Miami Area Home Prices Increase 5.9 Percent Annually in May

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According to a new report by the Miami Association of Realtors, non-distressed Miami single-family home sales increased for the fifth consecutive month and all existing residential properties posted price gains in May 2016.

The median sales price for existing single-family homes rose 4.6 percent year-over-year in May 2016, from $282,000 to $295,000. Single-family home prices have increased for 54 consecutive months. The median sales price for existing condominiums grew 2.5 percent to $214,250 from $209,000. Miami existing condo prices have risen in 58 of the last 60 months, a stretch encompassing five years.

"Miami real estate remains a bargain worldwide," said Mark Sadek, a Coral Springs Realtor and the 2016 M.A.R. chairman of the board. "Miami-Dade County residential properties are at 2004 price levels. Domestic and international home buyers are taking advantage of Miami's prices compared to other world-class global cities."

A 120-square meter condo in Miami-Fort Lauderdale-Miami Beach cost $149,900 on average, according to the National Association of Realtor (NAR). Prices for the same condo in London ($960,840), Hong Kong ($776,280), and New York ($1.6 million) are at least five times higher.

Historic-low mortgage interest rates are attracting home buyers. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.60 percent in May, which is the lowest since May 2013 (3.54 percent).

Total Sales Finish in Line with Miami Historical Averages

Total existing Miami-Dade County residential sales -- which posted a record year in 2013 and near record years in 2014 and 2015 -- decreased 10.4 percent year-over-year from 2,719 to 2,435.

Miami-Dade County single-family home transactions decreased 7.2 percent in May, from 1,272 to 1,180. Existing condominium sales -- which declined 13.3 percent, from 1,447 to 1,255 -- are competing with a robust new construction market, which continues to add inventory.

A 32.7 percent year-over-year drop in total distressed sales, from 683 transactions in May 2015 to 460 last month, contributed to the lower sales activity. Only 18.9 percent of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 25.1 percent in May 2015. In 2009, distressed sales comprised nearly 70 percent of Miami sales.

Short sales and REOs accounted for 3.2 and 15.7 percent, respectively, of total Miami sales in May 2016. Short sale transactions dropped 54.5 percent year-over-year while REOs fell 25.4 percent.

Sales and prices for traditional or non-distressed single-family homes are on the rise. Non-distressed Miami single-family homes registered a sales growth of 1.5 percent, increasing from 928 to 942. It's the fifth consecutive month traditional single-family homes sales have grown. Traditional Miami single-family homes gained 0.2 percent of price growth in May, growing from $320,000 to $320,750.

Nationally, distressed sales comprised 6 percent of all sales in May, down from 10 percent a year ago, according to the National Association of Realtor (NAR).

Total Miami residential properties combined for $979.7 million in total sales volume in May 2016, about 10.2 percent lower than the $1.08 billion sold during the same month last year. The aforementioned sales volume does not include the strong new construction condo sales figures.

Transactions in Popular Price Points Rise

Mid-priced Miami homes are seeing increased sales. Single-family homes priced between $200,000 and $600,000 saw a 5.9 percent year-over-year increase in May, growing from 716 to 756. The sector represented 64.1 percent of total Miami single-family home sales in May 2016.

Existing condos priced between $150,000 and $300,000 saw a 12.0 percent-rise in sales in May, increasing from 482 transactions to 540. This sector represented 43.0 percent of total existing Miami condo home sales in May 2016.

Miami Real Estate Selling Faster and Close to List Price

The median number of days between listing and contract dates for Miami single-family home sales fell 16.9 percent year-over-year to 49 days. The median number of days between the listing date and closing date for single-family properties dropped 13.3 percent to 98 days.

For condos, the median time to contract decreased 13.5 percent year-over-year to 64 days. The median number of days between the listing date and closing date decreased 9.3 percent to 107 days.

The median percent of original list price received for single-family homes was 95.3 percent in May 2016, an increase of 0.1 percent. The median percent of original list price received for existing condominiums was 94.2 percent, an increase of 0.1 percent.

