The 2020 Q2 and Q3 Miami Real Estate Report | The Miami Single-Family Home Market

Overview

This report will give you the best optics on the Miami real estate market whether you are relocating, looking for a second home or just looking for opportunity. We will discuss the macro market and then the micro market of Miami and its submarkets.

This report consists of 4 parts of which this is the third one. In this third part I we discuss Miami Homes During Covid-19. We go into further detail on how the Miami home market has performed and how it differs from the condo market. In part 1 of this report myself and another real estate agent who is also a market analyst discuss the market before and during Covid, which provides you with really good insights. Part 2 of this report discusses the condo market before and during Covid.  The last part is another interview, this time with South Florida’s top performing realtors including agents from Fort Lauderdale and Palm Beach.

I wanted to start this report with making this important market commentary: ‘Corona did not cause any of the market movements we have seen in the last 6 months, but rather accelerated the patterns we were already seeing in the market’. There were clear signs of strength in some single family sub-markets. When Covid, with its radical uncertainty arrived, property buyers focused on space for home offices, exterior living space and security away from infection. Thus it just further accelerated these trends. I go further into these patterns and trends further down this section, but much of it will come as little surprise – especially to those relocating buyers from the North East or West Coast of the US.

The Miami Single-Family Home Market Before and After Covid-19

The single-family home market is a very strong market that has flourished during these last 6 months (March 15th till September 15th). As I already explained in the first part of this report, this market represents a necessity purchase. This is not an investor based market or a second home kind of market. This is the market that caters to families whose kids need to attend local schools and who need a primary residence. The increase in demand was mainly caused by relocating families whose desire to move to Miami was sped up cause of Covid. In combination with Miami’s favorable tax climate and today’s need for space (think of a garden, home office etc) we experienced a large amount of sales. Moreover, local buyers started looking at their living situations and many condo owners decided it was time to make a move towards the single-family home market. The low interest rates are also causing more demand for Miami homes during Covid-19. According to the WSJ the US is seeing one of the largest shortages of homes, pushing home prices up. In Miami Dade we are seeing a likewise trend, in the month of September 2019 we saw 6,100 homes for sale (all price ranges taken into consideration) while the same month of 2020 saw just 4,000 homes for sale. That is a 34% decrease.

Below you see the difference between Miami condos and Miami homes During Covid-19, which shows you how a market based on necessities performs completely different than a purely investor driven market.

Comparing Home Sales to Condo Sales per Price Range

Comparing Home Sales to Condo Sales per Price Range you can see that the condo market has suffered much more during these last 6 months than homes. While condo sales pre-dominantly decreased since the same period in 2019, home sales has been up.

Two markets that really saw an increase in desire are the $1M to $2M market and the ultra luxury market of $5M+. We saw more or an equal amount of sales in the last 6 months than in that same period in previous years (please refer to the graph below named “Amount of sales per price range for Single Family Homes” to compare 2020 sales with 2019 sales in the same period).

In the period before June 15 we noticed a lot of home owners did not want to list or were hesitant to open the house for potential buyers. Furthermore, relocation buyers did not want to travel to Miami. However in the period after approximately mid June more listings hit the market and sales started picking up again. 

Home Sales in Miami’s Most Desired Residential Areas in during Covid compared to the same period in the year before

The amount of sales of Single Family Homes in Miami’s most desired residential areas in 2020 during Covid compared to the same period in 2019 (March 15-September 15).

Percentage of  Sales Before and After June 2020

Which % of the total sales happened after June when domestic travel restrictions were lifted and people started adapting to “the new normal”? Below you can see how single family homes sales decreased before June as owners were hesitant to list or show, buyers couldn’t travel and everyone was adapting to the new normal. After this initial period however, single-family home sales take off and started soaring.
The difference with how the condo market performed before and after this initial period is striking! 

A Deep Dive into the Different Price Ranges for Single-Family Homes

Miami Homes During Covid-19 | The $1M- $2M Market

One of the best performing pockets is the $1M – $3M market with a very bullish $1M-$2M range. Our high trafficked website saw a 800% increase of visitors and subscribers during Covid-19 and 70% of our website inquiries are for Coral Gables or Coconut Grove homes in this price range. As this is the entry level of good quality homes in many of Miami’s most desired areas this price range did particularly well. We experienced short marketing times and full price offers as well as back up offers.  This is also the market with the lowest numbers of inventory. Particularly Coral Gables and Coconut Grove saw very low numbers of inventory, mainly at the start of 2020 as sellers were hesitant to list. Good quality homes sold quickly leaving us with a shortage of those homes while buyers were lining up. This was seen mostly in Coconut Grove where the amount of sales dropped to 30 from 45 in the same period the year before. The Grove did not become less desired, but sellers were hesitant to list causing a great lack of supply. In mid-September the Grove had 15 properties under contract which means many deals are about to be made.

