Miami Housing Inventory Rises for First Time in 3 Years in May
The Miami Association of Realtors is reporting this week that Miami-Dade County real estate posted its 10th-highest total existing home sales month in history and its second-best May sales month ever.
"The rapid rise in mortgage rates, from an average of 3% to 6% over the past six months, is tempering Miami real estate's historic pace," MIAMI Chairman of the Board Fernando Arencibia Jr. said. "Although top sales marks are still being achieved, higher rates are starting to restore balance to the market. For the first time since July 2019, Miami single-family home inventory rose year-over-year. Look for fewer bidding wars, more days on market and a cooling of the growth-rate of pricing in the months ahead."
Second-Best May Sales Month in History
Miami total closed sales in May 2022 outperformed nearly every other May in history despite higher mortgage rates, lower supply, and higher sale prices.
Miami's May 2022 total home sales decreased year-over-year (3,198 in May 2022 vs. 3,536 in May 2021) but performed significantly higher than every May outside of May 2021.
Miami existing condo sales decreased 7.9% year-over-year, from 2,176 in record-breaking May 2021 to 2,005 in May 2022, due to lack of inventory and rising mortgage rates. Single-family home sales decreased 12.3% year-over-year, from 1,360 in record-breaking May 2021 to 1,193 in May 2022, due to lack of inventory and rising mortgage rates.
The May 2021 sales total surged so high because it benefited from 3% mortgage rates, higher supply (particularly in condos) and pandemic-driven demand.
Many of the homes that sold in May 2022 had their rates established in March and April when mortgage rates were at 5%. 2018 marked the last time mortgage rates were at this level.
Housing is sensitive to rising mortgage rates. Nevertheless, Miami May 2022 total home sales finished 21.9% higher than May 2018 (3,198 vs. 2,622).
The May 2022 total home sales count finishes as the 10th-highest total home sales month in Miami-Dade County history. The top-10 highest total sales months have been achieved in the last two years. June 2021 remains No. 1 with 4,057 total home transactions in a single month.
Mid-Market $400K-$600K Condo Sales Jump
Miami existing condo sales priced between $400K to $600K increased 29.9% year-over-year to 426 transactions in May 2022. Miami single-family homes priced between $400K to $600K decreased 4.5% year-over-year to 447 transactions in May 2022, due to lack of inventory.
Mid-market condo sales are increasing because that's where the higher inventory is. There are 2.6 months of supply for condos priced between $400K to $600K. That's the third-highest price range in supply, following $1M plus (6.2 months of supply) and $600K to $999,999 (3.9 months). Demand is so high that if Miami had more supply, it would have more sales.
Global buyers are also major condo buyers. With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers.
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 Luxury Condo Sales Rise
Miami existing condo luxury ($1-million-and-up) sales rose 8.8% year-over-year in May 2022 to 322 transactions, which are in a record-high range. Miami single-family luxury transactions decreased 5.1% year-over-year to 258 sales in May 2022 because of low inventory.
Miami luxury condos boast an inventory of 6.2 months of supply, portending more future growth in the sector given the high demand. There are 4.8 months of supply in luxury single-family homes.
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.
Rising Mortgage Rates Should Eventually Slow Price Growth Nationally, in Miami
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Demand for Miami real estate is at all-time highs. Inventory for Miami single-family homes (2.2 months) and condos (2.5 months) are low.
Locally, the greater share of Miami luxury sales is also part of the reason for the large year-over-year increase in median prices.
To battle national inflation, the Federal Reserve has aggressively raised rates this year and has plans for more hikes. High inflation and the Fed's tightening policy are the main drivers behind rising mortgage rates.
Mortgage rates have risen from 3% in January to 6% in June. On the same $300,000 mortgage, the monthly payment has risen from $1265 in December to $1800 today, according to NAR.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate across all of 2021 was 2.96%.
The mortgage rate is projected to land at 5.3% by 4Q 2022, according to NAR. That is still low compared to an all-time average of about 8% in the U.S.
