Greater Miami Home Prices Continue to Rise in May as Sales Dip from COVID
Surging Pending Sales Reflecting Strong Market Rebound Ahead
The Miami Association of Realtors (MIAMI) is reporting this week that Miami-Dade County median home prices increased year-over-year in May 2020 as home sales saw expected declines as a result of the global COVID-19 outbreak.
While the latest data shows lower levels of closed sales compared to a year ago, new pending sales in May 2020 rebounded in comparison to April. New pending sales for Miami single-family homes decreased 7.3%, an improvement over the April decrease of 48.2%. New pending sales for condos decreased 36.1% in May, an improvement over the 68.5% decrease in April.
"The Miami-Dade real estate market is already experiencing a remarkable recovery as evidenced by surging pending sales since mid-April despite the COVID-19 impact on May sales," MIAMI Chairman of the Board Jorge L. Guerra Jr. said. "Historically low mortgage rates, virtual tools and services, reopenings and pent-up demand have many buyers continuing their home buying process, which is generating very strong market activity."
Pending sales, which started to surge in mid-April and are stronger than they were before the COVID-19 stay home orders, are expected to result in rising closed sales in the next couple of months.
Mortgage applications are on the rise in South Florida and nationally, as the Miami mega region continues to see additional homebuying interest from the Northeast. Nationally, mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than one year ago, according to the Mortgage Bankers Association's seasonally adjusted index released June 17. That was the ninth consecutive week of gains and the highest volume in more than 11 years.
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.
102 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 4.4% year-over-year in May 2020, increasing from $360,000 to $375,714. Miami single-family home prices have risen for 102 consecutive months, a streak of 8.5 years. Existing condo prices increased 7% year-over-year, from $243,000 to $260,000. Condo prices have increased or stayed even in 104 of the last 108 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.
Miami Total Home Sales Decrease
Miami total home sales decreased 54% year-over-year in May 2020, from 2,796 to 1,297. Miami single-family home sales decreased 45.8% year-over-year in May 2020, from 1,355 to 734. Miami existing condo transactions declined 60.9% year-over-year in May 2020, from 1,441 to 563.
Dollar Volume Decreases
Single-family home dollar volume decreased 44.1% year-over-year, from $716 million to $400.3 million. Condo dollar volume decreased 60.4% year-over-year, from $585.2 million to $231.7 million.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.23% in May, down from 3.31% in April. 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 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 5.7% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 5.6% in May 2020. In 2009, distressed sales comprised 70% of Miami sales.
Total Miami distressed sales decreased 52.9%, from 157 to 74.
Short sales and REOs accounted for 1.2% and 4.5% year-over-year, respectively, of total Miami sales in May 2020. Short sale transactions decreased 48.3% year-over-year while REOs decreased 53.9%.
Nationally, distressed sales represented 3% of sales in May, about even with April but up from 2% in May 2019.
Miami Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 95.6% in May up 0.6% from 95% last year. The median percent of original list price received for existing condominiums was 92.9%, down 0.2% from 93.1% last year.
The median number of days between listing and contract dates for Miami single-family home sales was 44 days, a 25.4% decrease from 59 days last year. The median number of days between the listing date and closing date for condos was 60 days, a 23.1% decrease from 78 days.
The median time to sale for single-family homes was 90 days, a 15.9% decrease from 107 days last year. The median number of days to sale for condos was 109 days, a 7.6% decrease from 118 days.
National and State Statistics
Nationally, total existing-home sales transactions slumped 9.7% from April to a seasonally-adjusted annual rate of 3.91 million in May. Overall, sales fell year-over-year, down 26.6% from a year ago (5.33 million in May 2019).
Last month's closed sales of single-family homes statewide dropped 36.2% year-over-year, totaling 19,622, while condo-townhouse sales declined 50.3%, for a total of 6,069. 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 May was $284,600, up 2.3% from May 2019 ($278,200), as prices increased in every region. May's national price increase marks 99 straight months of year-over-year gains.
In May, the statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for 101 consecutive months. The statewide median sales price for single-family existing homes was $270,000, up 1.5% 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 $201,472, up 3.3% 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 25.9% of May 2020 total closed sales, compared to 36.2% last year. The national figure for cash buyers is 17%.
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 38.5% of condo closings were made in cash in May 2020 compared to 16.2% of single-family home sales.
Seller's Market for Single-Family Homes, Buyer's Market for Condos
Inventory of single-family homes decreased 16.2% in May from 6,759 active listings last year to 5,665 last month. Condominium inventory decreased 7.5% to 14,705 from 15,893 listings during the same period in 2019.
Months supply of inventory for single-family homes decreased 14.3% to 5.4 months, which indicates a seller's market. Inventory for existing condominiums increased 0.7% to 13.8 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 and since March 2019 for condos, reflecting strong demand.
Total active listings at the end of May decreased 10.1% year-over-year, from 22,652 to 20,370. Active listings remain about 60% below 2008 levels when sales bottomed.
New listings of Miami single-family homes decreased 10.2% to 1,559 from 1,737. New listings of condominiums decreased 6.9%, from 2,319 to 2,160.
Inventory of active listings has decreased the last nine months for condos and the last 10 months for single-family homes.
Nationally, total housing inventory at the end of May totaled 1.55 million units, up 6.2% from April, and down 18.8% from one year ago (1.91 million). Unsold inventory sits at a 4.8-month supply at the current sales pace, up from 4.0 months in April and up from the 4.3-month figure recorded in May 2019.