It’s a hard pill to swallow for many in
Miami’s real estate community. The city is experiencing a significant slowdown
in sales volume, according to the newly released Elliman reports, and even its
most well-regarded markets like Miami Beach are seeing some of their first
price cuts in years. The reports, commissioned by brokerage Douglas Elliman,
cover first-quarter data from several major housing markets in the U.S.
including all three of South Florida’s counties. What the numbers show is that
both mainland Miami and its barrier island Miami Beach are continuing to cool
off as sales and price growth slow. In the mainland, which covers neighborhoods
east of I-95, 3,583 condos and single-family homes were sold in the first
quarter, a reduction of 17.5 percent from the 4,344 closings made during the
same period a year ago. Prices saw a small 2.7 percent bump, from a median of
$393,343 per property last year to $404,020 in the first quarter. The Miami
Beach section of the report, which covers everything from Sunny Isles Beach to
Fisher Island, shows an even larger dip. Sales reached 810 properties, down 21
percent year-over-year. And for the third quarter in a row, prices on the beach
for both condos and single-family homes have dropped. Median prices fell from
$437,750 a year ago to $408,750 last quarter, according to the report. “We’re
experiencing a slowdown after an extended period of intense activity,” Jonathan
Miller, co-founder of research firm Miller Samuel and the author of the Elliman
reports, told The Real Deal. “The pace is shifting down to something much more
mundane.” The slower sales pace is leading to a large buildup of inventory,
which can further drag down the market. The report shows supply is up to 21.5
months for Miami Beach’s condos and houses, up from 12.8 months in the first
quarter of 2015. For the mainland, the supply is a much more manageable 10.6
months, but even that has risen by 39.5 percent year-over-year. And while the
aggregate sales numbers could be blamed on the condo market in previous months,
that’s not the case anymore. Both condos and single-family home sales were down
significantly in the mainland and the beach during the first quarter. Miller
said prices typically lag behind sales trends by about 15 months. So while
homes continue to become more expensive in the short term when you look at the
market as a whole, Miami could start seeing prices flatten out as soon as next year.
As for why the market has curbed, Miller
cited the same factors that industry members have come to memorize in recent
months: weak economies in foreign countries, especially those in Latin America,
have narrowed the buyer pools Miami relied on to fuel the market in previous years.
To make matters worse, a strong U.S. dollar also hurts the purchasing power of
foreign nationals, making Miami real estate more expensive. Also contributing
to that slowdown in sales, Miller said, is a shrinking supply of distressed
properties. Lender-owned homes and short sales made up 14.4 of all home sales
three years ago — now, they have a market share of only 8.1 percent. Even the
fact that it’s an election year could cause hesitancy for home buyers, he said,
as they wait for the new administration’s effect on federal mortgage rates to
get hashed out in the months following inauguration day in January. Though the
short-term numbers paint a gloomy picture, Miller pointed out a statistic that
could assuage some industry members’ fears for the future: in the years before
the housing crash, when the market was healthy, Miami and Miami Beach averaged
2,558 home sales per quarter. Now, even amidst a slowdown, the first quarter
saw nearly double that with 4,393 closings. While the greater Miami area continues
to slow, other South Florida markets are starting to show volatility. Home
sales in Fort Lauderdale dipped 8.3 percent year-over-year, from 504 to 462
properties. In Palm Beach, closings were cut in half year-over-year, from 90 to
45. Miller said the number of Palm Beach signed contracts jumped up in the
first quarter, despite the huge dip in recorded closings. The only South
Florida market to show a positive sales trend in the report was Boca Raton, a
wealthy city known for its golf course communities. Sales spiked by 20 percent
year-over-year, from 503 closings to 607 in the first quarter. “It’s not clear
how long we’ll be in this period,” Miller said, “but the market has certainly
changed from what it was a year or two ago.
Original Content The Real Deal
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