Despite Covid, Miami Shatters Multiple Residential Sales Records in 2021

Despite Covid, Miami Shatters Multiple Residential Sales Records in 2021

Residential News » Miami Edition | By Michael Gerrity | January 21, 2022 8:50 AM ET

Historic sales driven by ongoing wave of inbound Northeast and West Coast buyers throughout the year

According to the Miami Association of Realtors, Miami-Dade County real estate posted its best December sales month in history as it ended its historic 2021 with myriad year-end records including the most all-time annual total home sales, highest annual total dollar volume, most single-family home sales, most condo transactions and more.

49% More Sales - 103% More Dollar Volume in 2021

The red-hot market, fueled by domestic and global homebuyers, finished 2021 with 39,394 existing total home sales, which is 49.5% more than the 26,345 transactions Miami had in 2020 and 31.1% more than the previous annual record of 30,041 transactions in 2013. The dollar volume of Miami's sales in 2021 totaled $30.3 billion, which represents a 103.4% annual increase.

"Domestic and global homebuyers continue to fuel Miami real estate," MIAMI Chairman Fernando Arencibia Jr. said. "The sustained home sales growth speaks to domestic and global companies relocating to Miami to launch headquarters in tech and finance and bringing high-paying jobs; increased and continued migration to Miami from high-tax, high density cities; and how this new-normal-work-from-anywhere ability boosts the allure of South Florida."

Miami had broken its annual total sales record in just 10 months (by October 2021) and continued to add to it with the best November and best December in the market's history. Miami set its all-time annual condo sales record in just nine months in 2021 and ended the year with 23,689, up 80.9% vs. 2020. Miami broke its most all-time annual single-family home sales in 11 months and ended the year with 15,705, up 18.5% vs. 2020.

Best December Sales Month in Miami History

Miami-Dade County total home sales rose 14.8% year-over-year in December 2021, from 2,990 sales to 3,433. While Miami single-family home transactions decreased 1.2%, from 1,372 to 1,356, Miami existing condo sales increased 28.4%, from 1,618 to 2,077. It marks the 15th consecutive month of double-digit year-over-year condo gains.

Of the top-10 best home sales months in Miami history, nine happened in 2021. June 2021 (with its 4,057 total transactions) remains the No. 1 overall sales month in Miami history. December 2021 (with its 3,433 sales) ranks as the sixth-best sales month overall since MIAMI began tracking stats in 1993.

Miami home sales are also significantly higher vs. December 2019. Miami total home sales are up 41.6% in December 2021 vs. December 2019, from 2,424 to 3,433. Miami single-family home sales (15.5% increase) and condo transactions (66.2% jump) are higher than December 2019.

Miami Luxury Sales Jump as Northeast and West Coast Buyers Move to the Miami Mega Region

Miami single-family luxury ($1-million-and-up) transactions rose 18.6% year-over-year to 262 sales in December 2021. Miami existing condo luxury ($1-million-and-up) sales doubled, surging 100% year-over-year to 264 transactions.

There are only 3.2 months of supply in luxury single-family homes and 7.5 months of supply in luxury condos. Luxury months of supply continue to trend downward for all property types, month-over-month, and year-over-year.

Low interest rates, a robust 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 in South Florida.

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 on Nov. 8 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 25.6% year-over-year to 535 transactions in December 2021. Miami existing condo sales priced between $400K to $600K doubled, increasing 101.7% to 359 transactions.

More Inventory Arriving by Spring for Low-Supply/High-Demand Market

There is always a seasonal fade in inventory in the fall and winter. More inventory is expected to come to the market by spring 2022 as potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory. Expectation that interest rates will rise should continue to drive demand in the first quarter of 2022.

New listings of Miami single-family homes decreased 12.7% to 1,144 from 1,311. New listings of condominiums decreased 5.6%, from 1,917 to 1,809.

Inventory of single-family homes decreased 30% year-over-year in December 2021 from 3,659 active listings last year to 2,563 last month. Condominium inventory dropped 50.1% year-over-year to 6,434 from 12,898 listings during the same period in 2020.

Months' supply of inventory is down since July 2019 for single-family, reflecting strong demand. Months' supply of inventory for single-family homes decreased 39.4% to 2 months, which indicates a seller's market. Inventory for existing condominiums decreased 72% to 3.3 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 December 2021 decreased 45.7% year-over-year, from 16,557 to 8,997.

