Miami Beach Real Estate Market Report | Q2 2022

Miami Beach Real Estate Market Report: Miami Beach Condo Trends

In this market update we are taking a closer look as to how the Miami Beach condominium market has performed within the past 3 months :May through July 2022, which is considered the slow season for Miami Beach. Our objective is to provide buyers and sellers with the latest market insights that will help guide them through any market shifts, trends, and investment opportunities.

By observing the data from two different time periods (year-to-date as well as within the last 90 days), we are able to make accurate observations as to how specific trends will play a pivotal role in the upcoming fall season. We expect that the next season will bring a new wave of demand, both from a relocation and local standpoint. However certain segments of the condo market will appear different than they appear today.

Miami Beach Real Estate Report for Miami Beach Condos | Q2 2022

Miami Beach Real Estate Market Report | Months of Inventory

The Miami Beach condo market below the $3M mark is currently experiencing between 3 to 9 months of inventory on average, which indicates a healthy market. At this rate, it is still a seller’s market, considering that the summer season is generally a slower time period, in terms of sales volume, compared to other seasons. On the other hand, the current months of supply on the higher end ranges between 9 and 16 months, showing the inventory building up from Q1 of 2022

As we dive deeper into the various sub-markets in Miami Beach, we will notice that Sofi currently holds about 0 to 3 months of inventory, while the rest of Miami Beach has about 2 to 6 months, with the exceptions of the Condo Hotels. Condo Hotels such as, W, Setai, Fontainebleau, 1 Hotel and Homes are holding more inventory than demand, for now.

Miami Beach Real Estate Report for Miami Beach Condos | Q2 2022

As we look at different segments of the market, we will show how each segment performed in terms of the average sales price compared to 2021 and transaction volume.

  • $500K to $3M: The average sales price increased by 8% compared to 2021. Throughout the year, there were about 341 total transactions that occurred year-to-date. During the first 3 months of 2022, the market showed there were 167 transactions, which accounts for more than 50% of the total sales.
  • $3M to $5M: The average sales price increased by 11%. Out of the total 46 transactions, 24 occurred during the first quarter, which is a similar trend as the previous market segment.
  • $5M+: The average sales price only had a 4% increase, we can conclude that this segment has likely reached its peak.

Overall, the Miami Beach condo market has gone up 13% in value since 2021, which already experienced a surge in high prices.

Miami Beach Real Estate Report for Miami Beach Condos | Q2 2022

Miami Beach Real Estate Market Report | Rate of absorption in the last 30 days

This is a ratio between the number of the new active properties listed for sale in the past 30 days and the number of closed sales buy also pending sales/properties under contract from the last 30 days – we can assume that those properties will progress as recorded sales in the next 40 to 60 days. As we collect the data from the last 30 days, please note that this is a very short-term indication as to how the market will adjust in the foreseeable future.

While the calculation for the months of inventory is based on recorded closed sales, the rate of absorption is based on the closed sales as well as the number of pending sales. The rate of absorption is an extremely useful indicator, as it will help forecast the supply and demand curve that will ultimately create upward and downward pressures on the market.

Please see the rate of absorption for the following market segments below:

  • $500K to $3M: 1:1 ratio
  • $3M to $5M: 2:1 ratio
  • $5M+: 2:1.5 ratio

These ratios were calculated based on the amount of new listings relative to the amount of pending sale and closed sales. We can gather from the ratios above that the inventory in the $3M and up segments are experiencing some buildup. This is another indication that the higher end of the market is currently growing at a slower pace compared to the other market segments. Interestingly, we forecast that while the first segment of the market will have the same current months of supply – 5 months – which corresponds to a dynamic seller’s market, the $3M to $5M segment is expected to experience some stagnation. The forecasted months of supply can go up to 18 months by the end of 2022 – almost double of the current 9.5 months of supply. This is assuming there won’t be a big increase in closed sales before December.

The top end of the market – $5M+- is forecasted to keep performing at this pace even decreasing the current months of supply from the current 16 months to 12 months. However we expect more inventory to hit the resale market in the high season and therefore impacting the current ratio of 1.5 property sold every 2 new properties listed and keeping the months of supply more balanced. In terms of price, the market is showing that the average sales price per square foot within the las 90 days is line with the year-to-date numbers.

Miami Beach Real Estate Market Report | South of Fifth

Miami Beach Real Estate Report for Miami Beach Condos | Q2 2022

In our Miami Beach report we always take a closer look at South of Fifth as the best performing and most exclusive pocket of the beach. Prices have gone up by 13% on average ($1,590 per sq ft in 2022 surpassing the all time high $1378 average from 2021). When it comes to the number of transactions, the market showed that year to date 2022 is currently performing at 40% below 2021 recorded closed sales. With the current rate of absorption, we are expecting to end the year with a number of closed sales similar to 2021 ( see below)

Miami Beach Real Estate Report for Miami Beach Condos | Q2 2022

As we take a closer look at the last 90 days, we notice that the average price per square foot in the Sofi neighborhood increased to $1,627 from $1,590 since the beginning of 2022.

Lastly, we want to quickly mention that the rental market on the beach is still very tight (1 to 0.7 ratio between new listings and listings rented in the last 30 days) which will help the resale market remain strong. Many snowbirds that wish to spend 4 to 6 months in Miami are still having a hard time finding decent units to rent due to the scarcity in the supply. This scarcity oftentimes leads to buying instead of renting or overpaying for an average product, which is also causing an upward pressure on the resale market. Now that Miami has climbed to a different level among the cities in the US, for cultural events and level of businesses both in the tech and finance fields, we can expect that the demand will continue to drive the market appreciation.

Our Recommendations for Buyers

Overall, we are still seeing a strong demand for Miami Beach condos. While the seasonal slowdown that we are used to seeing in the summer is showing an impact on the supply but, it has not impacted the prices yet.

Due to the seasonal nature of Miami Beach the number of transactions has gone slightly down in the past three months, which is why we recommend any serious buyer to actively engage in buying a condo in the upcoming months, when fewer buyers are willing to pull the trigger and negotiation is again a possibility.

Our Recommendations for Sellers

Depending on the shift in the level of inventory that your specific condo unit is experiencing, your property value might be at the peak or have peaked already. We recommend that you give us a call to get guidance on when will be the best time to sell your condo and whether a side move is recommended in your case.

Overall, we can conclude that the Miami Beach condo market is showing to be quite dynamic in certain segments in particular even through the summer slowdown, which puts Miami Beach in an excellent position for the upcoming busy season in November when the higher end properties receive more attention in general.

* This market update data is based on active listings for sale and closed sales above $500,000.

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