Post Covid-19 – How smoking hot is Miami housing market?
South Florida housing market is strong and so far showing positive trends in 2021. There is an influx of new serious home buyers, looking to crash into Miami specifically. Resultantly, it has become a sellers’ market with sellers getting top dollars for their properties. People from North – where the weather is cold and snowy, and taxes are high – have been striving to shift to South Florida.
While the lush colours of sunny South Florida provide for a new landscape but it’s the job opportunities in Miami Dade and Broward Counties that actually angled the scale. After all, who does not like a sunny ambiance on most of the days in the year and especially, if you are getting this opportunity and shy away from the hefty state income tax. In Virginia, the residents pay 6% income tax to the state along with several other local taxes. In other places in the Northeast like New York, people pay more than that.
Due to Covid, several companies are shutting down in the Northeast, which urged thousands of people to move to Florida. It has disrupted the balance of the Miami housing market and can create a housing crunch. Owing to a sudden spike in demand with inventory remains low, home prices climbed up in South Florida. It has become a sellers’ market with many sellers in the market, selling their properties as they are getting a higher price.
Like other global realty markets, the Miami housing market was badly hit by Covid-19 induced pandemic but the South Florida and Miami housing markets bounced back in the 3rd quarter of 2020. And since then, the demand for houses, condos, and apartments in Miami has been increasing. Another interesting feature that made the Miami housing market so attractive for potential investors is the low mortgage rates.
The pent-up demand coupled with low mortgage rates boomed the Miami housing market, which will continue to fuel real estate transactions in 2021. According to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system, Miami-Dade County totals home sales showed a double-digit increase for the sixth consecutive month in February 2021. House prices have been increasing since then because there is strong demand for Miami properties but supply is limited, which eventually leads to price appreciation. And February 2021 is termed as the 111th consecutive month of home price appreciation in this region.
The statistics show that the monthly supply of inventory for single-family homes decreased by 49.1% to 2.8 months, which indicates a seller’s market. Inventory for existing condominiums decreased by 19% to 10.2 months, which indicates a buyer’s market. If inventory levels are around 6.5 months, there is a balanced housing market. This is the historical state-wide benchmark for the monthly supply inventory available for sale.
According to Realtor.com, the real estate market in Miami is balanced, which means there is a good mix of buyers and sellers. It also suggests that the Miami housing market is approaching a stable state rather than being on the decline. The median list price of homes in Miami, FL was $398K in February 2021, up 4.9 percent year over year.
The median price of a home sold was $355,000. The sale-to-list price ratio in Miami was 97.33 percent, which means that on average, homes in Miami sold for 2.67 percent less than the asking price. A buyer would prefer a sale-to-ask price ratio of 90 percent or higher, while a seller would often prefer situations with a ratio of 100 percent or higher.
The Miami metropolitan area is the 7th largest metropolitan area in the United States and the 72nd largest metropolitan area in the world. The metropolitan area includes the City of Miami (the financial and cultural core of the metropolis), Miami-Dade, Broward, and Palm Beach counties which are the first, second, and third most populous counties in Florida.
In May 2020, Miami-Fort Lauderdale-West Palm Beach MSA (Broward, Miami-Dade, and Palm Beach counties) experienced a 48.0% y-o-y drop in sales of single-family homes. The median sales prices increased by 2.1% to $372,500. Year-to-Date sales dropped by -2.9%. According to the national real estate brokerage Redfin, the Miami metro area had about an 8-month supply of homes for sale as of June 2020, which was higher than most other metros in the United States.
It is a general trend that in the buyers’ market, homes tend to stay longer on the market which makes sellers more conscious about their properties. Due to this, sellers usually lower down their property prices to attract potential buyers. The entire South Florida housing market — and Miami in particular — saw a decline in sales due to the COVID-19 pandemic.
However, the mortgage rates dropped which made real estate experts foresee a positive future for the Miami housing market. In June 2020, the Miami Association of Realtors said that they expect an increase in sales in the coming months, due to lower mortgage rates and an influx of investors fled from high-tax states.
The single-family market saw a roughly eight percent decline in sales year-over-year, but that includes months where it was very difficult to show off a home. The number of condos sold dropped by around 4%. The total number of homes sold, however, was only down 1%. And, albeit at a slower pace, the average home price continued to increase. This means single-family homes in the Miami real estate market have risen for more than ninety months in a row.
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