Miami's Luxury Housing Market Heats Up in Early 2020
According to the Miami Association of Realtors, Miami-Dade County total home sales surged double digits year-over-year in January 2020 thanks to a robust increase in mid-market and $1-million-and-up transactions.
Pending sales, which are indicators of future closed sales and reflect demand, increased in January and have now risen in 10 of the last 12 months. In another indicator of strong local demand, months supply of inventory is down since July 2019 for single-family and since March 2019 for condos.
"Low mortgage rates and homebuyers from tax-burdened states continue fueling Miami real estate," MIAMI Chairman of the Board Jorge L. Guerra Jr. said.Miami Total Home Sales Jump 15.6%
Miami total home sales increased 15.6% year-over-year, from 1,607 to 1,857. Miami single-family home sales increased 14.6% year-over-year, from 774 to 887. Miami existing condo transactions jumped 16.4% year-over-year, from 833 to 970.
A rise in mid-market and $1-million-and-up transactions played an integral role in last month's increases.
Sales for Miami single-family homes priced between $400K to $600K increased 32% year-over-year in January 2020 to 194 transactions. Sales for Miami condos priced between $400K to $600K increased 52.5% to 93 transactions.
In the luxury market ($1-million-and-up), Miami single-family homes jumped 34.5% to 78 transactions. Luxury Miami existing condos increased 6.5% to 49 transactions in January 2020.Dollar Volume Increases, Inventory Decreases
Single-family home dollar volume increased 16.1% year-over-year, from $406.4 million to $471.7 million. Condo dollar volume rose 11.4% year-over-year, from $353.7 million to $393.9 million.
Inventory of active listings has decreased the last five months for condos and the last six months for single-family. Months supply of inventory is down since July 2019 for single-family and since March 2019 for condos, reflecting strong demand.
With consumer confidence rising, unemployment low, job creation high and increased migration to Florida, Miami real estate should enjoy steady growth.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.62% in January, down from 3.72% in December. One year ago, the commitment rate was 4.46%.
Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to Florida Department of Business and Professional Regulation and FHA.
A new condo approval process could increase sales in the future. The new guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR has championed, are expected to generate increased homeownership opportunities.Eight Consecutive Years of Price Appreciation in Miami
Miami-Dade County single-family home prices increased 7.1% year-over-year in January 2020, increasing from $350,000 to $375,000. Miami single-family home prices have risen for 98 consecutive months, a streak of 8-plus years. Existing condo prices increased 6.5% year-over-year, from $230,000 to $245,000. Condo prices have increased or stayed even in 100 of the last 104 months.
Despite the price increase, Miami, where the median price is still comparable to 2006 figures, remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 93 square meters of prime property, according to Knight Frank's 2019 The Wealth Report. Monaco (16 square meters), Hong Kong (22), New York (31), Los Angeles (36) and others offer significantly less prime land for $1 million.Miami Distressed Sales Stay Low, Reflecting Healthy Market
Only 5.9% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 7.9% in January 2020. In 2009, distressed sales comprised 70% of Miami sales.
Total Miami distressed sales decreased 14.1%, from 128 to 110.
Short sales and REOs accounted for 1.3% and 4.6% year-over-year, respectively, of total Miami sales in January 2020. Short sale transactions increased 4.3% year-over-year while REOs decreased 18.1%.
Nationally, distressed sales represented 2% of sales in January, unchanged from December 2019 and down from January 2019.Miami Real Estate Selling Close to List Price
The median number of days between listing and contract dates for Miami single-family home sales was 50 days, a 9.1% decrease from 55 days last year. The median number of days between the listing date and closing date for single-family homes was 98 days, a 6.7% decrease from 105 days.
The median time to contract for condos was 82 days, a 13.9% increase from 72 days last year. The median number of days between the listing date and closing date for condos was 123 days, a 7% increase from 115 days.
The median percent of original list price received for single-family homes was 95.6%. The median percent of original list price received for existing condominiums was 93.4%.National and State Statistics
Nationally, total existing-home sales transactions decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year, up 9.6% from a year ago (4.98 million in January 2019).
Statewide closed sales of existing single-family homes totaled 18,298 last month, up 17.9% from January 2019, according to Florida Realtors. Florida's condo-townhouse market totaled 7,714, up 14.5% from the level a year ago. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
The national median existing-home price for all housing types in January was $266,300, up 6.8% from January 2019 ($249,400), as prices increased in every region. December's price increase marks 95 straight months of year-over-year gains.
Statewide median sales prices for both single-family homes and condo-townhouse properties in January rose year-over-year for 97 consecutive months. The statewide median sales price for single-family existing homes was $265,000, up 6% 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 $200,000, up 9.6% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.Miami's Cash Buyers Represent Almost Double the National Figure
Miami cash transactions comprised 33.8% of January 2020 total closed sales, compared to 37.7% last year. Miami cash transactions are almost double the national figure (21%).
Miami's high percentage of cash sales reflects South Florida's ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.
Condominiums comprise a large portion of Miami's cash purchases as 46.4% of condo closings were made in cash in January 2020 compared to 20.1% of single-family home sales.Seller's Market for Single-Family Homes, Buyer's Market for Condos
Inventory of single-family homes decreased 13.6% in January from 7,265 active listings last year to 6,277 last month. Condominium inventory decreased 9.8% to 14,902 from 16,518 listings during the same period in 2019.
Months supply of inventory for single-family homes decreased 17.6% to 5.6 months, which indicates a seller's market. Inventory for existing condominiums decreased 13.2% to 12.5 months, which indicates a buyer's market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Total active listings at the end of January decreased 10.9% year-over-year, from 23,783 to 21,179. Active listings remain about 60% below 2008 levels when sales bottomed. New listings of Miami single-family homes decreased 10.7% to 1,785 from 1,998. New listings of condominiums decreased 7.7%, from 2,673 to 2,468.
Nationally, total housing inventory at the end of January totaled 1.42 million units, up 2.2% from December, but down 10.7% from one year ago (1.59 million). The housing inventory level for January is the lowest level since 1999. Unsold inventory sits at a 3.1-month supply at the current sales pace, up from the 3.0-month figure recorded in December and down from the 3.8-month figure recorded in January 2019.