According to the Miami Association of Realtors, despite overall declining home sales numbers, Broward County total luxury home sales increased year-over-year as total dollar volume jumped for all properties in May 2022.
"More supply is coming to the high-demand, low-supply Broward and Fort Lauderdale real estate market," Broward-Miami President David Dweck said. "Broward single-family home active listings in Broward real estate rose for the first time since July 2019."
Broward $1-Miliion-And-Up Luxury Home Sales Surge
Broward total closed sales in May 2022 outperformed nearly every other May in history despite higher mortgage rates, lower supply, and higher sale prices.
Broward's May 2022 total home sales decreased year-over-year (3,222 in May 2022 vs. 3,705 in May 2021) but performed significantly higher than every May outside of May 2021.
Broward existing condo sales decreased 13.5% year-over-year, from 2,701 in May 2021 to 1,791 in May 2022, due to lack of inventory and rising mortgage rates. Single-family home sales decreased 12.4% year-over-year, from 1,634 in May 2021 to 1,431 in May 2022, due to lack of inventory and rising mortgage rates.
The May 2021 sales total surged so high because it benefited from 3% mortgage rates, higher supply (particularly in condos) and pandemic-driven demand.
Many of the homes that sold in May 2022 had their rates established in March and April when mortgage rates were at 5%. 2018 marked the last time mortgage rates were at the level.
Broward existing condo luxury ($1-million-and-up) sales rose 27.3% year-over-year in May 2022 to 84 transactions. Broward single-family luxury transactions increased 42.8% year-over-year to 247 sales in May 2022.
Homebuyers leaving tax-burdened states to purchase in Florida (no state income tax), new-to-market firms moving here, low interest rates, the appeal of property as an inflation hedge, rising wages and accrued savings in lockdowns, strong equity market performance, a reassessment of housing needs and lifestyles because of the pandemic and expansion of remote work are all factors driving South Florida real estate demand.
Mid-Market $400K-$600K Condo Sales Jump
Broward existing condo sales priced between $400K to $600K increased 58.3% year-over-year to 258 transactions in May 2022. Broward single-family homes priced between $400K to $600K decreased 13.6% year-over-year to 471 transactions in May 2022, due to lack of inventory.
Mid-market condo sales are increasing because that's where the higher inventory is. Global buyers prefer to purchase condos. 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 is leading to more international investment in South Florida - the No. 1 destination in the U.S. for foreign buyers. Global buyers purchase in Miami because 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 acceptance of all cultures, along with all our amenities.
Rising Mortgage Rates Should Eventually Slow Price Growth Nationally, in Miami
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Demand for Broward real estate is at all-time highs. Inventory for Broward single-family homes (1.5 months) and condos (1.4 months) are low.
Locally, the greater share of Broward 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 6% in June. On the same $300,000 mortgage, the monthly payment has risen from $1265 in December to $1800 today, according to NAR.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.23% in May, up from 4.98% in April. 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.
Broward home prices haven't begun to moderate because inventory is low. Also, one of the supports for home prices is rents and rents are rising strongly.
Broward County single-family home median prices increased 26.4% year-over-year in May 2022, increasing from $463,750 to $586,000. Existing condo median prices increased 20.7% year-over-year, from $210,000 to $253,500.
Single-Family Home Inventory Rises for the First Time Since July 2019
Inventory of single-family homes increased 4.6% year-over-year in May 2022 from 2,118 active listings last year to 2,215 last month. Condominium inventory decreased 40.5% year-over-year to 2,595 from 4,361 listings during the same period in 2021.
New listings of Broward single-family homes increased 0.2% to 2,023 from 2,018. New listings of condominiums stayed even year-over-year at 2,595.
Months' supply of inventory for single-family homes increased by 7.1% to 1.5 months year-over-year, which indicates a seller's market. Inventory for existing condominiums decreased 48.1% to 1.4 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 May 2022 decreased 25.8% year-over-year, from 6,479 to 4,810.
Nationally, total housing inventory at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.
Broward Real Estate Had a $362.5 Million Local Economic Impact Just in May 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. Broward County sold 3,222 homes in May 2022 and had a local economic impact of $362.5 million.
Broward total dollar volume totaled $1.87 billion in May 2022. Single-family home dollar volume increased 10% year-over-year, from $1.1 billion to $1.2 billion. Condo dollar volume increased 10.9% year-over-year, from $613.3 million to $680.5 million.
Broward Distressed Sales Keep Dropping, Reflecting Healthy Market
Only 0.9% of all closed residential sales in Broward were distressed last month, including REO (bank-owned properties) and short sales, lower than the 1.2% in May 2021.
Total Broward distressed sales decreased 30.4% year-over-year in May 2022, from 46 to 32. Short sales and REOs accounted for 0.2% and 0.8% year-over-year, respectively, of total Broward sales in May 2022. Short sale transactions decreased 73.7% year-over-year while REOs stayed even at 27.
Broward's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in May 2022, unchanged from May 2021
Broward's Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 28,861, down 6.9% year-over-year, while existing condo-townhouse sales totaled 13,265 down 14.4% over 15,491 in May 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, fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021).
The statewide median sales price for single-family existing homes was $420,000, up 21.8% 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 $322,000, up 28.8% 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 May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 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 101.3% in May 2022, up 1.3% from 100% last year. The median percent of original list price received for existing condominiums was 100%, up 3.7% from 96.4% last year.
The median number of days between listing and contract dates for Broward single-family home sales was 11 days, a 8.3% decrease from 12 days last year. The median time to sale for single-family homes was 50 days, a 12.3% decrease from 57 days last year.
The median number of days between the listing date and contract date for condos was 14 days, down 57.6% from 33 days. The median number of days to sell for condos was 56 days, a 26.3% decrease from 76 days.
Broward Cash Sales 83.6% More than National Figure in May 2022
Cash sales represented 45.9% of Broward closed sales in May 2022, compared to 38.4% in May 2021. About 25% 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 South Florida'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 59.8% of all Broward existing condo sales and 28.7% of single-family transactions.