Miami Real Estate: one of the best years in sales

Miami-Dade County real estate has already posted the fourth-best year for total home sales in history and, with another calendar month to go, is poised to end 2022 as the second-biggest year for sales in history, based on November 2022 statistics from the Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.

“South Florida real estate is different from many US markets in that our demand for housing continues to be driven by immigration, both domestic and international,” said MIAMI Chairman of the Board Fernando Arencibia Jr. “This influx of people and businesses moving to our region, along with the proportion of cash buyers that is nearly double the national average, should continue to shield Miami from the impact of high mortgage rates as the Fed continues to with its mandate to manipulate inflationary pressure.”

The 30-year fixed mortgage rate, which topped 7% earlier this fall, has declined for five straight weeks and is now about 1% lower than the recent spike in rates. But it's important to note that the November 2022 statistics do not reflect these lower rates, as the November 2022 purchases were agreed upon in September and October, when rates were highest.

“Lower mortgage rates mean a stronger market for home sales in 2023,” said MIAMI REALTORS® Chief Economist Gay Cororaton. “I expect home sales to pick up in 2023 compared to 2022 as mortgage rates continue to drop to 6% in 2023 amid slowing inflation.”

Two forward-looking national data points have turned positive in recent weeks, a strong sign as we head into 2023. National Mortgage Purchase Applications hit seven consecutive weeks of positive trend data and the HMI Builders Confidence Index was positive on December 19.

Miami is projected to record the second-biggest sales year ever
The Miami-Dade County real estate market has already sold 29,848 total home sales (or 84 transactions per day) through November 2022, putting it on track for the second best year ever in terms of total sales. annual sales behind historic 2021.

Compared to a November 2021 record, Miami November 2022 sales decreased 40,7% year-over-year, from 3021 to 1791, due to high mortgage rates and low inventory.

While overall inventory is on the rise, most of the growth in listings is in the upper or luxury segment of the market. Miami single-family home inventory in the $400K to $600K price range, for example, has 2,7 months of supply, well below a balanced market (6 months).

Single-family home sales declined 38,5% year-over-year, from a record-breaking 1168 in November 2021 to 718 in November 2022, due to a lack of inventory and rising mortgage rates. Existing condo sales in Miami decreased 42,1% year-over-year, from a record 1853 in November 2021, to 1073 in November 2022, due to lack of inventory and rising mortgage rates.

Miami November 2022 sales are close to pre-pandemic totals
November 2021 sales were up both due to record low mortgage rates and pandemic-driven home buying. Mortgage rates averaged 3.07% in November 2021.

Mortgage rates have more than doubled today, but as of November 2022 Miami sales remain close to pre-pandemic sales totals despite today's higher prices and rates. Miami's November 2019 (2033 transactions) and November 2018 (2081 sales) numbers are not far from its November 2022 transactions.

The Federal Reserve, which has made multiple increases in the federal funds rate, is intent on reining in 40-year high inflation. Although the Federal Reserve does not set mortgage rates, it affects them through the conduct of its monetary policy.

According to Freddie Mac, the average commitment rate for a conventional 30-year fixed-rate mortgage averaged 6.31% as of December 15. That's down from 6.33% last week, but up from 3.12% a year ago.

Strong immigration from Miami Real Estate and other market fundamentals

  • Miami-Dade County's out-of-state driver's license exchanges remain in double digits for relocating New Yorkers, Californians, New Jerseyans and more, according to third-quarter 2022 data from the Department of Highway Safety and Motor Vehicles of Florida (FLHSMV). For example, 80% more New Yorkers exchanged their driver's licenses for Miami-Dade licenses between Q2020 2022 and Q5355 2016 (2019) compared to the annual average number of license exchanges observed between 2967 and XNUMX (XNUMX).
  • Global companies continue to relocate to Miami, such as Citadel, a multinational hedge fund that manages $57 billion in assets and is developing a $1 billion Miami office tower with plans to have 1500 employees in 10 years.
  • One of the strongest labor markets in the country. As of October 2022, the unemployment rate in the Miami-Fort Lauderdale-West Palm Beach metropolitan area was 2,3% compared to 3,7% nationally.
  • Miami prices continue to rise (11 consecutive years of price appreciation) and homes continue to sell rapidly (31 days on average).
  • Global buyers are returning in droves to the main international market of the United States. Foreign homebuyers purchased $6.8 billion in residential properties in South Florida in 2022, up 34% from the $5.1 billion in 2021, according to our 2022 Global MIAMI REALTORS® Study.
  • Miami's percentage of cash buyers (42.3%) is significantly higher than the national average (26%). Nearly 60% of Miami-Dade luxury buyers pay for everything in cash.
  • Distressed sales are statistically insignificant, reflecting a healthy market.
  • Demographic changes (Millennials reach prime age to buy a home and increase the growth of the elderly/retired population)
  • A high percentage of the remote working workforce prefers the Miami market, where many have relocated to live, work and play due to our lifestyle, climate and more.

Home prices in South Florida are lower than many other US metropolitan areas. Median home price in Miami-Fort Lauderdale-West Palm Beach ($570,000) is significantly lower than in many other major markets such as San Francisco-Oakland-Hayward, CA ($1.3 million), San Diego -Carlsbad, CA ($900,000), Los Angeles-Long Beach-Glendale, CA ($893,200), Seattle-Tacoma-Bellevue, WA ($741,300 ), Boston-Cambridge-Newton, MA-NH ($698,900), Denver-Aurora-Lakewood, CO ($666), New York-Jersey City-White Plains, NY-NJ ($000), and Washington-Arlington-Alexandria, DC-VA-MD-WV ($616), according to NAR's Q300 581 Metro Media Area Pricing Report.

