My brokerage, EWM Realty International, released our 2017 Real Estate Market Outlook Report which provides a snapshot of 2016 results and trends expected to influence the 2017 residential real estate markets in Miami-Dade and Broward counties.
[Click here for a FREE download of the whole report]
There are some important takeaways anyone interested in buying or selling in the Miami market should be aware of.
To make your life easier, I’ve put together the “cliff notes” version:
- Luxury market making headlines with massive oversupply
6-9 months of inventory is considered to be a “healthy market”.
The luxury market is making headlines because we’ve developed a huge backlog of properties in excess of $1M, with the 2016 year-end inventory growing to 25.9 months for single-family homes, and 54.6 months for condos.
According to the report, “Miami-Dade currently has the largest supply of million dollar-plus condominiums in history, with 2,549 available as of 12/31/16. The last time we saw such high levels of inventory was on 12/31/06 with 1,849 condos for sale – and at the very cusp of the Great Recession.”
This has created an affordability gap between the massive supply of luxury homes, and what most people earning Miami wages can afford. The majority of Miami’s inventory and sales are still in the $300,000 and under market. Homes in this price range are in high demand and getting snatched up, which is why at year-end 2016 there were only 2.2 months of inventory for single-family homes and 6.6 months of inventory for condos.
- Why? New Development And High Prices
As we see in every boom and bust cycle here in Miami, we’re in the middle of another influx of new luxury developments.
According to the Miami Downtown Development Authority, more than 10,000 apartments and condos were built, under construction, or proposed in the 1.2-square-mile Brickell neighborhood in 2016 alone.
In the 2 years from December 2014 – 2016, luxury ($1M+) condo inventory increased by 75% and single-family home inventory increased by 55%.
In addition, we’re seeing a price correction coming down from the highs of 2014 and 2015. According to the report, “…there is a significant pent-up demand of buyers on the sidelines, especially luxury buyers – simply waiting for today’s pricing to more closely align with their expectations of market value.”
- International Buyers Slow Down
The surge of new development and rising of prices over the last several years was largely fueled by foreign buyers. However, because of weak economies abroad and the strength of the US dollar, foreign buyers can no longer afford to buy at the same rate.
The countries impacted the most include Brazil, Russia, Argentina and Venezuela. For example, a South Florida home or condo an Argentinian could have purchased in 2007 for $1 million would cost more than $4.5 million in equivalent Argentine pesos today.
…a South Florida home or condo an Argentinian could have purchased in 2007 for $1 million would cost more than $4.5 million in equivalent Argentine pesos today.
In some cases, luxury buyers have even had to pull out of preconstruction projects because it’s simply too expensive to complete their purchases.
However, the outlook for positive currency movement in 2017 is optimistic.
- There’s still 1000+ people moving to Florida every day
The slowdown of the foreign buyer has actually made room for more domestic buyers. People around the country flock to this tropical paradise, which is why it’s still the 3rd largest state in the country, based on population.
The report states that, “of the 1,000 net new residents establishing homes in Florida each day, 200 – 300 of them are moving to the tri-county area every 24hrs!”
Some of Florida’s most attractive qualities, such as the year round sunshine, central location for tourism, and lack of state income taxes – aren’t impacted and continue to draw more and more people.
And I’m not just talking about your grandparents, a recent report from Realtor.com said Millennials ranked Miami the 2nd most desirable place to live.
- If you price it right, they will come
If there is only 1 thing you takeaway from this report, it is this.
Pricing is always your #1 marketing feature, and as the Miami market goes through a price adjustment, this becomes increasingly important. There are buyers waiting on the sidelines, and sales are happening – for those properties priced correctly.
According to the report, “More than 1/3 of all sales in the $1M+ category in the past 6 months have reflected price reductions averaging more than 14% of their original listing price.”
While it may be tempting to list at a dream price just to see what happens, statistics show that the longer your property is on the market, the lower the price you will get. Buyers subconsciously assume if a property has been on the market a while, there must be something wrong with it.
It’s really in your best interest to come out of the gates priced appropriately.
Be sure to work with a realtor who shows you lots of appropriate comparables and considers what’s unique about your situation. If you’re curious what the right price for your home would be today – reach out, I’m happy to sit down and talk through your options.
My firm is overall optimistic about 2017. And – as they say, knowledge is power. With a thorough understanding of what’s going on in Miami right now, you have the best chance at achieving your homeownership goals.
My mission, to empower homeowners with knowledge, continues to feel as important as ever. As always, I’m here for however I can best serve you.
[Click here for a FREE download of the whole report]