Residential Real Estate News
Despite Runaway Inflation, Greater Miami Condos Keep Selling in March
Miami-Dade County Condo Sales Surge for 18 Consecutive Months
According to the Miami Association of Realtors, Miami real estate registered its third-highest sales month in history in March 2022 as existing condo transactions surged for the 18th consecutive month.
"Demand is driving the Miami real estate market and the lack of housing supply continues to fuel property appreciation and record sales," MIAMI Chairman of the Board Fernando Arencibia Jr. said. "Until we see new listings outpace active listings consistently month over month, our market will continue its current trajectory even in the face of increasing interest rates. Homebuyers with positive cash flow, strong jobs and high equity are relocating to live in South Florida. The shift to working-from-home, Miami's fintech expansion and Miami's stature as the No. 1 U.S. destination for global homebuyers continues fueling demand."
Best March Sales Month in Miami History
Miami-Dade County total home sales rose 5% year-over-year in March 2022, from 3,751 sales to 3,939. The 3,939 sales rank No. 3 among the highest sales months in Miami history, trailing only April 2021 (3,960) and June 2021 (4,057).
Miami existing condo sales surged 14.9% year-over-year, from 2,201 in March 2021 to 2,528 in March 2022. It marks the 18th consecutive month of double-digit year-over-year condo gains. Miami single-family home sales decreased 9% year-over-year, from 1,550 to 1,411, because of low inventory.
Miami Luxury Condo Sales Surge 40.4%; Mid-Market $400-600K Transactions Jump Also
Miami existing condo luxury ($1-million-and-up) sales surged 40.4% year-over-year to 389 transactions. Miami single-family luxury transactions decreased 14.1% year-over-year to 268 sales in March 2022.
Miami luxury condos boast an inventory of 5.8 months of supply, portending more future growth in the sector given the high demand. There are 3.5 months of supply in luxury single-family homes. Luxury months of supply continues to trend downward for all property types because of the robust demand.
Homebuyers leaving tax-burdened states to purchase in Florida (no state income tax), new-to-market firms moving here, low interest rates, the appeal of property as an inflation hedge, rising wages and accrued savings in lockdowns, strong equity market performance, a reassessment of housing needs and lifestyles because of the pandemic and expansion of remote work are all factors driving South Florida real estate demand.
With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers. Global buyers are coming here for the vaccine and purchasing property.
Vaccinated foreigners were allowed to resume travel to the U.S. back in November 2021 and that is leading to more international investment in South Florida - the No. 1 destination in the U.S. for foreign buyers. Global buyers purchase in Miami because Miami is a world-class global city with better real estate prices than other similar global cities. Foreign buyers feel at home with our incredible diversity and acceptance of all cultures, along with all our amenities.
Miami single-family homes priced between $400K to $600K increased 15.8% year-over-year to 565 transactions in March 2022. Miami existing condo sales priced between $400K to $600K increased 110.4% year-over-year to 507 transactions in March 2022.
Rising Mortgage Rates Should Eventually Slow Price Growth Nationally, in Miami
Rising median prices is a trend nationwide. Low inventory relative to high demand leads to prices rising. Locally, the greater share of Miami luxury sales over the past year is part of the reason for the large year-over-year increase in median prices.
The Federal Reserve raised rates for the first time in three years in February and has plans for six more rate hikes by year's end. Mortgage rates have increased this month to near 5%, its highest point in more than a decade.
Home sales and prices from March were not impacted by this recent rise. Many of the financed sales that closed in March had their rates established in January and February when rates were mid to high 3%.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.17% in March, up from 3.76% in February. The average commitment rate across all of 2021 was 2.96%.
The mortgage rate is projected to land at about 4.5% at year-end 2022, according to NAR. That is still low compared to an all-time average of about 8% in the U.S.
Long term, the hope is higher rates will lead to more days on the market (gives buyers more choices). 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. Historically, inventory expands six months after rates rise, but today's market is unlike any other.
Miami-Dade County single-family median prices increased 13.1% year-over-year in March 2022, increasing from $491,250 to $540,000. Miami single-family median prices have risen for 124 consecutive months (10.33 years), the longest running-streak on record. Existing condo median prices increased 31.1% year-over-year, from $305,000 to $400,000. Condo median prices have increased in 126 of the last 130 months.
More Inventory to Arrive Later this Year for Low-Supply/High-Demand Market
Inventory tends to rise in the spring and summer and then it fades in the fall and winter.
