Miami Real Estate Market
Miami real estate market, has finally slowed down with even markets like Miami Beach seeing some of its lowest prices in years, after experiencing a long period of profound activity. Though despite slowing sales, Miami real estate is expected to stay strong throughout.
In Miami Beach, for instance, sales in the first quarter were down a staggering 21 percent from last year, with sales reaching 810 properties. Median prices dropped to $408,750 from $437,750, with this being the third quarter in a row that prices have dropped.
Down in the mainland however, the Miami real estate market is doing a bit better, seeing only a 17.5 percent drop in sales with 3,583 homes being sold compared to the 4,344 sold during the first quarter of last year. Home prices though did jump 2.7 percent from $393,343 to $404,020 from last quarter.
Miami Real Estate:
So what’s contributing to the slowing sales growth? One large factor is a circular one: the slower sales help to build up the Miami real estate inventory, but too much inventory is what is contributing to dragging the market down. Miami Beach’s inventory alone is at a 21.5 months’ supply, up a shocking amount from the 12.8 months from the first quarter of last year.
Miami itself is doing better with a 10.6 months’ supply, but compared to last year, it’s still a 39.5 percent increase in inventory.
Another large factor to the slowing sales in the Miami real estate market is a combination of weakening economies abroad in places like Europe and Latin America, and the strengthening of the U.S. dollar. Miami has been relying on foreign nationals to help move the market along for the past several years, but a strong U.S dollar means even more expensive real estate and along with weak economies, the amount of buyers from abroad has severely narrowed. This has effectively stranded local developers and has forced them to find a replacement group of condo buyers.
Other smaller but still significant factors to the slowing of the Miami real estate market is the decreasing supply of distressed homes – now only having a market share of 8.1 percent. However this also means that real estate investors who know how to locate distressed properties before they go on the market (like preforeclosures, tax delinquent, bankruptcy sales, and more) have a unique possibility right now to enter the Miami real estate market, which has a high demand of distressed properties compared to market/retail properties (rehabber, landlords and investors are the target buyers.) I have several webinars that address this particular need and how to locate distressed properties.
2016 being an election year too could cause problems, with home buyers waiting to see what effects the new administration would have on mortgage rates.
However, it’s not all bad. For those who are concerned that we may be in another bubble, it’s important to know that this kind of slow down was expected in the Miami real estate market and won’t have any of the consequences we experienced in 2007 and 2008. In fact, reports have shown that despite development projects that have either been recently delayed or even cancelled, developers are planning and announcing more projects for the near future; with a lot of focus going in the hotel and hospitality and retail sectors. And though home prices in places like Miami may continue to rise a little in the short term, in the long term, we could see the market even out as soon as next year.