Miami Housing Update: February 2023

 

54% more showings than last month, does that mean a crazy market in Miami, again? What is fueling our Miami market?  What does it mean for buyers and sellers alike?

Let’s dive into the Miami housing update’s latest news and headlines like this: “Home sales plummet in South Florida. Why do prices keep rising as housing market deflates?” or “Miami-Dade Pending Home Sales and Showing Appointments Rise”

 

Last month in January, Miami Dade County experienced a jump in two leading home buying indicators -pending home sales and showing appointments-.

As you can see in this graph, is the first time since August of last year that we are seeing a spike in pending home sales. A 35.5% month over month increase, from 1,688 in December 2022 to 2,288 in January 2023. 

 

As you might remember, back in August 2022 we started to see a continuous increase in mortgage rates. Hence, on the other side, the pending home sales started to go the opposite, to go down. Some buyers were automatically priced out from the market because they didn’t qualify for a mortgage loan. Fast forward to November and December of 2022, we saw a decrease in interest rates where the buyers who were waiting and ready for that, jumped all in to find their home. And we need to be very clear, real estate is one of the investments in life that you either are ready or not. You can’t take long to think about it and that’s what these buyers did. Another point to consider is that it could take up to 40 days to close a transaction after that property went under contract. So meaning, January and that is why we are seeing these two increase indicators. The same story happened with the showing requests; it jumped 54.5% month over month. In fact, it marks the most showings in a month since May 2022.

 

However, last week the mortgage rates jumped again to 6.5% being the highest average for the 30-year, fixed-rate loan since Nov. when it peaked at 7.08%. Higher rates means a couple of hundreds of additional dollars to a monthly mortgage payment. So if this continues to increase we know what we could see for the next market updates. We need to keep in mind that we are still in a sellers market. Given the shortage of homes on the market and the decline in new home construction, homebuyers should keep in mind that home prices are more likely to increase than decrease in Miami.

 

 

Moving on to the total sales, it decreased 46.9%  year-over-year. 41.2% decreased for single family homes and 50.6% decrease for condo and townhomes. Closed sales have been going down since last year because we need to think of 2021 and 2022 as two abnormal years with historic numbers for almost everything.

 

With the increase of pending home sales in January, we could think that closed sales for the next 2 months will be a little higher but we will see since not all transactions that go under contract close.

 

Miami Housing Update: Median Price

 

Single-family home median prices increased 4.8% year-over-year with $545,000 and 11.1% for condos and townhomes with $400,000. This highlights the strength and resilience of the South Florida market, which continues to demonstrate a unique demand for real estate. While other markets are experimenting with depreciation already, Miami is still showing signs of appreciation. Goldman Sachs recently released their forecast for this year and 2024 being Miami 1 of 2 markets forecasted to see price appreciation.

 

Miami Housing Update: Inventory

Let’s talk a little about this, which is also very important. Last month in January we saw a 29.8% increase for total active listings in Miami that means that month’s supply of inventory for single family homes increased to 4 months and for condos to 4.4. Yes, we are seeing more and more inventory coming. However, we still have low inventory.

 

Two more points to mention that I am seeing are:

A decrease in the median percent of original list price received for single-family homes that was 94.6% in January 2023, down from 98.1% last year. And for condos/townhomes was 95.1%, down from 97.3% last year. However, I started to see the waiting lines of families to see a property and the attraction again. Meaning that I am guessing that this factor could come next month or in the next months with an increase month over month for the first time since probably June of last year.

 

The second point is the median time to contract which increased 62.5% from last year to 39 days for single-family homes and condos to 44 days. I am also thinking that this point will increase in the next few months but it will decrease again later on.

 

What does it mean for buyers and sellers alike?

Let me share with you some facts to consider and also some facts that make the Miami housing market unique. 

• Prices going up. We are seeing appreciation
• People moving to Miami. According to the United States Postal Service change-of-address data. South Florida ranked No. 1 in the U.S. for most inbound population gains between 2019 and 2022 a 56.2% increase.
• The percentage of cash buyers in Miami is 43.2%, significantly higher than the national average with 29%.
• Miami is quickly becoming a hub for technology-related jobs, with the city ranking among the top 20 cities in the United States for the highest number of tech job postings, according to the CompTIA Tech Jobs Report. 
• In addition, Miami-Dade County has experienced a significant influx of national and global companies, with approximately 60 firms relocating or expanding their businesses to the region in 2021-22. This has led to the creation of over 8,000 new jobs, both direct and indirect, that offer high value and boast an average salary of $97,000, as reported by the Beacon Council and causing a 143% increase in demand for flexible office space in 2022
• Moreover, South Florida has one of the strongest job markets in the country, with an unemployment rate of just 2%, which is lower than the national average.
• We have not even talked about foreign homebuyers. According to the 2022 MIAMI REALTORS® Global Study, Miami has emerged as the top market (No. 1) for global buyers in the United States. In 2022, foreign homebuyers purchased $6.8 billion worth of residential properties in South Florida, which reflects a 34% increase from the $5.1 billion recorded in 2021.

 

Is definitely a unique market, and these are other times here.

Back in 2005-2008 we saw:

• Excessive borrowing
• Speculation on housing
• Exotic loan products
• High credit stress even when housing peaked in 2005
• High foreclosures
• High bankruptcies
• Declining mortgage purchase applications

 

In today’s market we are seeing:

• Strict loan requirements (Dodd-Frank bill in 2010)
• No exotic loan products
• Homeowners have positive cash flow, high equity
• Millennials are largest demographic and need shelter
• 60% of homeowners have mortgage rates sub 4%

I do these market updates every month, I am looking forward to seeing what new data we will get but especially what new alarms we could see if any.

 

 

 

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Sharon Colón
Your Favorite Real Estate Agent in Miami
ΓEA⅃ Broker, LLC
786-376-2398
[email protected]
www.sharoncolonre.com