Miami-Dade County median single-family home prices increased 9,4% year-over-year in November 2022, rising from $502,750 to $550,000. Miami single-family home median prices have risen for 132 consecutive months (11 years), the longest streak on record. Median prices for existing condos increased 14,2% year-over-year, from $346 to $000. Median condo prices have increased in 395 of the last 000 months.

While median prices have risen nationally, so has home buying power due to a long-term decline in rates prior to March 2022 and slow but steady growth in household income. West Palm Beach (No. 5) and Miami (No. 6) were among the top 10 US metropolitan areas where homebuyer income grew the most during the pandemic according to the Redfin report.

Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Inventory for single-family homes (4 months) and condos (4 months) in Miami is low. In addition, one of the supports for housing prices is rent, and rents are rising strongly.

Locally, the bulk of luxury sales in Miami is also part of the reason for the large year-over-year increase in median prices.

Miami's total active listings increase for the second month in a row
Total active listings as of the end of November 2022 increased 11,9% year-over-year, from 9984 to 11.

Single-family home inventory increased 52,9% year-over-year in November 2022, from 2805 active listings last year to 4288 last month. Condo inventory decreased 4% year-over-year to 6,890 of 7,179 listings during the same period in 2021.

New listings for single-family homes in Miami decreased 13.8% to 1,236 from 1,434. New condo listings decreased 17.8%, from 2,111 to 1,735.

The months supply of inventory for single-family homes increased 90,5% to 4 months year-over-year, indicating a seller's market. Existing condo inventory increased 8.1% over 4 months, also indicating a seller's market. A balanced market between buyers and sellers offers a supply of between six and nine months.

Nationally, the total housing inventory at the end of November was 1,14 million units, 6,6% less than in October, but 2,7% more than a year ago (1,11 million). Unsold inventory is in a 3,3-month supply at the current sales pace, which was identical to October, but higher than the 2,1 months in November 2021.

The Miami real estate sector records a local economic impact of $201,5 million in November 2022
Every time a house is sold, the economy is impacted: income generated by the real estate industries (commissions, fees and moving expenses), expenses related to the purchase of a house (furniture and remodeling expenses), multiplier of the housing-related spending (income earned as a result of a home sale recirculates in the economy); and new construction (additional home sales induce more home production).

The total economic impact of a typical home sale in Florida is $112,500, according to NAR. Miami-Dade County sold 1791 homes in November 2022 and had a local economic impact of $201,5 million.

Miami's total dollar volume was $1,300 billion in November 2022. Single-family dollar volume decreased 40,14% year-over-year, from $1,000 billion to $641,9 million. Condo dollar volume decreased 37,5% year-over-year, from $1100 billion to $706 million.

Miami distressed sales remain low, reflecting a healthy market
Just 1,7% of all closed residential sales in Miami were distressed last month, including REOs (bank-owned properties) and short sales, compared to 0,8% in November 2021. In 2009, distressed sales comprised 70% of Miami's sales.

Short sales and REOs accounted for 0,1% and 1,6% year-over-year, respectively, of total sales in Miami in November 2022.

Miami's percentage of distressed sales is on par with the national figure. Nationwide, distressed sales represented approximately 2% of sales in November, the same as in November 2021.

Miami's percentage of sales continues to outpace the nation, the state
In Florida, closed sales of single-family homes statewide totaled 17.009 as of November 2022, down 38,2% from the prior year, while existing condo and townhome sales totaled 7.084, down 38,9% . Closed sales can occur 30 to 90 days or more after sales contracts are drawn up.

Nationwide, total existing home sales transactions decreased 7,7% from October to a seasonally adjusted annual rate of 4,09 million in November. Year-over-year, sales decreased by 35,4% (versus 6,33 million in November 2021).

The statewide median sales price for existing single-family homes was $400.000, up 9,6% from the prior year, according to data from the Florida Department of Realtors Research in partnership with local realtor boards/associations. The state median price last month for condominium and townhome units was $307.000, up 12,3% from the prior year figure. The median is the midpoint; half the houses sold for more, the other half for less.

Nationwide, the median existing home price for all home types in November was $370, an increase of 700% from November 3,5 ($2021), as prices increased in all regions. This marks 358 consecutive months of year-over-year increases, the longest streak on record.

Miami real estate attracts near list price
The median percentage of the original list price received for single-family homes was 95,3% in November 2022, down 3,2% from 98,4% last year. The median percentage of the original list price received for existing condos was 96,3%, down 0,8% from last year's 97,1%.

The median number of days between listing and contract dates for single-family home sales in Miami was 31 days, compared to 20 days last year. The median time to sale for single-family homes was 74 days, an increase of 12,1% from 66 days last year.

The median number of days between the listing date and the contract date for condominiums was 35 days, 2,8% less than the 36 days. The median number of days to condo sales was 74 days, a 7,5% decrease from 80 days.

Cash sales in Miami 62,7% more than the national figure in November 2022
Cash sales accounted for 42,3% of Miami closed sales in November 2022, compared to 38,4% in November 2021. About 26% of US home sales are made in cash, according to the latest NAR Statistics.

Cash buyers are not deterred by rising rates. The high percentage of cash buyers reflects Miami's superior position as the preeminent US real estate market for foreign buyers, who tend to buy everything with cash, as well as some relocating from more expensive US markets who can buy more with the proceeds of real estate sales.

Cash sales represented 53,9% of all existing condominium sales in Miami and 24,8% of single-family transactions.