Miami’s real estate market has been hit hard in the past year, and the slowdown appears to be gaining steam in 2016.
A new report – published by Douglass Elliman and MIller Samuel Real Estate Appraisers & Consultant – shows the total number of sales for Miami’s high-end luxury market fell 21.1 percent to 810 properties in the first quarter of 2016. The sales price for the upmarket neighborhood, which includes everywhere from Sunny Isles Beach to Fisher Island, were also down 7.5 percent year-over-year to an average of $905,262. The median sale price for the once-hot market also fell 6.6 percent year-over-year to $408,750, down from $437,750 the previous year.
“The high end is softer than the broader market right now,” said Jonathan Miller, president and CEO of Miller Samuel. “We are coming off this unusually strong period for the high end between 2011 and 2014 and now we’re seeing normalization of that segment.”
The report also shows inventory levels for Miami’s real estate market surged nearly 33 percent in the first quarter of 2016, and there is now a 21.5-month supply of properties. That equates to the number of days on market nearly doubling from 53 to 97 days year-over-year.
Signs of light can be found in Miami’s broader markets. The city’s coastal mainland market, which covers neighborhoods east of I-95, saw a 2.7 percent bump in price in the first quarter, from a median of $393,343 per property last year to $404,020. The downside is the area also experienced a 17.5 percent reduction in sold properties.
“We’re experiencing a slowdown after an extended period of intense activity,” said Miller. “The pace is shifting down to something much more mundane.”
According to the report, the slower sales pace is leading to a large buildup of inventory, which is anticipated to further drag the real estate market down in Miami. The report cites factors such as weak economies in foreign countries for Miami’s slowdown, specifically those in Latin America, which have traditionally fueled Miami’s market.
“Miami’s median prices are still significantly below their 2007 peak,” said Mark Sadek, a Coral Springs Realtor. “Miami real estate remains a bargain especially compared to other world-class cities, and domestic and international consumers proved that in February as total dollar sales volume in single-family homes increased 7 percent compared to the previous year.”
In addition, the report reveals a shrinking supply of distressed properties is also contributing to the slowdown in sales. Short sales and lender-owned homes, which made up 14.4 percent of all home sales three years ago, now only have a market share of 8.1 percent.
Along with Miami, other South Florida markets are starting to experience a slowdown. In Fort Lauderdale, home sales fell 8.3 percent year-over-year, from 504 to 462 properties. In Palm Beach, sales were cut in half year-over-year, from 90 to 45.
“It’s not clear how long we’ll be in this period,” Miller said, “but the market has certainly changed from what it was a year or two ago.”
In the report, the only markets in South Florida showing positive signs was Boca Raton. Sales in the area skyrocketed by 20 percent year-over-year, from 503 closing to 607 in the first quarter.
According to the Miami Association of Realtors, a new FHA policy should qualify more South Florida condo buildings. The plan will streamline the condominium recertification process, expand its definition of acceptable owner-occupied units to include second homes not owned by investors and change the way it views co-insurance clauses. The new policy should help Miami’s real estate markets.