Lack of Condo Financing Continues to Impact Sales

In addition to competing sales from new construction units, the lack of access to mortgage loans is also impacting existing condominiums. Of the 9,307 condominium buildings in Miami-Dade and Broward Counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to statistics from the Florida Department of Business and Professional Regulation and FHA.

National and State Statistics

Nationally, existing-home sales sprang to their highest pace in almost a decade. Total existing-home sales grew to a seasonally adjusted annual rate of 5.53 million in May 2016, which is 4.5 percent higher than May 2015 (5.29 million). It's the highest annual pace since February 2007 (5.79 million).

Statewide, closed sales of existing single-family homes totaled 25,518 last month, up 4.5 percent over the May 2015 figure, according to Florida Realtors. Florida's condominium sales totaled 10,455 last month, up slightly (0.1 percent) compared to May 2015.

The national median existing-home price for all housing types in May was $239,700, up 4.7 percent from May 2015 ($228,900). May's price increase marks the 51st consecutive month of year-over-year gains.

The statewide median sales price for single-family existing homes last month was $221,050, up 10.5 percent from the previous year, according to Florida Realtors. The statewide median price for townhouse-condo properties in May was $165,000, up 4.4 percent over the year-ago figure. In May, statewide median sales prices for both single-family homes and townhouse-condo properties rose year-over-year for the 54th month in a row.

Miami's Cash Buyers Continue to Represent More than Twice the National Average

Miami cash transactions comprised 47.1 percent of May total closed sales, compared to 49.5 percent last year. Miami cash transactions are more than double the national average of 22 percent. Miami's high percentage of cash sales reflects South Florida's ability to attract a diverse number of international home buyers, who tend to purchase properties in all cash.

Condominiums comprise a large portion of Miami's cash purchases as 62 percent of condo closings were made in cash in May compared to 31.3 percent of single-family home sales.

Seller's Market for Single-Family Homes, Buyer's Market for Condos

Inventory of single-family homes increased 8.1 percent in May from 5,827 active listings last year to 6,298 last month. Condominium inventory increased 16.8 percent to 14,107 from 12,081 listings during the same period in 2015.

There is a 5.6-month supply of Miami single-family homes, an increase of 12 percent from May 2015, which indicates a sellers' market. There is an 11.2-month supply of condominium inventory, a year-over-year increase of 24.4 percent, which indicates a buyers' market. A balanced market between buyers and sellers offers between six and nine months' supply of inventory.

Total active listings at the end of May increased 13.9 percent year-over-year, from 17,908 to 20,405. Active listings remain about 60 percent below 2008 levels when sales bottomed.

New listings of Miami single-family homes increased 7.6 percent from 1,730 in May of last year to 1,861 last month. New listings of condominiums increased 9.3 percent, growing from 2,173 to 2,376.

Nationally, total housing inventory at the end of May rose 1.4 percent to 2.15 million existing homes available for sale, but is still 5.7 percent lower than a year ago (2.28 million). Unsold inventory is at a 4.7-month supply at the current sales pace, which is unchanged from April.

Miami New Construction Market Update

Most Miami preconstruction condo developers require a 50-percent cash deposit on new units. The deposit is not only one of the highest in the United States but is significantly higher than the 20 percent required during the last real estate cycle. The large all-cash deposits are a sign home buyers are committed to the Miami market.

Developers are also being cautious not to overbuild. About 85 percent of condos under construction in downtown Miami are sold, according to Integra Realty Resources and the Miami Downtown Development Authority. Downtown Miami has about 7,200 units under construction, a considerably smaller number than the 18,500 the area had under construction in 2006.

Strong sales in the Miami preconstruction condominium market east of Interstate 95 continue to reflect significant demand for new properties, according to a June 20 report from preconstruction condo projects website Cranespotters.com.

Forty-seven condo towers with 4,358 units have been completed in Miami-Dade County east of I-95 since the start of 2011. There are 80 towers with 12,731 units under construction in Miami-Dade County east of I-95. About 58 towers with 8,334 units are planned, but have not begun development. About 79 towers with 11,373 units are proposed in Miami-Dade County east of I-95.