking at the entire county, that’s every price range, every neighborhood,” said Mr. Shuffield. “Neighborhoods that are the best, neighborhoods that are average; but for single-family homes across the entire county in the last quarter, September, October, November, increased 9% value, whereas in Coconut Grove they increased 21% in value for single-family homes.”

There is a direct correlation between the increase in value of homes and the lack of inventory.

“The increase in value is above the county at large because of the desirability and the very short supply of properties in Coconut Grove,” said Mr. Shuffield. “Coconut Grove is a very small place, and the more people want to buy there, the more pressure that will put on upward pricing. But as we start to increase the inventory and the interest rates go down, that will spur more buyers.”

Other professionals have noticed a slowdown in the real estate market due to interest rates and lack of inventory.

“The residential market right now, is in what we call this classic real estate paradox, which is buyers who want to buy have been a little hesitant because of interest rates and sellers who don’t need to sell and don’t want to sell because they got low interest rates and there isn’t really a desire,” said David Siddons, president of David Siddons group at Douglas Elliman. “We have a tragic situation with a lack of inventory. Product when it is available, when it’s good, it flies. The challenge is we just don’t have enough of it.”

Although the optimal supply on the market is six to nine months’ worth of monthly sales for the overall market, in a market like Coconut Grove with higher median prices, the optimal number of months of supply differs, said Mr. Shuffield.

When “we’re dealing in markets where the average median price is $2 million, then we feel comfortable if we have 12-18 months of supply. And we’re right at the low end of that today: 12 months’ supply,” Mr. Shuffield said. “But we’ve been increasing that pretty dramatically since the spring of this year. In the spring of this year, we only had three and a half months of supply and … in November alone 15 months of supply, so we’re seeing our months of supply increasing because our number of new listings are increasing.”

If the months of inventory continue to increase, a shift in prices could be seen.

“Pricing will continue to be affected by the level of inventory, and once we grow our months of supply past this 12-18 months in Coconut Grove, then we will start to see prices begin to really level off and in some cases, probably decrease a little bit,” said Mr. Shuffield.

The median price for condominiums sold in September, October and November in Coconut Grove was $1,240,000, and a year ago during the same three-month period, the median price was $821,000, an increase of 51%, said Mr. Shuffield.

Despite the increase in prices in the Coconut Grove real estate market, sales are increasing.

“In Coconut Grove … single-family homes, townhomes and condominiums, what we’ve actually seen as a year over year, there’s been about a 21.2% increase in sales in terms of the number of closed sales year over year,” said Carlos Villanueva, district sales manager for the Coral Gables and Coconut Grove office at the Keyes Company. “We’ve also seen an increase in cash sales by approximately 56.3%. A lot of that is driven because of the higher interest rates. As of recent, rates have dropped dramatically, so we may see a pivot or a shift in that.”

Fixed rates across the country have also seen a change.

“According to the Freddie Mac primary mortgage weekly market survey, the average 30-year fixed rate mortgage across the country dropped to 6.95% for the week ending Dec. 14, 2023, the lowest rate since Aug. 10, 2023. On Oct. 26, the rate had risen to 7.79%; therefore, this decrease of 0.84% in the rate over the past seven weeks has encouraged an immediate revival of additional buyers entering the market,” said Mr. Shuffield.

“This significant decrease in the annual 30-year mortgage rate,” he said, “equates to an 8% decrease in the overall principal and interest portion of a buyer’s monthly home payment – yielding annual savings of just shy of $7,000 for a borrower of $1 million at today’s rate versus the higher rate of just seven weeks ago.”

Coconut Grove caters to many buyers as it is home to top schools and unique dining experiences; this contributes to the community’s growth and attraction.

“There’s just a lot to offer [in Coconut Grove],” said Mr. Villanueva. “It’s a very walkable community. It provides a lifestyle that many are seeking when it comes to live, work and play, and it’s all concentrated within a relatively reasonable radius. That makes it very attractive for people to make Coconut Grove their home … great community, pricing is strong, demand is strong, the fundamentals are strong. The education and the influence that are attracted there are also very strong… It’s just really a strong market to be in and it’s gotten stronger in the last five years.”

Coconut Grove has also attracted outsiders as they join the residential community.

“We definitely see a substantial amount of migration from the Northeast as well as from the Midwest, coming into Coconut Grove,” said Mr. Villanueva. “As of recently, we’ve also seen some migration from California … as well from a foreign national perspective, quite a bit from Europe.

We’re seeing German, French, Italians … that like the Grove lifestyle, and they’ve been making some acquisitions there.”

Other professionals in the field have also noticed Coconut Grove attracting more people.

“Everybody wants to live there and there’s a lack of availability of options,” said Mr. Siddons. “But the New Yorkers, especially the people who move from Greenwich or Westchester or some of the sub areas of New York, absolutely love it because it’s … got a real organic feel. Sometimes, they’ll say to me it feels a little bit like the [Greenwich] Village. Very laid back and those cafes, restaurants. Very cool, but very little product. Because once it’s discovered, nobody wants to leave.”

However, Coconut Grove has not always been what it is today. Throughout the years, it has shifted from a laid-back destination to a more sophisticated location.

“It’s unique,” said Mr. Villanueva. “Coconut Grove used to be the completely bohemian artsy neighborhood, now it’s become more of a luxe neighborhood. Because of all the condo developments and new restaurants, the redevelopment of CocoWalk, the redevelopment of the waterfront … it’s become a very desirable waterfront neighborhood, not that it wasn’t before, but it used to be different. You used to go to Scotty’s Landing and sit in plastic chairs and have fish dip and a mahi sandwich. Now you actually go to more of a gastronomic experience with the new restaurants … like Key Club and PLANTA [Queen].”

The city continues to grow and attract more residential buyers. However, its geographical size continues to limit availability.

“It’s a first choice for many families when they come into Miami,” said Mr. Siddons. “There’s no other neighborhood like it. It’s really not replicable…. With a lot of people moving in, when they discover it, it is justifiably a first choice for many buyers, but it’s a very small geographical area.”