Historically in the U.S., total inventory tends to expand six months after mortgage rates begin to rise. A new study by Realtor.com detailed that 64% of possible sellers intend to list their home by October 2022.
New listings of Miami single-family homes decreased 8.5% to 1,540 from 1,974. New listings of condominiums decreased 9.6%, from 2,861 to 2,585.
Inventory of single-family homes decreased 20.8% year-over-year in March 2022 from 2,784 active listings last year to 2,205 last month. Condominium inventory dropped 54.7% year-over-year to 4,835 from 10,672 listings during the same period in 2021.
Months' supply of inventory is down since July 2019 for single-family, reflecting strong demand. Months' supply of inventory for single-family homes decreased 29.2% to 1.7 months, which indicates a seller's market. Inventory for existing condominiums decreased 73.6% to 2.3 months, which also indicates a seller's market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Total active listings at the end of March 2022 decreased 47.7% year-over-year, from 13,456 to 7,040.
Nationally, total housing inventory at the end of March totaled 950,000 units, up 11.8% from February and down 9.5% from one year ago (1.05 million). Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021.
Miami Real Estate Had a $355 Million Local Economic Impact Just in March 2022
Every time a home is sold it impacts the economy: income generated from real estate industries (commissions, fees and moving expenses), expenditures related to home purchase (furniture and remodeling expenses), multiplier of housing related expenditures (income earned as a result of a home sale is re-circulated into the economy) and new construction (additional home sales induce added home production).
The total economic impact of a typical Florida home sale is $90,300, according to NAR. Miami-Dade County sold 3,939 homes in March 2022 and therefore had a local economic impact of $355 million.
Miami total dollar volume totaled $3.4 billion in March 2022. Single-family home dollar volume decreased 9.9% year-over-year, from $1.6 billion to $1.4 billion. Condo dollar volume increased 41.55% year-over-year, from $1.4 billion to $1.9 billion.
Miami Distressed Sales Keep Dropping, Reflecting Healthy Market
Only 1.3% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, higher than the 1.2% in March 2021. In 2009, distressed sales comprised 70% of Miami sales.
Total Miami distressed sales increased 15.6% year-over-year in March 2022, from 45 to 52. Short sales and REOs accounted for 0.3% and 1.0% year-over-year, respectively, of total Miami sales in March 2022. Short sale transactions decreased 15.4% year-over-year while REOs increased 28.1%.
Miami's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in March 2022, equal to the percentage in March 2021.
Miami's Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 30,793, down 6.2% year-over-year, while existing condo-townhouse sales totaled 14,631, down 11.4% over March 2021. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.7% from February to a seasonally adjusted annual rate of 5.77 million in March. Year-over-year, sales fell 4.5% (6.04 million in March 2021).
The statewide median sales price for single-family existing homes was $396,558, up 21.3% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month's statewide median price for condo-townhouse units was $308,000, up 27.3% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
Nationally, the median existing-home price for all housing types in March was $375,300, up 15.0% from March 2021 ($326,300), as prices rose in each region. This marks 121 consecutive months of year-over-year increases, the longest-running streak on record.
Miami Real Estate Attracting Multiple Bids, Buyers Going Over-List Price
The median percent of original list price received for single-family homes was 100% in March 2022, up 2.8% from 97.3% last year. The median percent of original list price received for existing condominiums was 98.6%, up 4.3% from 94.5% last year.
The median number of days between listing and contract dates for Miami single-family home sales was 18 days, a 35.7% decrease from 28 days last year. The median time to sale for single-family homes was 61 days, a 19.7% decrease from 76 days last year.
The median number of days between the listing date and contract date for condos was 31 days, down 50% from 62 days. The median number of days to sale for condos was 73 days, a 29.8% decrease from 104 days.
Miami Cash Sales 55.4% More than National Figure in March 2022
Cash sales represented 43.5% of Miami closed sales in March 2022, compared to 36.2% in March 2021. About 28% of U.S. home sales are made in cash, according to the latest NAR statistics.
The high percentage of cash buyers reflects Miami's top position as the preeminent American real estate market for foreign buyers, who tend to purchase with all cash as well as some moving from more expensive U.S. markets who can buy more with their profits from real estate sales.
Cash sales accounted for 52.1% of all Miami existing condo sales and 28.2% of single-family transactions.
