Miami’s real estate market is so strong that homes are selling for near-asking price
The local real estate market is in good shape, according to a report by the Miami Association of Realtors. January saw an increase in the sale of condominiums, single family homes and luxury properties valued at $1 million or more.
Sales of residential properties in Miami-Dade rose by 5.1 percent, from 1,731 to 1,820, from January 2017 to January 2018. That represented $791.3 million in sales in the first month of 2018, $89 million more than in January 2017. The number does not include multimillion-dollar properties.
The Miami Association of Realtors obtains its data from the Multiple Listing Service (MLS), a computerized system that lists properties for sale.
Miami properties sold for pretty close to asking price. Another good sign: Homes are selling quickly.
On average, a single-family home goes under contract 47 days after it is listed for sale, compared to 61 days last year. Closing the deals took an average of 98 days, a sharp drop from January 2017, when it took an average of 113 days.
Selling an apartment takes a little bit more time, 123 days. But the average wait for a contract is 75 days, 10 days less than what it took last year.
The shortage of properties on sale partially determines the prices and speed of the sales. In January 2017, 6,590 single family homes were for sale, compared to 6,255 this January.
The inventory has been dropping for more than five months, confirming that the market is favorable to those who want to sell their properties.
But there’s a 14-month inventory of apartments, indicating that the market is favorable to buyers. A balanced market is supposed to have an inventory of six to nine months.
The biggest obstacle for the sale of condominiums is the difficulty in obtaining financing. Out of the 9,307 condo buildings or complexes in Miami-Dade and Broward, only 12 are approved to receive financing from the Federal Housing Administration. That’s a type of loan for first-time home buyers, which allows them to put down 5 percent or less as down payment.
This sounds like good news, but for those who don’t already own a home it’s not. The average price of a single family home rose by $20,000 and reached $330,000, compared to $240,500 for the national average. Prices have risen for 74 months straight.
Condominiums did not fall behind and now sell for an average of $230,000.
The sale of homes fell at the national and state levels, but in Florida, the sale of condos rose 5.9 percent compared to January 2017.
Only 9.9 percent of the sales in January involved properties in trouble, including bank-owned and short sale properties. Those kinds of properties accounted for 12.7 percent of the sales last year — and 70 percent in 2009.
Nationally, those kinds of sales are lower than in Miami at just 5 percent, 2 percent less than last year.
Cash is king in Miami-Dade’s real estate market, with 42.2 percent of all sales involving no mortgages. That’s almost double the national figure of 22 percent.
On the good side, that’s a drop from last year, when 43.4 percent of sales were in cash.
Those numbers show that South Florida attracts many foreign buyers. Most of the condo sales are in cash because banks do not approve financing for those kinds of buildings.
Also affecting the Miami real estate market is the fact that many residents of northern states are moving to Florida to cut down on their costs of living.
Federal tax reform, which was signed into law on Dec. 22, sets a deductions cap for income, sales and property taxes at $10,000. The new cap is leading more residents of states with high property values and state income tax to purchase properties in states such as Florida, which has no state income tax.