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    The 2017 Miami Real Estate Outlook

    February 3, 2017

    SUBSCRIBE NOW FOR THE 
    THE 2017 MID-YEAR MIAMI REAL ESTATE REPORT

    Click on the orange pop -up box to receive the 2017 Miami real estate report

    With much talk about a slowing Miami Real Estate Market and articles from the more educated Journalists talking of ‘market correction’, it is fair to say that when we look at the overall 2017 Q1 and Q2 stats we are not in the same ‘boom period’ of 2014 / 2015. However… Savvy real estate investors can still find great opportunities in the Miami market – the biggest opportunities present themselves not in an upward market but a downward one. For those who are relocating buyers you can still protect your financial investment by purchasing in a number of neighborhood submarkets that are extremely stable and /or some that are actually going up! The reports actually shows the floor and ceiling prices for every market so you can best spot deals or know where to offer to capture that best deal. For sellers this report will hopefully give you an insight into what your home value might be in 6 months or even a year from now. It may also help you appreciate your neighborhood home values better and the best strategy to take when selling!

    This report covers the Key Neighborhoods of: Pinecrest, Palmetto Bay, South Miami, Coral Gables, Coconut Grove, Brickell, Downtown, Edgewater, The Miami Islands and South Beach, Miami Beach, Aventura, Bal Harbour, The Bay Harbor Islands. Fisher Island, The Upper East Side, and Sunny Isles.

    The 2017 Outlook for Miami Residential Real Estate Markets

    EWM just released their 2017 Outlook report on the Miami Residential Market. As EWM/Christies agents we would like to share with you the latest information on the Miami real estate market and the most important take-aways.

    The 2017 Miami Real Estate Outlook.

    Below is a summary of the 2017 Miami Real Estate Outlook. For the entire report please click on the picture on the right hand side or click here to download the full report.

    Screen Shot 2017-02-02 at 3.58.17 PM

    The Inventory Levels in the Miami Residential Real Estate Market

    Looking back at 2015 and 2016 we see those were adjustment years. Years in which the inventory rose substantially and sales began to decrease, especially on the high end of the market.

    For the 2017 outlook we are looking at the Months of Inventory. Months of inventory is one of the most important indicators in a real estate market and quintessential to look at when predicting future behaviour of a market. We enter 2017 with a lot of inventory and reduced sales, especially in the higher ends of the market. Please have a look at the below graphs to see the meaning of months of supply and the current months of supply in the Miami market for condos and homes

    Months of Inventory: Our Number 1 Metric

    The two graphs below show you how we evaluate the Months of Inventory or Supply in Real Estate. As you can see the $1M+ market uses another standard than the markets below $1M. A low supply or a sellers market is a market in which prices are likely to rise while a buyers market indicated prices will need to come down

    Months of Inventory in 2016 for Homes and Condos

    Download the entire PDF of Miami-Dade Supplemental Charts and Data

    Properties below $1M

    Condos in Miami Dade have 12 months of supply vs 4,5 months of supply in homes. Comparing Q4 of 2015 with Q4 of 2016 we see an 11% inventory increase in homes and a 45% inventory increase in condos

    Click on image to enlarge

    Properties above $1M

    Condos in Miami Dade have 55 months of supply vs 26 months of supply for Single Family Homes. Comparing Q4 2015 with Q4 2016 we see a 19% inventory increase in homes and a 69% inventory increase in condos

    Click on image to enlarge

    Screen Shot 2017-02-02 at 12.04.12 PM
    Screen Shot 2017-02-02 at 12.03.28 PM

    High Inventory Levels creates downward pressure on asking prices

    The higher levels of supply especially in the higher end of the market and reduced levels of demand creates an environment in which sellers will have to reduce their prices in order to sell. In the past few years many properties sold above market price and the sky was the limit. Many sellers now come to the realization that prices need to come down in order to sell. It is not the time to “test the market”, not with this inventory.

    The Effect of Currency Rate on Foreign Buyers

    The amount of foreign buyers has decreased considerably compared to the past few years mainly due to currency rate changes.

    Two years ago we still sold 32% to foreign nationals. In the $2M dollar+ market this was even 42% of all properties while today these numbers decreased to 25% and 34% for the $2M+ market. That is a large percentage of lost buyers. Although a large part of the demand is now taken over by national buyers (attracted by Florida’s advantageous tax climate and affordable prices) there is still a gap in the supply vs demand curve that needs to be overcome by reduction of price levels.

    Rising Interest Rates; What it means for buying power

    Interest rates are expected to go up slightly and have already gone up in the last few months.

    As a simple example over a $100,000 mortgage the difference between a 4% and a 5% interest rate is a difference between $477 and $537 per month, which is a 11.1% decrease in purchasing power. When you pay 5% interest over $100,000 you pay the same amount of monthly payments as someone who has a $112,000 mortgage and pays only 4%.

    As interest rates are expected to rise, many buyers are pulling the trigger to buy a property. They are locking in their deal now to be able to profit from affordable interest rates (and higher mortgage amounts). Obviously buyer’s purchasing power affects the sellers as well. Those sellers who want to profit from eager buyers need to price their property right in order to close a deal before interest rates go up and buyers loose purchasing power.

    Where are the Opportunities for Buyers

    As can be seen from the presentation the real opportunities are currently in the single family home market of $300,000 – $400,0000. This range of homes is in such short supply and will continue to be in the future which makes it a smart investment.

    The very high-end of the market is often overpriced. We see many properties being priced at approximately 20% over the final sales price. This means that investors looking for a $3M investment might look at properties listed up to $3,5M or $4M.

    We took a sample of what sold over $3M in the last 6 months and compared it to their original listing prices.

    • Miami Luxury Condos: Sold between 5% and 60% less than they listed for with an average of 20%
    • Miami Beach Homes: Sold between 5% and 35% less than they listed for with an average of 18%
    • Coconut Grove, Coral Gables and Pinecrest: Sold between 3% and 57% less than they listed for with an average of 17%

     

    ** This doesn’t mean to start writing low offers as some sellers do price their properties right. Always ask your realtor to see what the market prices are in each market.

    Advise for Sellers

    With so much inventory on the market sellers need to understand this is not the time to “Test the Market”. The market is softening a lot and numbers need to be realistic in order to sell. With many buyers still trying to get good interest rates and to close the deal rather earlier than later its important for sellers to act right away. This means if you are thinking of selling in the near future, the earlier to pull the trigger the better.

    David Siddons is a Miami real estate expert and top producing realtor who is known for his excellent market knowledge and analytics. For more information about the Miami real estate market or for advice for buyers or sellers please contact David Siddons

    +1 305 508 0899 | Siddons.d@ewm.com

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    THE 2017 MIAMI REAL ESTATE REPORT

    EX-STOCKBROCKER’S ANALYSIS OF THE MIAMI MARKET

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