Out of State buyers from New York, California and now Internationally post COVID, driving Miami's housing market frenzy in 2022
According to the Miami Association of Realtors, Miami-Dade County real estate registered its best-ever February sales month as existing condo transactions surged by double digits for the 17th consecutive month. The red-hot market had a record January 2022 sales month and a historic 2021, which saw Miami shatter its all-time annual total home sales and total dollar volume records.
"Demand remains at all-time high levels for Miami real estate," MIAMI Chairman of the Board Fernando Arencibia Jr. said. "Buyers from high-tax, high-density states continue purchasing South Florida homes and now we're seeing a major return of global buyers with pandemic-related protocols relaxing. The competitive U.S. job market is driving higher incomes and increased workplace flexibility and that coupled with more of the U.S. population entering their prime home-buying years means demand for Miami real estate will continue."
Best February Sales Month in Miami History
Miami-Dade County total home sales rose 13.2% year-over-year in February 2022, from 2,485 sales to 2,814. Miami single-family home transactions decreased 7.9%, from 1,093 to 1,007 because of low inventory. Miami existing condo sales increased 29.8%, from 1,392 to 1,807. It marks the 17th consecutive month of double-digit year-over-year condo gains.
Miami home sales are also significantly higher in February 2022 vs. February 2020. Miami total home sales are up 51.1% in February 2022 vs. February 2020, from 1,862 to 2,814. Miami single-family home sales (13.9% increase) and condo transactions (84.8% jump) are higher than January 2020.
Miami Luxury Condo Sales Surge 45.4%; Mid-Market $400-600K Transactions Jump Also
Miami existing condo luxury ($1-million-and-up) sales surged 45.4% year-over-year to 237 transactions. Miami single-family luxury transactions decreased 6.5% year-over-year to 187 sales in February 2022.
Miami luxury condos boast a healthy inventory of 6.2 months of supply (balanced market), portending more future growth in the sector given the high demand. There are 3.2 months of supply in luxury single-family homes. Luxury months of supply continue to trend downward for all property types because of the robust demand.
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.
With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers. Global buyers are coming here for the vaccine and purchasing property.
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.
Miami single-family homes priced between $400K to $600K increased 24.7% year-over-year to 389 transactions in February 2022. Miami existing condo sales priced between $400K to $600K increased 101.8% year-over-year to 345 transactions in February 2022.
More Inventory Arriving by Spring for Low-Supply/High-Demand Market
There is always a seasonal fade in inventory in the winter. More inventory is expected to come this spring, as potential home sellers become more comfortable listing and showing their homes. Rising interest rates should also continue to drive demand in the first quarter of 2022.
New listings of Miami single-family homes decreased 4.7% to 1,519 from 1,594. New listings of condominiums decreased 1.4%, from 2,454 to 2,419.
Inventory of single-family homes decreased 29.3% year-over-year in February 2022 from 3,128 active listings last year to 2,212 last month. Condominium inventory dropped 55.1% year-over-year to 5,272 from 11,735 listings during the same period in 2021.
Months' supply of inventory is down since July 2019 for single-family, reflecting strong demand. Months' supply of inventory for single-family homes decreased 39.3% to 1.7 months, which indicates a seller's market. Inventory for existing condominiums decreased 74.5% to 2.6 months, which 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 February 2022 decreased 49.6% year-over-year, from 14,863 to 7,484.
Nationally, total housing inventory at the end of February totaled 870,000 units, up 2.4% from January and down 15.5% from one year ago (1.03 million). Unsold inventory sits at a 1.7-month supply at the current sales pace, up from the record-low supply in January of 1.6 months and down from 2.0 months in February 2021.
Fed Raised Rates on Wednesday and Announced Plans for More Rate Hikes: Decisions Should Eventually Slow Price Growth Nationally, in Miami
Rising median prices is a trend nationwide. Low inventory relative to high demand leads to prices rising. Locally, the greater share of Miami luxury sales over the past year is part of the reason for the large year-over-year increase in median prices.
On Wednesday, the Federal Reserve raised rates for the first time in three years and announced plans for six more rate hikes by year's end to curb national inflation.
