Inbound New York Buyers Boost Miami Soaring Home Sales in August

Inbound New York Buyers Boost Miami Soaring Home Sales in August

Residential News » Miami Edition | By Michael Gerrity | September 23, 2020 8:00 AM ET

Miami single-family home sales jumped 16.6% year-over-year

According to the Miami Association of Realtors, Miami-Dade County total home sales surged in August 2020.

Miami-Dade County total residential property sales jumped 6.4% year-over-year, from 2,374 to 2,527. Miami single-family home sales jumped 16.6% year-over-year, from 1,164 to 1,357. Miami existing condo transactions decreased 3.3% year-over-year, from 1,210 to 1,170.

"Pent-up demand, historically low mortgage rates and the robust fundamentals of the South Florida housing market is leading to increased buying activity," Miami Realtor's Chairman of the Board Jorge L. Guerra Jr. said. "South Florida real estate activity is now stronger than it was before the impact of the pandemic. We expect this trend to continue as a result of strong demand for housing and very low interest rates."

Pent-up demand has led to an increase in mortgage applications locally and nationally. Mortgage applications to purchase a home rose 3% last week from the previous week and were a stunning 40% higher from a year ago, according to the Sept. 9 Mortgage Bankers Association's seasonally adjusted index.

The COVID-19 situation has accelerated the trend of homebuyers from New York and cold weather and tax-burdened Northeastern states searching and purchasing homes in South Florida.

Before the COVID-19 situation, the Miami-Dade market was exceptionally strong. Miami real estate had record low delinquencies, no subprime mortgage crisis, strong demand/low supply, low interest rates, strong population growth, demand from foreign buyers and tax refugees from tax burdened states, high consumer confidence and a strong job market.
105 Consecutive Months of Price Appreciation in Miami

Strong demand coupled with limited supply continue to drive price appreciation in Miami-Dade.

Miami-Dade County single-family home prices increased 12.4% year-over-year in August 2020, increasing from $370,000 to $416,000. Miami single-family home prices have risen for 105 consecutive months, a streak of 8.5-plus years. Existing condo prices increased 9.7% year-over-year, from $241,635 to $265,000. Condo prices have increased or stayed even in 107 of the last 111 months.

Miami, where the median price is still comparable to 2007 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.

Mid-Market and Luxury Home Sales Jump in August 2020

Miami single-family homes priced between $400K to $600K surged 43.1% year-over-year to 392 transactions in August 2020. Miami existing condo sales priced between $400K to $600K increased 22.1% to 116 transactions.

Miami single-family luxury ($1-million-and-up) transactions jumped 86.6% year-over-year to 153 sales in August 2020. Miami existing condo luxury ($1-million-and-up) sales increased 29.6% year-over-year to 70 transactions.

Record-low interest rates; a record-high S&P 500; the appeal of stable assets in a volatile economy; homebuyers leaving tax-burdened Northeastern states to purchase in Florida (no state income tax); and work-from-home and remote-learning policies have all combined to create a robust market for luxury single-family properties.

Single-Family Home Dollar Volume Increases

Single-family home dollar volume increased 77.1% year-over-year, from $580.6 million to $1 billion. Condo dollar volume increased 9.3% year-over-year, from $449.1 million to $490.8 million.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 2.94% in August, down from 3.02% in July. This gives consumers incredible buying power. The average commitment rate across all of 2019 was 3.94%.

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 the Florida Department of Business and Professional Regulation and FHA.

A new condo approval process is expected to increase sales. 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.

Miami Distressed Sales Stay Low, Reflecting Healthy Market

Only 3.0% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 6.2% in August 2020. In 2009, distressed sales comprised 70% of Miami sales.

Total Miami distressed sales decreased 47.9%, from 148 to 77.

Short sales and REOs accounted for 0.7% and 2.4% year-over-year, respectively, of total Miami sales in August 2020. Short sale transactions decreased 58.5% year-over-year while REOs decreased 43.9%.

Nationally, distressed sales represented less than 1% of sales in August, equal to July's percentage, but down from 2% in August 2019.

Miami Real Estate Selling Close to List Price

The median percent of original list price received for single-family homes was 96% in August up 0.2% from 95.8% last year. The median percent of original list price received for existing condominiums was 94.7%, down 1% from 93.8% last year.

The median number of days between listing and contract dates for Miami single-family home sales was 51 days, a 4.1% increase from 49 days last year. The median number of days between the listing date and closing date for condos was 80 days, down 9.6% from 73 days.

The median time to sale for single-family homes was 100 days, a 2% increase from 98 days last year. The median number of days to sale for condos was 132 days, a 15.8% increase from 114 days.

Statewide, closed sales of single-family homes statewide rose 8.8% year-over-year, totaling 29,495, while existing condo-townhouse sales increased 10.3% over August 2019 and totaled 11,100. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

In August, the statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for 104 months in a row. The statewide median sales price for single-family existing homes was $300,000, up 13.2% from the previous year, according to data from Florida Realtors Research Department.

Last month's statewide median price for condo-townhouse units was $217,500, up 14.5% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Miami's Cash Buyers Top National Figure

Miami cash transactions comprised 27.1% of August 2020 total closed sales, compared to 31.6% last year. The national figure for cash buyers is 18%.

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 38.9% of condo closings were made in cash in August 2020 compared to 16.9% of single-family home sales.

Seller's Market for Single-Family Homes, Buyer's Market for Condos

Inventory of single-family homes decreased 34.8% in August from 6,385 active listings last year to 4,164 last month. Condominium inventory decreased 6.4% to 14,226 from 15,202 listings during the same period in 2019.

Months supply of inventory for single-family homes decreased 32.2% to 4 months, which indicates a seller's market. Inventory for existing condominiums increased 6.1% to 14 months, which indicates a buyer's market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Months supply of inventory is down since July 2019 for single-family, reflecting strong demand.

Total active listings at the end of August decreased 14.8% year-over-year, from 21,587 to 18,390. Active listings remain about 60% below 2008 levels when sales bottomed.

New listings of Miami single-family homes increased 1.4% to 1,622 from 1,599. New listings of condominiums increased 4%, from 2,052 to 2,134.

Inventory of active listings has decreased the last 13 months for single-family homes.

Nationally, total housing inventory at the end of August totaled 1.49 million units, down 0.7% from July and down 18.6% from one year ago (1.83 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from 3.1 months in July and down from the 4.0-month figure recorded in August 2019.

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