40-year high inflation, rising interest rates and economic uncertainty scaring off buyers
According to the Miami Association of Realtors, Miami-Dade County residential property sales transactions in October 2022 decreased 30.6% year-over-year, from 2,978 in October 2021 to 2,067 today, because of high mortgage rates, economic uncertainty and low inventory.
Single-family home sales decreased 23.9% year-over-year, from 1,161 in record-breaking October 2021 to 884 in October 2022, due to lack of inventory and rising mortgage rates. Miami existing condo sales decreased 34.9% year-over-year, from 1,817 record-breaking October 2021 to 1,183 in October 2022, due to lack of inventory and rising mortgage rates.
The Fed, which has made multiple hikes to the fed funds rate, is intent on slowing 40-year high inflation. While the Fed doesn't set mortgage rates, it affects them through its conduct of monetary policy. Miami Realtors' Chief Economist Gay Cororaton anticipates a 50-basis point increase in the federal funds rate in the Fed's December 2022 meeting, followed by smaller rate hikes in the first quarter of 2023 and possibly a pause in the second half of the year as the Fed assesses the effect of the rising mortgage rates on the economy.
October 2022 marks the eighth consecutive month of 5% or higher mortgage rates. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.90% in October, up from 6.11% in September. The average commitment rate across all of 2021 was 2.96%.
Miami Total Active Listings Rise for First Time Since August 2019
Total active listings at the end of October 2022 increased 2.2% year-over-year, from 10,570 to 10,799.
The inventory of single-family homes increased 41.9% year-over-year in October 2022 from 2,918 active listings last year to 4,142 last month. Condominium inventory decreased 13% year-over-year to 6,657 from 7,652 listings during the same period in 2021.
New listings of Miami single-family homes decreased 13.9% to 1,348 from 1,566. New listings of condominiums decreased 24.5%, from 2,429 to 1,833.
Months' supply of inventory for single-family homes increased 68.2% to 3.7 months year-over-year, which indicates a seller's market. Inventory for existing condominiums decreased 5% to 3.8 months, which also indicates a seller's market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Nationally, total housing inventory at the end of October was 1.22 million units, which was down 0.8% from both September and one year ago (1.23 million). Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months in October 2021.
Miami Distressed Sales Remain Low, Reflecting Healthy Market
Total Miami distressed sales decreased 28.9% in October 2022, from 45 to 32. Short sales and REOs accounted for 0.4% and 1.1% year-over-year, respectively, of total Miami sales in October 2022. Short sale transactions decreased 52.6% year-over-year while REOs decreased 11.5%.
Only 1.5% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.5% in October 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 October, identical to October 2021.
Miami's Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 20,837 in October 2022, down 24.6% year-over-year, while existing condo-townhouse sales totaled 8,356, down 26.9%. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
Nationally, total existing-home sales transactions decreased 5.9% from September to a seasonally adjusted annual rate of 4.43 million in October. Year-over-year, sales dropped by 28.4% (down from 6.19 million in October 2021).
The statewide median sales price for single-family existing homes was $401,990, up 12% 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 $310,000, up 19.2% 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 for all housing types in October was $379,100, a gain of 6.6% from October 2021 ($355,700), as prices rose in all regions. This marks 128 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 96% in October 2022, down 2.7% from 98.7% last year. The median percent of original list price received for existing condominiums was 96.9%, down 0.4% from 97.3% last year.
The median number of days between listing and contract dates for Miami single-family home sales was 30 days, up from 22 days last year. The median time to sale for single-family homes was 75 days, an 8.7% increase from 69 days last year.
The median number of days between the listing date and contract date for condos was 31 days, down 8.8% from 34 days. The median number of days to sale for condos was 71 days, a 10.1% decrease from 79 days.
Miami Cash Sales 46.5% More than National Figure in October 2022
Cash sales represented 38.1% of Miami closed sales in October 2022, compared to 37% in October 2021. About 26% 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 48.4% of all Miami existing condo sales and 24.4% of single-family transactions.