Wondering how the pandemic is affecting Miami real estate? The Jo-Ann Forster Team at Compass in Miami has been working to take the guesswork out of it, crunching data from the MIAMI Association of Realtors’ Multiple Listing System every day for the last seven weeks to better understand the impact of the pandemic on the local market.
According to Brian Shapiro, senior vice president of the Jo-Ann Forster Team at Compass, their most recent COVID-19 Miami Real Estate Report, updated through May 4, contained some surprisingly good news.
For the first time in seven weeks, closed sales in Miami increased last week with a total of 313 closings. Although closed sales are still 31% below pre-quarantine averages, the increase is a sign that things are beginning to stabilize. According to the report, the number of new sale contracts across all price ranges increased by 9% or more in each of the last three weeks.
“We’ve seen three straight weeks of improvements in the number of new contracts,” Shapiro told Miami Agent. “We’re not trying to promote an unrealistic positivity, but it’s unbelievable that even in the depths of the quarantine, there are still hundreds of homes being listed. This is not the same as the last crisis. Not only did we enter into this with an extremely strong market — things were booming here in Miami — people have more equity in their homes this time.”
Not surprisingly, the Miami market seems to be showing improvement from the top down. New contracts for properties priced between $500,000 and $1 million increased by 33% last week while new contracts for properties priced above $1 million were up a whopping 64% last week.
In addition, the number of cancelled contracts were down to the lowest level since the quarantine started, an important indicator that the market is improving. “Early on in the pandemic, there were not only fewer contracts but an increase in cancelled listings, so it was the double whammy,” said Shapiro, who estimates he spends 30 hours a week gathering the data to create the report. “It’s very tempting to look at closed sales, because that’s where the money is, but they’re a trailing indicator, because they went under contract 45 to 60 days ago. When we started this project, we wanted to see what was happening with new listings and contracts. So, this is very positive, because it means sellers are seeing the light at the end of the tunnel.”
That said, price reductions in Miami are increasing, up 13% last week to the second highest level since the quarantine began, with the biggest increase in significant reductions of at least 10% off list price. Shapiro predicts further reductions in the mid-range condo sector. “Without a doubt, that segment is going to be hardest hit,” he said. “Many [mid-range condo owners] are second homeowners and investors who are paying high condo fees and may need to liquidate. Once you get into the third quarter, you’re going to see people like that who will look to sell.”
While new listings have increased by at least 10% each of the last three weeks, with new listings under $500,000 up 15% last week and new listings and $500K-$1M up 1.2%, the pipeline is still relatively thin. “It’s going to take a while to work through that, since there’s a 30-day plus lag in closings,” Shapiro said. MMy guess is we’re really looking at the end of the third quarter or beginning of the fourth quarter before we start to see closed sales really rebound.”
In the meantime, Shapiro is feeling positive. “One of the most interesting things we’re seeing is that the buyers who are out there today are really, really serious,” he said. “If you’re looking right now, you’re a very serious qualified buyer. The volume will come back. We’re definitely seeing it in the data and we’re getting more calls and more internet traffic. Things are picking up and people are becoming more optimistic. The fear is subsiding.”