South Florida’s overall housing market is experiencing generational growth, led by epic increases in the ultra-high-end market of homes and condos exceeding $10 million, according to data from Insight, a new study released by Berkshire Hathaway HomeServices (BHHS) EWM Realty.
The increase in sales is dramatic across all price points, but in the $10 million and over market, Q1 2021 had a 980% increase in the number of sales of these trophy properties in Miami-Dade – from 5 total homes and condos sold during the first three months of 2020, to 54 sold during the same period in 2021.
Based on data from the Southeast Florida Multiple Listing Service (MLS), the study reveals nothing short of startling numbers in the sale of luxury single-family homes, although the sale of high-end condominiums has also been surging.
“The initial response of local families and newcomers to South Florida after the COVID shutdown was to flee to single-family homes and larger lots. The spike in the sale of luxury single-family homes was immediate, overshadowing a growing renewed interest in our significant inventory of luxury condominiums,” says Ron Shuffield, President & CEO of BHHS EWM Realty. “Inventories have since plummeted for both single-family homes and condos.”
The inventory of single-family homes in the $500,000 and under market in South Florida is an increasingly endangered product type. Inventories during Q1 2021 fell 68.3% in Miami-Dade County and 64.2% in Broward County. The same price point also experienced a substantial decrease in condominium inventory, 25.9% in Miami-Dade and 30.4% in Broward.
“As it relates to starter homes,” said Shuffield, “condominiums are becoming an increasingly more viable option in light of the tighter inventories with single-family homes. This is a positive for condos as we still have excellent values in this arena.”
The $500k to $1 million price point had dramatic increases in sales, and equally dramatic decreases in inventory. In Miami-Dade, year-over-year, single family home sales increased 65.1% within this price point, while inventories plummeted 54.1%. In condos, sales increased 72% while inventory decreased 26.5%
In Broward County the numbers were also striking, with a 69% year-over-year increase in the number of single-family home sales and a 62.6% decrease in inventory, and a 39.2% increase in sales and 26.2% decrease in inventory for condominiums.
While the ultra-high-end market’s growth is the highest from a percentage standpoint, the $1 million to $2 million market is equally striking, with a 91.2% increase in year-over-year sales of single family homes in that price point in Miami-Dade, and a 49% decrease in inventory, and a 148% increase in condo sales and 28.5% decrease in inventory.
Not to be left behind, Broward saw a year-over-year increase of 85.3% in the number of single family homes in that price point, and a 50.4% decrease in inventory, and a 104.9% increase in condo sales and an 18.2% increase in inventory.
“We are living through an epic shift in the housing market across America – a re-balancing of where we are choosing to live, not just living where we work,” continues Shuffield. “With 661 net new residents moving into Florida each day (per U.S. Census data), it’s inevitable that the strong demand for South Florida housing at all price points will continue.”
Study Results Include:
No End in Sight for Single-Family Home Appeal
In South Florida, with its shortage of land to build new housing, the impact of the pandemic and other compelling economic factors, the very limited supply is understandable. The overall inventory of single-family homes under $1 million in Miami-Dade County has shrunk to less than 2 months of supply. A healthy market is 6-9 months of available inventory in the under $1 million price range, definitely creating one of our community’s great ‘seller’s markets’. We will continue to see a great deal of interest in single-family homes throughout 2021 at all price points. The challenge will continue to be maintaining sufficient inventory to keep a check on double-digit elevating prices.
One Virus. Two Impacts.
Because of the pandemic, the residential real estate buying and selling process can be accomplished in a completely virtual manner. Everything — from listings, to showings, to offers, to selling, to financing, to closing – can be virtual. Facebook and Instagram Live home video tours were born out of the pandemic — and are continuing to be offered today. The video quality of the home tours, coupled with 3-D photography floor plans, has provided buyers (and brokers) the ability to ‘tour’ more properties in the same or less time as the more traditional in-person tours. These new methods are definitely here to stay post-COVID.
Return of International Buyer
COVID played a huge role over this past year in further slowing sales to the international market, particularly from Latin America. For almost five decades, South Florida real estate has been a magnet for foreign owners looking to establish part-time, and full-time residences throughout our communities. Beyond the current COVID crisis, the strengthening of the US dollar against most Latin American currencies since the recession of 2008, in addition to economic setbacks and instability in much of the region, had already made it increasingly difficult for these buyers. With the vaccine deliveries rapidly moving within the population, we expect to soon see international travelers and second-home owners returning to South Florida. This will be all more viable as key events such as the South Beach Food & Wine Festival become ‘live’, and ultimately our revered Art Week, led by Art Basel return to our South Florida calendars.
