Rising prices and quick sales times have defined Miami’s real estate market in recent months, while falling sales and struggling inventories have also endured. It’s a tale of two markets.
In the Miami Association of Realtors October market report, median price for single-family homes jumped 10.4 percent year-over-year, from $240,000 to $265,000, with nearly 96 percent of transactions closing at original list price – an increase of 0.3 percent from a year earlier.
Single-family homes are selling for more and quicker – down from a median of 43 days on market in Oct. 2014 to 40 days in Oct. 2015 – but the amount of activity is falling right alongside inventory.
Sales of single-family homes dropped 4.4 percent year-over-year in October, while inventory fell 4.2 percent to a 5.2-month supply – which is better than the national average, but still down from a 5.8-month supply in Oct. 2014 and below the 6- to 9-month supply needed for a balanced market, according to MIAMI.
The coupling of falling sales and inventory with rising prices is indicative of a market that’s overvalued – which several reporting agencies and industry organizations have already suggested of the city’s market. Low inventory has pushed prices to questionably sustainable levels, which is seemingly tempering the number of new buyers interested in entering the market. However, the low and falling inventory magnifies and misrepresents the strength of demand, which leads to further price increases.
New FHA Policy to Help Condo Market
The condo market has managed to avoid inventory struggles, as the property type saw its active listings increase 1.1 percent last month, helping inventory reach a 9.1-month supply, up from 8.2 months in Oct. 2014.
The additional inventory has had some adverse effects on Miami’s condo market, including median days on market rising from 58 days a year ago to 59 days, and the number of transactions dropping 6.6 percent year-over-year, while prices rose 8.1 percent from $185,000 to $200,000.
Many have pointed to overbuilding as the culprit behind the city’s odd condo market of extreme supply and falling demand, but one factor that’s been keeping buyers out of Miami condos – approval for Federal Housing Administration loans – may soon be a problem of the past thanks to a new policy.
“The new FHA policy should broaden the opportunity for South Florida families to realize the dream of homeownership,” said Danielle Blake, senior vice president of government affairs & housing for MIAMI.
According to statistics released earlier this year from the Florida Department of Business and Professional Regulation and FHA, of the 8,523 condo buildings in Mimi-Dade and Broward Counties, only 23 are approved for FHA loans. The administration’s new policy, announced on Nov. 12, promises to “to 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.”
“By increasing the number of local condo buildings approved for FHA loans, more consumers will be able to access FHA’s low down payment mortgages,” Blake said.
International Demand is Key
Speaking on the market as a whole, Christopher Zoller provided a statement to accompany the association’s report, reiterating the international appeal of Miami and celebrating what he describes as a “strong demand” for single-family homes.
“Miami Real estate continues to attract international buyers from all over the world as well as a growing number of domestic consumers,” he said. “South Florida offers world-class amenities, a top-tier arts and cultural epicenter, a diversified economy and more. The strong demand is leading to fewer days on the market for Miami single-family homes while buyer offers are near asking price.”