Overall we recorded a very high number of pending sales and active listings with a contract with Coral Gables seeing 40 pending sales (that is 50% of the total sales during Covid), 31 pending sales in Pinecrest (that is 58% of the total sales during Covid), 7 in Key Biscayne (53% of the total sales during Covid) and 5 in High Pines/Ponce Davis (63% of the total sales during Covid).

Prices per SF increased, which is a logical consequence of low inventory levels.

Market Examples of the Performance of Miami Homes During Covid-19

Miami Homes During Covid-19 | The $2M-$3M Market 

Also one of the most bullish markets in Miami, as this is the market for the working wealthy and the price range of choice for many of the relocation families.  Pinecrest and Coral Gables saw the highest increase in sales with Coral Gables recording an astonishing 52% increase from 21 to 32 sales and Pinecrest a 33% increase from 15 to 20 sales.

This price range saw a good amount of sales, 20% higher (from 75 to 90) than the amount of sales in that same period in 2019, and an equally impressive amount of pending contracts. Coconut Grove had 10 sales but also 6 homes under contract, Coral Gables had 32 sales but also 12 homes under contract, Miami Beach had 11 sales but 13 properties under contract, the Miami Beach islands had 3 sales and 2 pending properties and finally High Pines had 5 sales and 6 homes under contract.

With sales up and inventory levels shrinking it seems surprising that the prices per SF for Coral Gables and Coconut Grove homes have gone down. This is exactly the reason why our reports combine data sets with the “Out-in-the-field-experience” of a top producing Miami realtor. The data shows that prices have gone down, but when looking closely at the date we noticed that in Coconut Grove several older, less quality homes were sold in 2020, which had a downward pressure on the prices. The same happened in the Gables; several older or larger properties sold for lower prices per SF. This is also caused by the fast reduction in inventory. As mentioned before, good quality homes are sold rather quickly these days. Our experience working this market on a daily basis however shows us that the good quality properties sold for near asking prices in a very fast pace. The average sales price per SF does not always reflect what is really happening in a market.

Miami Homes During Covid-19 | The $3M-$5M Market  

One of the price ranges with the least changes. In the main residential areas we just saw 7 additional sales compared to 2019 which is a 14% increase. Key Biscayne saw a 100% increase from 5 to 10 homes (Key Biscayne saw an impressive increase in sales in all price ranges). High Pines and Pinecrest also saw increased sales volume with respectively 60% and 87%. On the other hand the Beach saw a decline in sales in this price range.

The market saw 56 sales and 25 pending sales.  Most of the pending deals are seen on the Beach, which means that this area is gaining in strength, but also Coral Gables and the High Pines / Ponce Davis area had 4 properties under contract which represents at least 40% of its recorded sales.

Inventory seems slightly higher in some of the areas, which was caused by the stop in sales for 3 weeks when Miami was in full lockdown. As months of inventory are compared to previous months we recorded a little peak in inventory as we saw very limited sales in April which was corrected in the months after.  Besides that the amount of pending sales are not taken into consideration for months of inventory, but show a very bullish outlook. Please remember that starting from this price range, sales become increasingly limited and this might lead to jumps in prices per SF as well as inventory levels. My experience in the market is that good quality, well-polished homes sell very fast.

As always a little bit of explanation behind the sales numbers. Looking at the price levels of Coral Gables we noticed that in 2019 11 out of 12 homes that sold were waterfront, while in 2020 only 4 out of 10 homes sold were waterfront. With other words, the market values didn’t decrease, but the market saw less expensive homes being sold. The sales price per SF for waterfront homes was actually about $70 per SF higher in 2020 than in 2019.

Coconut Grove saw a large surge in prices, but it needs to be mentioned that this jump was caused by 2 waterfront homes and a brand new home. Furthermore two of these 3 homes offered just under 5,000 SF , which generates a higher price per SF. On the other hand in 2019 we saw just one waterfront sale and 2 of the 3 homes were extremely large (10,000+ SF), which generally leads to a lower price per SF. The Grove is a bullish market, but this price increase does not reflect 100% what is going on in the market.