The Resurgence of the Condo Lifestyle
After years of modest sales, condo sales are definitely back – in rapidly growing numbers. The volume of sales, particularly at the higher-end, has been extremely robust. The overall condominium market in Miami-Dade had approximately 14 months of available inventory as of Q1 2020, and is now less than 7 months in Q1 2021. As we move into Q2 2021 and beyond, we anticipate increased activity related to the returning international traveler, as well as from the ever-growing number of domestic buyers. South Florida has the most compelling offering of high-end condos anywhere in the world. When comparing product, value, and the intangibles of South Florida, such as weather and easy access of air travel, the area’s appeal is obvious.
Steady Growth Fueled By New Buyers into South Florida
Buyers from various regions are making their way to South Florida. It is no surprise that Florida hosts more visitors from New York than from any other state. We’ve long joked that Miami is New York’s sixth borough. What’s increasingly of interest to South Florida’s residential real estate market is the number of individuals buying homes here from throughout the south, southwest and even west coast, as in California. This was already a trend prior to COVID. So, while the travel restrictions related to the pandemic brought international travel to a complete halt, we continued to see a trickle of buyers from other parts of the US making their way into our community.
Low Interest Rates Are Driving Demand
When the cost to borrow money goes down, home prices typically rise. The posted interest rate by FreddieMac for a 30-year fixed mortgage in February 2021 was 2.81%. Just 10 years earlier, that rate was 4.95%, and that was considered low! So a substantive reason for the success of the residential real estate market, both in South Florida and nationally, is continued access to generationally low interest rates. But that trend will more than likely begin to shift, with rates increasing slightly through 2021. Just as home values generally increase during periods of low interest rates, they often trend down when rates trend up. Our inventory issues in South Florida will continue to keep home values on the upswing, but increasing interest rates will certainly impact select areas of the market.
Purchasing: A Better Option than Renting
With mortgage rates hovering around 3%, it is generally accepted that the debate of ‘rent vs. buy’ generally falls squarely into the ‘buy’ category. For example, the principal and interest payment on a $500,000 mortgage at a rate of 3% is $2,108.02 per month. It would be difficult to find a comparable rental home for that amount of money in today’s market. Understanding of course that buying also includes insurance, real estate taxes and other expenses not associated with renting, buying is still very compelling, especially when considering locking in a 30-year fixed rate mortgage at today’s historically low rates, and the potential for value appreciation.
Bright Future for South Florida
One of our nation’s great public health tragedies has fueled one of our region’s most prolific residential real estate markets. But the momentum already existed pre-COVID. The impact of The US Tax Cuts and Jobs Act of 2017 on residents of high-tax states, such as New York and California, along with the lack of State of Florida income & estate taxes for permanent residents of Florida, was already drawing new residents. Now with the region as an expanding business hub (especially in the financial services arena), advanced medical & research centers, and burgeoning cultural arts communities, South Florida‘ global appeal has an extremely bright future.
About Berkshire Hathaway HomeServices EWM Realty
BHHS EWM Realty, a full-service real estate brokerage founded in 1964, is one of America’s largest real estate services firms. The brokerage is part of an international network of 50,000 agents operating from 1,500 offices spread across the globe. Its parent company, HomeServices of America, an affiliate of Berkshire Hathaway, is the number one brokerage company in the U.S. based on transaction sides. BHHS EWM Realty has locations in Miami-Dade and Broward counties with more than 900 associates and staff members. Visit https://www.ewm.com/.
About Berkshire Hathaway HomeServices
Berkshire Hathaway HomeServices is among the few organizations entrusted to use the world-renowned Berkshire Hathaway name, bringing to the global residential real estate market a definitive mark of trust, integrity, stability and longevity. The network’s parent company is HomeServices of America, Inc., the nation’s largest, full-service residential brokerage firm as measured by transactions, and an affiliate of Berkshire Hathaway Inc. The Berkshire Hathaway HomeServices global network has more than 50,000 affiliated independent sales associates and 1,500 offices throughout the U.S. and abroad, generating US$114.5 billion in closed transactions in 2018. For additional information, visit www.berkshirehathawayhs.com.
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