Nationally, total housing inventory at the end of December amounted to 910,000 units, down 18.0% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.

Fed's Decision for More Rate Hikes in 2022 Should Slow Growth of Median Prices

The Fed's announcement in December 2021 that it will be raising rates and end bond buying in 2022, will accelerate demand for housing in the short term and eventually put downward pressure on median prices.

Miami-Dade County single-family median prices increased 15.4% year-over-year in December 2021, increasing from $454,900 to $525,000. Miami single-family median prices have risen for 121 consecutive months, a streak of 10.1 years. Existing condo median prices increased 29.3% year-over-year, from $274,500 to $355,000. Condo median prices have increased in 123 of the last 127 months.

The greater share of Miami luxury sales in December 2021 compared to December 2020 is part of the reason for the large year-over-year increase in median prices.

Rising median prices is a trend nationwide as record-low mortgage rates and the increased availability of remote work and education has accelerated the demand for housing. Low inventory relative to high demand leads to prices rising.

Lower mortgage rates are making home purchases more affordable. According to Freddie Mac, the average commitment rate a 30-year, conventional, fixed-rate mortgage was 3.10 in December, up from 3.07 in November. The average commitment rate across all of 2021 was 2.96%.

Thumbnail image for lawrence-yun.jpg
Lawrence Yun

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.

Should mortgage rates resume their upward climb, home price growth is likely to slow in response. As more sellers list properties in 2022, the increased inventory should ease the growth of median prices.

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 $3.1 Billion, Showcasing Impact Housing Plays in Local Economy

While other industries struggled over the past year, housing lifted the economy nationally and locally. For every two homes sold in the U.S., one job is created. Miami dollar volume showcases the impact housing plays in the local economy.

Miami total dollar volume totaled $3.1 billion in December 2021. Single-family home dollar volume increased 27.7% year-over-year, from $1.31 billion to $1.67 billion. Condo dollar volume increased 68.5% year-over-year, from $853 million to $1.4 billion.

Miami Distressed Sales Keep Dropping, Reflecting Healthy Market

Only 1% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.9% in December 2020. In 2009, distressed sales comprised 70% of Miami sales.

Total Miami distressed sales dropped 40.7% year-over-year in December 2021, from 59 to 35. Short sales and REOs accounted for 0.4% and 0.6% year-over-year, respectively, of total Miami sales in December 2021. Short sale transactions decreased 22.2% year-over-year while REOs dropped 48.8%.

Miami's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in December 2021, equal to the percentage in December 2020.

National, State Housing Demand Robust as More Inventory Expected to Arrive

Miami's percentage of sales increases continue to be higher than the nation and state.

Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 4.6% from November to a seasonally adjusted annual rate of 6.18 million in December. From a year-over-year perspective, sales waned 7.1% (6.65 million in December 2020).

Statewide, closed sales of single-family homes statewide last month totaled 29,988, down 1.6% from December 2020, while existing condo-townhouse sales totaled 12,789, a slight uptick of 0.3% year-over-year, according to Florida Realtors' data.

Nationally, the median existing-home price for all housing types in December was $358,000, up 15.8% from December 2020 ($309,200), as prices rose in each region. The South witnessed the highest pace of appreciation. This marks 118 straight months of year-over-year increases, the longest-running streak on record.

The statewide median sales price for single-family existing homes in December was $373,990, up 21% from the previous year. Meanwhile, the statewide median price for condo-townhouse units was $285,000, up 23.9% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

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 December 2021, up 1.8% from 97% last year. The median percent of original list price received for existing condominiums was 97.3%, up 3.2% from 94.3% last year.

The median number of days between listing and contract dates for Miami single-family home sales was 19 days, a 17.4% decrease from 23 days last year. The median time to sale for single-family homes was 66 days, a 13.2% decrease from 76 days last year.

The median number of days between the listing date and contract date for condos was 36 days, down 35.7% from 56 days. The median number of days to sale for condos was 80 days, a 19.2% decrease from 99 days.

Miami Cash Sales 75.7% More than National Figure in December 2021

Cash sales represented 40.4% of Miami closed sales in December 2021, compared to 32.2% in December 2020. About 23% 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 49.1% of all Miami existing condo sales and 27.1% of single-family transactions.

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