Luxury property sales dropped by 15 percent year-over-year across the Miami and Miami Beach markets this past quarter – and for the single-family homes and condos that did sell, they stayed on the market for longer and ended up selling for less.
Those were the findings of Douglas Elliman’s third quarter report, and though the numbers are bad, one expert says it’s not as bad as they look.
“I do not think anyone should underestimate the importance, value proposition and demand for Miami’s real estate market,” says Douglas Elliman Florida CEO Jay Parker.
To be clear, Parker has seen his brokerage’s report. He knows it says there is more than a three-year supply of luxury condos in Miami, and more than four years of supply in Miami Beach; he knows that luxury condo and single-family home sales are down across both markets – in some cases by more than 20 percent; and he also knows about Greater Miami’s slowing luxury sales, bloated luxury inventories and falling luxury prices. Yet, Parker is not sweating the figures, because he does not think they reflect a market in trouble. In fact, he says it’s normal.
“The market is, in fact, adjusting from the extraordinary growth after the recession, and I do not think that is an indication of a catastrophic change,” he explains, later adding that while inventories are going up, they’re not going up at pre-crisis bubble rates and are “consistent with what we normally refer to as a healthy market.”
Not the worst, but still bad
Parker is not wrong about the Miami market’s absurd, post-crisis growth. Home prices in Miami-Dade and Broward counties grew 104 and 111 percent, respectively, from Q1 2011 to Q1 2016.
However, while current inventories are not lugging around the same kinds of surpluses they did 2006 and 2007, they also do not reflect what is traditionally considered a healthy market – which, by the Miami Association of Realtors’ definition, is six to nine months of supply. Indeed, between the single-family and condo markets of Miami and Miami Beach, the Magic City’s single-family luxury inventory is the lowest – at a 17-month supply.
Miami is no longer a seller’s market
One stat that did stand out as abnormal to Parker is the days on market. Luxury single-family homes took an average of 118 days to sell in Miami, compared to 56 during the same period last year, and 141 days in Miami Beach, a year-over-year increase of about 100 days. It was an almost identical scenario on the condo side of the luxury market.
Parker attribute’s those lengthening timelines to a drop in demand, and as a clear sign that Miami is no longer a seller’s market.
“The increase in days on market has brought to the forefront, for many of our sellers, the realization that they may not be able to make as much of a gain on their real estate investment as they thought,” he says. “They will have to adjust to the market and capitalize on the gains they’ve made since acquiring those properties after or during the recession.”
We’ve provided a more comprehensive third-quarter break down of the Miami-Miami Beach luxury market below:
Luxury Single Family
|Median Sales Price||$1,166,338||$8,400,000|
|Median Sales Price YoY Change||-4.60%||-2.30%|
|Closed Sales YoY Change||-2.30%||-27.30%|
|DOM (Q3 2016)||118||141|
|DOM (Q3 2015)||56||43|
|Inventory YoY Change||40.60%||22%|
|Absorption Period In Months (Q3 2016)||17.6||54|
|Absorption Period In Months (Q3 2015)||12.2||32.2|
|Median Sales Price||$731,000||$2,100,000|
|Median Sales Price YoY Change||-22.10%||-4.50%|
|Closed Sales YoY Change||-24.90%||-16.50%|
|DOM (Q3 2016)||129||126|
|DOM (Q3 2015)||52||57|
|Inventory YoY Change||10.80%||30.10%|
|Absorption Period In Months (Q3 2016)||39.8||52.2|
|Absorption Period In Months (Q3 2015)||27||33.5|