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Miami Sales Remain Strong in February, but Are They Too Strong?

by James McClister

Strong February numbers represent a healing market. But is it healing too much, too fast?

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February proved yet another fruitful month for the Magic City, with single-family home sales registering double-digit gains and median sales prices continuing their three-year growth streak, according to a new report from the Miami Association of Realtors and the local MLS.

Setting an all time annual record in 2014, existing-home transactions have been on a tear, consistently boasting significant gains. In February, sales jumped 14.2 percent year-over-year, from 860 to 982. Condominium sales posted a 1.4 percent gain, the report confirmed.

The city’s impressive sales activity is indicative of a surge of demand that’s been swelling since 2013. Even as investors leave the healing market to find more succulent options, huge infusions of international and non-native domestic buyers are helping to keep sales strong and prices up.

“Miami has so much going on,” said Carlos Garcia, broker vice president of the The Keyes Company. “We have the weather, the location, the prices are lower than other major cities, unemployment is low, we have heavy construction and the infrastructure is being updated.”

For single-family homes in February, median sale price took another leap forward, climbing 7.9 percent from Feb. 2013 up to $245,000 – well above the statewide median sale price of $179,995, but still within 2004 levels. Median sale price for condos similarly rose 6.8 percent year-over-year to $189,000.

Demanding Demand

Indicative of the persistent demand, MIAMI researchers found, single-family homes and condos continue to sell close to asking price in a relatively short amount of time, while inventories remain filled out.

  • The median number of days on the market for single-family homes sold in February 2015 was just 46 days, a decrease of 2.1 percent compared to the same period in 2014.
  • The median number of days on the market for condominiums sold in February 2015 was 65 days, an increase of 14 percent compared to the same period in 2014.
  • At the current sales pace, there is a 5.5-month supply of single-family homes, a negligible decrease of 1.8 percent from 5.6 months in February 2014. There is an 8.9-month supply of condominium inventory, up from 7.5 months in February 2014, an increase of 19.1 percent.

Foreign Aid

Despite home sales recording double-digit gains, MIAMI 2015 Residential President Christopher Zoller said that things are moving at a “moderate rate.”

“Seller confidence and buyer demand in the Miami real estate market is leading to more active listings and higher sale prices,” he added.

Situated in comfortable proximity to the Carribbean and Latin America, a primary driver behind the city’s prolonged success, Zoller and Garcia agreed, is hinged on the prominent role international buyers play in South Florida.

“We have a lot of foreign buyers buying here, especially from South America, but lately from Euorpe and Asia, as well,” Garcia said.

In past years, international buyers have overlooked Miami in lieu of properties in New York or Los Angeles – the country’s original hubs for foreign clients – but with home prices remaining affordable, the city’s enticing lifestyle and ample amenities are attracting considerable attention.

It has been suggested that Miami is in the midst of a new bubble, specifically the city’s condo market. Some fear prices will inevitably implode and the market will collapse into the familiar ruin of the 2007 crisis, but Garcia is confident the city has installed enough failsafe practices to ensure growth is healthy and maintainable.

“Condo projects are taking buyer deposits up to 50 to 70 percent, so the developers do not need banks, and the buyers need only 30 to 50 percent from the banks or balance in cash,” he said. “This is a complete reverse from previous projects when they relied heavily on banks.”

As it’s difficult to categorize a market as in a bubble whilst in the bubble, the trajectory single-family and condo prices take over the next few months will give us a better indication of where the market is heading long term.

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