Housing On Market Disappears Fast
Written by Scott Blake on July 11, 2013
By Scott Blake
Miami-Dade County’s rollercoaster-like housing market has swung from a large oversupply in past years to dwindling inventories this year that are fueling double-digit price increases.
As of May, the local supply of existing single-family homes on the market had dwindled to five months, while the local supply of existing condominiums and townhouses being marketed had dwindled to 5.8 months, according to new statistics from the Miami Association of Realtors. The figures do not include new construction.
The decreasing inventories of existing housing are at their lowest levels in at least five years, the statistics show.
“We need to six to nine months of supply — and up to 12 months — to be a balanced market,” said Ron Shuffield, president of Miami residential real estate firm Esslinger Wooten Maxwell Realtors.
The result of the tightening housing supply has been double-digit price increases that some fear could eventually develop into another housing market bubble.
For instance, the median resale price of a single-family home in Miami-Dade rose to $222,000 in May, up 16.8% from May 2012. Condominiums saw an even bigger gain, rising to a median resale price of $180,000 in May, up 20% from $150,000 a year earlier, according to the Miami Association of Realtors. The median means half sell for more and half sell for less.
When looking over the past two years, Mr. Shuffield said, local housing price increases are even greater, with condo resale prices rising about 56% and single-family resale prices rising more than 32%.
“We have too many buyers chasing too few sellers,” he added.
That is evident in statistics that show the area’s shrinking housing supply, as measured by how many months it would take at the current pace of sales to run out of housing inventory.
In May, the supply over all price categories averaged five months for existing single-family homes. However, the supply for homes priced under $250,000 — which account for the majority of sales — was even lower, ranging from 2.9 months for homes priced under $50,000 to 3.3 months for homes priced from $200,000 to $249,999, Miami Association of Realtors statistics show.
The same holds true in the existing condo and townhouse market. The supply in May ranged from 2.2 months for units priced under $50,000 to 4.4 months for units priced between $150,000 and $199,999, statistics show.
“Three-quarters of everything we’re selling is for under $300,000,” Mr. Shuffield said.
In both the single-family and condo markets, the average supply was pulled up by the higher price categories. For single-family homes priced at $1 million or more, the supply was 15.5 months in May, while for condos priced at $1 million or more, the supply was 14.4 months, statistics show.
This year’s local housing supply numbers are a far cry from those of previous years following the real estate crash. In May 2009, for example, Miami-Dade’s single-family housing supply averaged 20.1 months over all price categories, while the supply of condos and townhouses averaged 32.5 months. Each year since, the supply levels have steadily dropped, statistics show.
The result of falling inventories has been that buyers at the low- and mid-levels of the residential real estate market are being squeezed the most, particularly in the single-family home market.
According to the Miami Association of Realtors, active listings for condos and townhouses in Miami-Dade totaled 8,045 in May, up 7.4% from May 2012, when there were 7,488 active listings.
The median number of days on the market for condos and townhouses, meanwhile, was unchanged at 48. And when sales closed, sellers received 96.6% of the original listing price in May, up from 95.4% a year earlier.
However, trends in the single-family market have differed. Active listings dropped to 4,997 in May, down 2.5% from 5,123 in May 2012.
In addition, the median number of days on the market for single-family homes decreased to 43 in May, down from 49 days a year earlier. And sellers received 94.9% of their original listing price, up from 92.8% a year earlier.
Miami Association of Realtors spokeswoman Lynda Fernandez said local condos started selling more in 2011, and the trend in the single-family market has lagged about six months behind.
The combination of previously deflated prices in the housing market followed by the beginnings of large price increases about two years ago attracted the attention of many investors, Ms. Fernandez said.
At a recent conference on the housing market, it was said that institutional investors such as banks and financial firms are accounting for about a quarter of residential real estate sales in the Miami-Dade market. But the majority of buyers are mainstream consumers and individual investors, Ms. Fernandez said.
And many cases, buyers have brought large amounts of cash to the bargaining table. In fact, the majority of sales in Miami-Dade continues to be all-cash purchases, especially in the condo market, according to Miami Association of Realtors statistics.
In May, for example, all-cash purchases accounted for 76% of the 1,672 closed sales of existing condos and townhouses in Miami-Dade. In the existing single-family market, all-cash purchases accounted for 44.9% of closed sales in May, statistics show.
“What we’re dealing with,” Mr. Shuffield said, “is a severe shortage of housing across the county. Construction came to a halt for several years and now they’re trying to catch up.”To read the entire issue of Miami Today online, subscribe to e-MIAMI TODAY, an exact digital replica of the printed edition.