The new Miami data was just released and the news is that the supply is increasing, that June sales were the third highest June in Miami Dade County history, so a lot of sales even with the rapid rise of mortgage rates. What’s going on in the Miami market? Is it a crash coming to Miami? Will the housing market crash in 2022?
The Miami market is adjusting little by little and depending on the area too. For example, a few days ago a colleague from my office had an open house and got over 30 families who went to the open house and over 5 offers on the table. I would say, that really depends on the area in the county. However, you can see more price reductions, more inventory coming to the market, and more days on the market on properties in certain areas. So indeed, we are seeing a slight change in our market.
Even though the total home sales decreased year over year in June 2022, it ended being the third highest June in history. The total home sales in June 2022 was 2,891 vs. 4,057 from the all-time breaking sales of June 2021 even with the rapid rise of mortgage rates, from an average of 3% to 6% in six months.
The real question here is, how long will it takes to stop being a sellers’ market and become a neutral market?
Single-family home sales also decreased 26.1% year-over-year, from 1,542 in record-breaking June 2021 to 1,139 in June 2022. According to the last report from the Miami Association of Realtors, this is due to the lack of inventory and rising mortgage rates.
It totally makes sense when we have been seeing the inventory like this graph below, going down since 2020 for the huge buyer’s demand. Because of the historically low interest rates the buyer’s demand increased significantly in the last 2 years causing a huge lack of inventory.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.52% in June, up from 5.23% in May. The average commitment rate across all of 2021 was 2.96%. Of course, this huge increase in mortgage rates is now causing that demand to be shrunk down and resulting in less demand because buyers won’t be able to afford to buy a house in today’s market. As you can see in this graph, we have been in a strong seller’s market for a while.
A seller’s market means, 6 months of supply or less, a balanced market offers between six- and nine-months supply and of course a buyers market is something above 9 months of supply.
Talking about that, months supply of inventory increased for the second month in a row to 2.8 months in June from 2.2 in May and also 2.2 months back in June 2021 an increase of 27.3%. This is happening nationwide because the total housing inventory at the end of June nationwide had an increase of 9.6% from May.
Believe or not the single family home median price increased 15.8% in June 2022 from $500,000 to $579,000 and an increase of 0.7% from May 2022. The Miami market is still competitive depending on the area, we can see that with the median percent of original list price received being at 100% still. An increase of 0.6% from last year and has been like that for the last 4 months meaning sellers are getting at least full price offers or very close to. We should start to see that change in the next couple of months.
The median time to contract increased to 15 days which is interesting because it tells us the properties are taking a little more to get under contract.
Miami’s existing condo sales decreased 30.3% year-over-year, from 2,515 in all-time, record-breaking June 2021 to 1,752 in June 2022.
The median sales price for condos increased 20.6% year-over-year, from $340,000 to $410,000 and decreased by 1.2% from May with $415,000.
The median time to contract in June increased to 22 days.
Months’ supply of inventory for condos decreased 43.1% from last year to 2.9 months but this is the second month in a row with more inventory. May had 2.5 an increase of 16%.
2018 marked the last time mortgage rates hit 5%. Yet, Miami total home sales in June 2022 finished 11.4% higher than in June 2018 (2,891 vs. 2,594).
So, long term, we are going to see higher rates and that will lead to the properties to stay longer on the market. 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 meaning a shift on the market being more a balanced market. Remember what we saw during 2020 and 2021 was unprecedented. So the market is adjusting now little by little to what it was prior to 2020.
Don’t think that the market is going to crash or stop listening to those people saying that. Find the data that will give you the facts. Actually, a recession does not equals to a housing crisis. In fact, only 1.9% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.5% in June 2021. In 2009, distressed sales comprised 70% of Miami sales.
Yes, buying a house now in Miami will get more expensive (but nothing that you can’t fix later refinancing your house instead of paying rent). Miami foreclosures will eventually start to increase because of all the end of government aid. So technically it will increase because they were on hold but that does not mean there will be a crash.
As always, if you would like to download the full report provided by the Miami Realtors I’ve posted a link down in the description below for you to get it.
To see the full report for Single Family Homes click here
To see the full report for Townhouses and Condos click here
If you are thinking about buying or selling in Miami, CLICK HERE or you can call me at 786-376-2398.
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