Miami Beach also saw a decline in prices as 2019 had more waterfront sales (6 out of 11). In 2020 we saw just 2 out of 7 sales being located on the water. Also 2019 sold 9 newer construction homes (2017+) while in 2020 saw only one new construction being sold. Taken this in consideration it is understandable that the prices dropped from 2019 to 2020, 2019 was simply seeing more qualitative sales. Diving into waterfront vs dry lot homes: Dry lot homes sold in 2019 at an average of $814 per SF vs $670 per SF in 2020 while waterfront homes dropped from $834 per SF to $811 per SF.  

The Islands with their limited sales in this price ranges saw a strong 2019 with several $1,000+ per SF sales. Nonetheless, 2020 Saw healthy sales prices as well with dry lot homes trading at almost $1,000 per SF.

Miami Homes During Covid-19 | The $5M-$10M Market

With 35 sales in this price range and a 75% increase since 2019 this is one of the strongest price points. A strong sub-market for relocation buyers and entrepreneurs who can work from any city in the world. This price range also showed no less than 18 pending sales in mid-September, of which 9 on the Miami Beach Islands.  Buyers in this price range prefer the gated communities in the Gables (Cocoplum and Gables Estates), Miami Beach (The Islands, N Bay Road and Pine Tree Dr belonging to the favorites) and Key Biscayne. The two later cities also saw the largest increase in sales since 2019 with Key Biscayne seeing 300% more sales and Miami Beach 75% more sales.

Inventory levels are down and prices per SF remained stable in most neighborhoods. If we take the areas of Gables, Grove, Pinecrest and Ponce Davis together, which many buyers look at for the great private schools we see that the inventory dropped from 38 months in 2019 to 26 in 2020 and a stable price level. Please remember that most of these neighborhoods only see a very limited amount of sales therefore a slight increase or decrease in price levels per SF are not worth mentioning. The Gables saw a property trade for land value at $2,000+ per SF and was therefore not taken into consideration for 2020’s average price levels.

Miami Luxury Homes During Covid-19 | The $10M+ market

One of the most bullish single-family home markets with a 31% increase since 2019. This market was already a very strong one given the many tax relocations that are happening. It is the buyer of this kind of property that profits most from relocating to Miami. As mentioned previously, Covid-19 was just an accelerator for those already planning to move to Miami. These are buyers that can work from any place in the world and they prefer Miami. Besides that, your dollar stretches much further in Miami than in many of the US’ largest cities, providing for more quality and a larger size home.

We saw 21 sales and 10 pending sales divided over Coral Gables, Miami Beach and the Islands. There were also sales recorded on Indian Creek Island (1) and Bal Harbour (1). Buyers looking for this ultra luxury segment are really being pulled into two sections of the market, which are the Gables gated communities of Gables Estates and Cocoplum as well as the Island communities on the Beach (The Venetians, Star, Palm, Hibiscus and Sunset Islands). Gables Estates, the most exclusive gated community in Coral Gables saw its sales double, if not triple, compared to previous years and is also home to the highest sales price and highest pending sales price in these last 6 months. Besides this, the Gables saw two strong sales this year both representing the two highest sales prices per SF ever achieved in the exclusive gated community of Gables Estates. One of them was an off-market trade by the David Siddons Group. This is a clear sign of the strong ultra-luxury market and the increased desirability of Coral Gables among HNWI’s.

From the 21 sales that happened 33% (7) were brand new homes from 2020 or have never been lived in before. Most buyers are looking for brand new homes and in general (specially in the $1M-$5M market) we see only 5%-10% of the market being brand new homes. That is a very low number of new construction for such a high demand. In the ultra luxury market we currently see 117 homes for sale. From these 117 homes on the market 22% is from 2018 or newer and only 12% is from 2020. So while they are quite the amount of homes to choose from only a minority offers what most buyers are really looking for.

The Market Gap for Brand New Homes

While most people are looking for brand new homes for sale (2020 constructions or never lived in), the market only offers a handful of these. Please see below an overview of each price range and the percentage of homes that represent brand new construction homes. The lower price ranges have the lowest amount of new construction homes while the most choices can be found in the $10M+ market in which brand new homes take 12% of the market share.

• $10M+ Range: 117 homes for sale with 14 (12%) brand new construction homes
• $5M-$10M range: 140 homes for sale with 10 (7%) brand new construction homes
• $3M-$5M range: 232 homes for sale with 25 (10%) brand new construction homes
• $2M-3M range: 265 homes for sale of which just 23 (8%) brand new construction homes
• $1M-$2M range: 488 homes for sale with just 17 (3%) brand new construction homes