The decision will accelerate demand for housing in the short term and eventually put downward pressure on median prices. The belief is that with mortgage rates rising in the coming months, the high demand for housing will be moderated and the growth of median prices will slow. As more sellers list properties in 2022, the increased inventory should also ease the growth of median prices.
Miami-Dade County single-family median prices increased 19.1% year-over-year in February 2022, increasing from $450,000 to $536,000. Miami single-family median prices have risen for 123 consecutive months (10.25 years), the longest running-streak on record. Existing condo median prices increased 26.7% year-over-year, from $300,000 to $380,000. Condo median prices have increased in 125 of the last 129 months.
Mortgage rates remain low historically and are making home purchases more affordable. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.76% in February, up from 3.45% in January. The average commitment rate across all of 2021 was 2.96%.
NAR Chief Economist Lawrence Yun expects the 30-year fixed mortgage rate to increase to 3.7% by the end of 2022. It would be still lower than the pre-pandemic rate of 4%.
With interest rates still at record lows, many South Florida homeowners have refinanced their home loans. So not only are many homeowners paying lower mortgage payments today; they are doing so while their wealth (home equity) has significantly increased. Home equity can be tapped for renovations, college loans and more.
Miami remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 85 square meters of prime property, according to Knight Frank's 2021 The Wealth Report. Monaco (15 square meters), Hong Kong (23), London (31), New York (34) and Geneva (35) and others offer significantly less prime land for $1 million.
Miami Dollar Volume Totals $2.3 Billion, Showcasing Impact Housing Plays in Local Economy
Throughout the pandemic, housing has proved how it can lift the economy nationally and locally. For every two homes sold in the U.S., one job is created. The total economic impact or multiplier effect of a typical Florida home sale is $90,300, according to NAR.
Miami total dollar volume totaled $2.3 billion in February 2022. Single-family home dollar volume decreased 5.5% year-over-year, from $1.02 million to $964 million. Condo dollar volume increased 52.65% year-over-year, from $859 million to $1.3 billion.
Miami Distressed Sales Keep Dropping, Reflecting Healthy Market
Only 1.6% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, equal to the figure in February 2021. In 2009, distressed sales comprised 70% of Miami sales.
Total Miami distressed sales increased 12.8% year-over-year in February 2022, from 39 to 44. Short sales and REOs accounted for 0.5% and 1.1% year-over-year, respectively, of total Miami sales in February 2022. Short sale transactions increased 18.2% year-over-year while REOs increased 10.7%.
Miami's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in February 2022, equal to the percentage in February 2021.
Miami's Percentage of Sales Continue to Outpace the Nation, State
Last month, closed sales of single-family homes statewide totaled 23,661, down 1.2% year-over-year, while existing condo-townhouse sales totaled 10,975, down 3.6% over February 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, sank 7.2% from January to a seasonally adjusted annual rate of 6.02 million in February. Year-over-year, sales decreased 2.4% (6.17 million in February 2021).
The statewide median sales price for single-family existing homes was $381,481, up 21.1% 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 $290,000, up 24.3% 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 February was $357,300, up 15.0% from February 2021 ($310,600), as prices grew in each region. This marks 120 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 98.7% in February 2022, up 1.5% from 97.2% last year. The median percent of original list price received for existing condominiums was 97.8%, up 3.7% from 94.3% last year.
The median number of days between listing and contract dates for Miami single-family home sales was 25 days, a 16.7% decrease from 30 days last year. The median time to sale for single-family homes was 73 days, a 7.6% decrease from 79 days last year.
The median number of days between the listing date and contract date for condos was 38 days, down 36.7% from 60 days. The median number of days to sale for condos was 81 days, a 22.1% decrease from 104 days.
Miami Cash Sales 75.6% More than National Figure in February 2022
Cash sales represented 43.9% of Miami closed sales in February 2022, compared to 35.8% in February 2021. About 25% of U.S. home sales are made in cash, according to the latest NAR statistics.
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 53% of all Miami existing condo sales and 27.5% of single-family transactions.