Miami home sales down, but prices still up. How long can it last?

It’s a trend that can’t last forever: Home sales in Miami-Dade County are falling, but prices are still going up.

Total existing home sales slid to 2,435 in May, down 10.4 percent annually, according to data from the Miami Association of Realtors. Single-family homes — down 7.2 percent — fared better than condos, which fell 13.3 percent. (Existing condos are competing with a glut of new luxury construction.)

Two factors are contributing to the residential slowdown, which comes after three years of heady sales: First, a strong dollar is crippling the foreign buyers who drove South Florida’s latest real estate boom. Second, investors and flippers have already snapped up much of Miami’s shrinking foreclosure inventory, which ballooned during the recession and fueled sales.

Foreclosures fell from 25.1 percent of all sales in May 2015 to 18.9 percent of sales in May 2016.

10.4 percent Decline in total residential sales in Miami-Dade County in May

Meanwhile, prices are still rising.

In Miami, single-family home prices rose to $295,000, up 4.6 percent year-over-year. Condo prices hit $214,250, a 2.5 percent annual gain.

That makes sense, experts say. For now.

“Historically, even after there has been a noticeable change in the market, home prices continue to increase for six to 12 months despite the shift in supply and demand,” said Jack McCabe, a real estate analyst. “If you see a big change in the real estate market, it takes a long time to sell. It’s not like stocks or commodities.”

Sellers are already starting to respond, especially in the luxury market, said Ron Shuffield, president of EWM Realty International.

“We’re seeing a lot of people reducing prices as inventory goes up and sales go down,” Shuffield said.

About 37 percent of Miami-Dade listings over a million dollars have seen price reductions since Jan. 1, according to research conducted by EWM.

“The message we’ve been taking to our sellers since last August is that we’re returning to a more normal market,” Shuffield said. “These are still great numbers that we’re seeing.”

The overall trends suggest single-family homes remain a seller’s market while condos are firmly in buyers’ territory.

Realtor Jeff Morr said he believes the U.S. presidential election might be playing a role in the slowdown and that important indicators, including low interest rates, remain positive.

Miami set an annual record for residential sales in 2013, and came close again in 2014 and 2015. Coupled with flat wages, the real estate boom has helped make Miami one of the least affordable cities in the nation.

I THINK THAT THE ELECTION YEAR REALLY THREW OFF SOME PEOPLE’S CONFIDENCE, MORE THE MEDIA THAN ANYONE ELSE.
Jeff Morr, Realtor

“I think that the election year really threw off some people’s confidence, more the media than anyone else,” Morr said. “We still have foreign buyers coming to Miami. … We’re a really undervalued market compared to other similar markets.”

While Miami’s luxury market is cooling down, there’s no sign of relief for starter and mid-market homes.

Because of a lack of available land and high construction costs, builders haven’t been able to put up much in the way of affordable homes. The tight inventory means strong sales.

Sales for single-family homes priced between $200,000 and $600,000 beat the rest of the market, growing 5.9 percent in May. There’s no sign of much new supply entering the pipeline at that price point.

“The mid-market homes are going to maintain value and even go up,” McCabe said. “It’s the new construction, luxury market that’s going to suffer, at least the projects with middling design or off-the-water locations. A lot of them are not that outstanding. … When the market crashed last time, every property went down. That’s not going to happen this time.”

Broward County, which is less dependent on foreign buyers, had a better month.

In Broward, single-family home prices rose to $312,500 in May, up 7.8 percent annually, according to the Greater Fort Lauderdale Realtors. Condo prices hit $145,000, up 7.4 percent for the year.

Sales were up, too, likely driven by suburbanites seeking good schools as the summer buying season gets underway.

Broward saw 1,671 single-family home sales in May, up 15 percent from April and 9.5 percent from May 2015. There were 1,570 condo sales, down 1.6 percent compared to May 2015 but up 9.5 percent for the year.

The hot market is being driven by several trends also popping up at a national level: Homebuilders haven’t produced much stock at the lower end of the market. That’s driving down inventory and causing a mad scramble for the few available starter homes.

In Broward, single-family homes stayed on the market for an average of 41 days in May, down from 50 in May 2015. Nationally, homes last just 32 days on the market. Broward’s inventory for single-family homes has fallen to 3.8 months worth of supply. A healthy market generally has between six and nine months.

“Buyers struggling to find an affordable home to buy will continue to do so,” said Svenja Gudell, chief economist of real estate website Zillow, in a statement. She added that the housing market had become “hypercompetitive” for buyers seeking starter and other well-priced homes.

 

BY NICHOLAS NEHAMAS AND JACK HERRICK
nnehamas@miamiherald.com

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