Long term, the hope is higher rates will lead to more days on the market (gives buyers more choices). Higher rates will eventually lead to a moderation of the growth rate of pricing. With the growth rate of pricing cooling, total inventory could grow later. Historically, inventory expands six months after rates rise, but today's market is unlike any other.
Miami home prices haven't begun to moderate because inventory is low. Also, one of the supports for home prices is rent, and rents are rising strongly.
Miami-Dade County single-family home median prices increased 15% year-over-year in May 2022, increasing from $500,000 to $575,000. Miami single-family median prices have risen for 126 consecutive months (10.5 years), the longest running-streak on record. Existing condo median prices increased 27.7% year-over-year, from $325,000 to $415,000. Condo median prices have increased in 128 of the last 132 months.
Single-Family Home Inventory Rises for the First Time Since July 2019
Inventory of single-family homes increased 0.2% year-over-year in May 2022 from 2,784 active listings last year to 2,790 last month. Condominium inventory decreased 43.8% year-over-year to 5,024 from 8,946 listings during the same period in 2021.
New listings of Miami single-family homes decreased a negligible 0.7% to 1,813 from 1,826. New listings of condominiums decreased 3%, from 2,598 to 2,521.
Months' supply of inventory for single-family homes stayed even at 2.2 months year-over-year, which indicates a seller's market. Inventory for existing condominiums decreased 58.3% to 2.5 months, which also 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 May 2022 decreased 33% year-over-year, from 11,730 to 7,814.
Nationally, total housing inventory at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.
Miami Real Estate Had a $359.8 Million Local Economic Impact Just in May 2022
Every time a home is sold it impacts the economy: income generated from real estate industries (commissions, fees and moving expenses), expenditures related to home purchase (furniture and remodeling expenses), multiplier of housing related expenditures (income earned as a result of a home sale is re-circulated into the economy) and new construction (additional home sales induce added home production).
The total economic impact of a typical Florida home sale is $112,500, according to NAR. Miami-Dade County sold 3,198 homes in May 2022 and had a local economic impact of $359.8 million.
Miami total dollar volume totaled $2.81 billion in May 2022. Single-family home dollar volume decreased 8.31% year-over-year, from $1.4 billion to $1.3 billion. Condo dollar volume increased 3% year-over-year, from $1.47 billion to $1.51 billion.
Miami Distressed Sales Keep Dropping, Reflecting Healthy Market
Only 1.2% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, lower than the 1.7% in May 2021. In 2009, distressed sales comprised 70% of Miami sales.
Total Miami distressed sales decreased 35% year-over-year in May 2022, from 60 to 39. Short sales and REOs accounted for 0.5% and 0.8% year-over-year, respectively, of total Miami sales in May 2022. Short sale transactions decreased 44.2% year-over-year while REOs decreased 11.8%.
Miami's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in May 2022, unchanged from May 2021
Miami's Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 28,861, down 6.9% year-over-year, while existing condo-townhouse sales totaled 13,265 down 14.4% over 15,491 in May 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, fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021).
The statewide median sales price for single-family existing homes was $420,000, up 21.8% 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 $322,000, up 28.8% 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 of all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 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 100% in May 2022, up 1.3% from 98.7% last year. The median percent of original list price received for existing condominiums was 100%, up 4.4% from 95.8% last year.
The median number of days between listing and contract dates for Miami single-family home sales was 14 days, a 22.2% decrease from 18 days last year. The median time to sale for single-family homes was 58 days, a 13.4% decrease from 67 days last year.
The median number of days between the listing date and contract date for condos was 21 days, down 57.1% from 49 days. The median number of days to sale for condos was 67 days, a 28.7% decrease from 94 days.
Miami Cash Sales 77.6% More than National Figure in May 2022
Cash sales represented 44.4% of Miami closed sales in May 2022, compared to 38.9% in May 2021. About 25% of U.S. home sales are made in cash, according to the latest NAR statistics.
Cash buyers are not deterred by rising rates.
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 52.7% of all Miami existing condo sales and 30.4% of single-family transactions.