2022 ended up being the second-biggest total sales and condo sales year ever in Miami despite the increase in the interest rates that we saw last year. However, we can’t say the same for December 2022 and actually for the last few months of last year.
When we look at Miami’s December 2022 sales numbers we are seeing a huge decrease, higher than the previous month, a 48.2% year over year from 3,433 to 1,779 and yet we need to think that we are comparing a record 2021 year but we also need to think that today’s mortgage rates have doubled vs. a year ago and the market has low inventory in specific price points, for example, the single-family inventory in the $400K to $600K price range, is at 2.6 months of supply right now. We are going to talk about the overall inventory in a bit but I just wanted to point that out.
If we break down the sales, we are seeing that single family homes sales decreased 45.1% and condo sales decreased 50.2% from 2021, a year that was a completely historic year. Well you know, it’s a fact, we are going to keep seeing less sales because we are comparing this to an unprecedented year. This is a common denominator in different experts’ forecasts for this year because we also have higher mortgage rates and buyers have been priced out with the higher mortgage rates.
As far as the median price, single-family home median prices increased 1.1% year-over-year to $530,900 but decreased 3.5% from November with $550,000. Same for the condo and townhomes data, the median price for condo increased 5.5% to $374,500 from last year but decreased 5.1% from November with $395,000. As you can see from these tables, we have been seeing double digits positive changes for the last year in the percent change year-over-year column. However, I am guessing this will start to change in the next few months. Yet, I don’t think there will be a huge fall or a huge difference either since we still have the demand and low inventory.
Total active inventory increased 18.9% year over year from 8,997 to 10,706 and if we split this into single-family homes and condo, that is an increase of 57.7% for single family homes year-over-year and 3.6% increase for condo in December 2022.
That means that month’s supply of inventory increased for both. Single family homes now have 4 months, it doubled from last year and condo now has 4.1 months. We are still in a seller’s market with low inventory but it is worth clarifying that even though we are still in a seller’s market, buyers now have the possibility of getting concessions when submitting an offer. Homebuyers who decide to buy in 2023 will find fairly more supply in the market and will also face less buyer competition. Yet, we could possibly see some one or two light bidding wars between 2 families looking for a very specific home since we have low inventory, especially in the $400K-$600k price range that I mentioned which does have 2.6 months of supply but overall, it is indeed a completely different market with relatively more inventory.
The increase in inventory is directly proportional to how long they go under contract and in December single family homes took 35 days to go under contract, an increase of 84.2% from last year that only was taking 19 days to go under contract and 13% longer than the previous month with 31 days. Meaning, properties are taking way longer to sell, putting Buyers in a better position where they could possibly negotiate the price with the sellers and possibly other things too.
Let’s talk now about foreclosures, a few days ago headlines like the ones above with: US foreclosure filings surged 115% in 2022 and here is another one Foreclosures filings rose 115% in the past year, and here is another one U.S. Foreclosure Activity Doubles Annually But Still Below Pre-Pandemic Levels. And while they are very alarming headlines, scary, they do share some facts, but they also are hiding the real information behind this and I am going to break this down for you.
Let’s start with this quote from Attom data. “ATTOM, a leading curator of real estate data nationwide for land and property data, today released its Year-End 2022 U.S. Foreclosure Market Report, which shows foreclosure filings— default notices, scheduled auctions and bank repossessions — were reported on 324,237 U.S. properties in 2022, UP 115 PERCENT FROM 2021 BUT DOWN 34 PERCENT FROM 2019, before the pandemic shook up the market. Foreclosure filings in 2022 were also down 89 percent from a peak of nearly 2.9 million in 2010.”
As usual, the media is trying to keep you reading with headlines like these. However, when you look at what the data is actually telling us is that foreclosures are up 115% from 2021 but they still down below 34% lower from the years prior to 2020. And certainly nowhere near where the foreclosures filings peaked over 2.9M in 2010.
Take a look at the graphs above so you can visualize what I just said a little better. Yes, the foreclosure activity in the US doubled, that is true. However, it is still below the years prior to 2020. As you can see this graph shows data of foreclosure filings and it’s going all the way back to 2005. This is showing how many foreclosure filings were filed in the US. And we can see where we are today. 2022 is far below those peak levels that we saw when the real estate market crashed. For 2021 and 2022 numbers, yes those numbers doubled and it is not surprising when we saw forbearance programs, and we saw the moratorium that was put on foreclosures. These were factors that took foreclosure filings to historic lows. That 115% increase is not surprising at all. What we have to remember, which is usual for the media, is that they want to put everything tragic and that is not what the data shows. And the data shows we are still far below those peak times. Yet still unfortunate that 324K families had to fill out for foreclosure and we absolutely don’t want that to a family or a homeowner to happen but when we compare this to 2009 or 2010 with 2.8M-2.9M foreclosure filings per year we are nowhere near to a wave of foreclosures coming to the market. In fact, homeowners are sitting right now with a lot of home equity giving the possibility to the owners to sell rather than go into the foreclosure process. Even though we are going to see this number rise as expected, it is not what the media or the headlines are trying for you to think that a massive crash is coming to the market.
If we talk about foreclosures for our local market, only 1.2% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 1% in December 2021.
When looking for information, do not pay attention to only the headlines. Make sure to read the factual data and compare it with others too.
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