By: Ron Shuffield, CEO, EWM Realty International
Miami-Dade County’s residential real estate market is becoming more complex to analyze, as the metrics, particularly at both the higher and lower ends of the market are forcing the brokerage community to take different approaches for each.
The just-released, July Southeast Florida Multiple Listing Service (MLS) numbers for the month of July 2015 note that overall inventory of combined single family homes and condominiums for the fiscal quarter of May, June and July of 2015 is up 5.6% over the same fiscal quarter in 2014, while sales are up slightly, at 1.2%. The month of July 2015 itself had virtually no change in overall inventory from June 2015, but total sales were down 12.3%.
Months of available overall housing inventory (single-family homes & condos), the true harbinger of the health of a residential real estate market, remained at 6 months, the same at which it has ostensibly remained since a high of 8 months in January of this year. The healthy range is 6-9 months, and as far as the overall market is concerned, we are clearly within that level.
When segmenting single-family homes and condominiums, we begin to see contrasting information though. Market-wide, the May, June and July 2015 fiscal quarter shows that the overall supply of inventory of single-family homes is 4.4 months, but the inventory of condominiums is 8.5 months. The disparity is also true at both ends of the market, with only 2.4 months of available single family home supply for homes priced under $300,000, with 4.8 months of inventory for condominiums priced under $300,000.
The $300,000 and under price point is challenging, particularly for single-family home buyers, with only 2.4 months of available supply at this price point. During the three months of April, May and June 2015, 57% of all single-family home sold in Miami-Dade County were for properties in the $300,000 and under price range, with 42% of that total being foreclosures and shortsales. Distressed property sales across all price points and product types measured 25% of total industry sales in Miami-Dade at the end of June 2015.
We are clearly still moving bank-owned and/or troubled inventory, but we need as much inventory as we can get at this under $300,000 price point. We will see how this inventory evolves over the coming months.
At the other end of the market, we see a very different paradigm, with increasing inventories in the million-dollar-plus market, coupled with a slowdown in total sales. As of July 2015, the million-dollar-plus market saw an overall inventory increase of 26% (homes & condos) for the fiscal quarter of May, June and July, the brunt of which came from increased inventory of condominiums, which was up 31%. Single-family home inventory for sale was up 20% for the quarter, while sales for the combined product types were down 10%. While overall available luxury inventory supply for the fiscal quarter ending July 2015 is 15 months (still normal for the higher-end price points), it is clear that inventory is increasing and will continue to do so in the short-run.
Overall, we are seeing an adjustment in the higher-end market, an adjustment that becomes increasingly obvious within the higher the price points. The higher the price point, the higher the months of available supply.
So what is the consequence? In an era where we have had almost consistent double-digit annual increases in price across all price points since the end of the recession, we are entering an era that will continue to ‘force’ market stabilization. Sustained double-digit growth in price was not only untenable, but negative for the market as a whole. In order to begin to deal with the increasing volume of higher-end inventory in particular, sellers are beginning to adjust their expectations to a more normal market.
Our market is, and will continued to be buoyed by the international buyer, as it has since literally the onset of our community, but this buying group is also transitioning due to currency restraints and other home-country considerations. These buyers still represents more than a quarter of our total Miami-Dade sales, which makes them a significant part of our South Florida real estate economy. In order to avoid stagnation in inventory, particularly at the higher-end price points, it is important that the Realtor community stay ahead of the curve, and advice their clients wisely about pricing, as well as inventory changes.