- Miami’s real estate market is showing signs of recovery from April’s sales slump
- Pending sales surged by 86% and new listings grew by 57.4%, bringing inventory levels slightly lower than last month’s.
- Total sales closed declined by 8.3% but numbers are expected to recover as pending sales are finalized
- Median property prices dropped slightly across most segments compared to April but still remain higher YoY
- Buyers are shifting their preference towards single-family homes over condos post-COVID lockdown, causing a slower recovery for condos.
- Luxury condos, in particular, are significantly oversupplied in Miami.
As COVID-19 lockdown measures came into effect, Miami real estate suffered the brunt of the impact. Total sales closed in April declined by 40% compared to the previous year — the number of sales in May was worse still.
Nevertheless, promising signs are showing in the recent May 2020 report published by MIAMI REALTOR. The real estate market in Miami seems to be heading into a recovery phase after the COVID-related market slump. The report shows pending property sales in May grew by as much as 60.5% across Florida and 86% in Miami-Dade county. New property listings also grew 36.4% across Florida and 57.4% in Miami-Dade, indicating that buyers and sellers are starting to return to the market. This sentiment is noted by many prominent brokers in the area, who are noticing signs of recovery.
“While not at the levels we’ve seen year-over-year in previous selling seasons, the early May growth is certainly noticeable, especially when compared with the plunging decreases we experienced in April,” Ron Shuffield, CEO of BHHS EWM Realty commented in an interview with Miami Herald.
Similar positive sentiment is echoed by Carolyn Block Ellert, chair of the Gold Coast Master Brokers Forum: “The next month we will likely see opportunity buyers looking for a good deal, then by July we’ll probably see more buyers from the northeast, which would normally be an off-season for us in terms of sales.”
Figures 1, 2, and 3 show this development in greater detail for 5 main counties in South Florida. The three figures show numbers of sales closed, pending sales, and new listings in May 2020, benchmarked against May 2019 (year-over-year) and April 2020 (month-over-month).
Figure 1 shows that pending sales are increasing in May 2020 compared to April 2020 in most of the main counties. The only exception is Palm Beach, whose recovery period seems to have started earlier in April, as evidenced by a more robust number of pending sales in April 2020 compared to the other counties. Figure 2 shows a similar trend for new listings, where a clear gain can be observed relative to April’s low during COVID-19 lockdown. Nevertheless, it is also noteworthy that overall numbers of pending sales and new listings are still well-below May 2019 levels.
However, as seen in figure 3, the numbers of closed sales in May 2020 is significantly behind both year-over-year (YoY) and month-over-month (MoM) averages for all 5 counties, despite a gain in pending sales and new listings. The result seems to indicate that Miami is still in the early stages of recovery, where buyers and sellers have recently returned to the market in high volume, leaving a large number of deals unfinished. The number of sales closed is anticipated to rise in the subsequent months as the current pending sales are finalized.
Figure 1: Number of Pending Salesin May 2020 By Counties
Fig2. Number of Pending Salesin May 2020 By Counties
Figure 3: Number of Sales Closed in May 2020 By Counties
Figures 4-6 illustrate the extent of these trends as percentage changes from Apr 2020 to May 2020. With the exception of Palm Beach, figure 4 shows that pending sales have grown in the magnitude of around 70 – 90%. Similarly, new listings have increased in the range of 45% – 85% as shown in figure 5. Both developments are strong signs of recovery.
Given these developments, figure 6 assesses the total impact of all these forces by looking at changes in total active properties (inventories) across areas. Lower inventory levels are observed in Miami-Dade, Broward, and Palm Beach, indicating sufficient demand in May to absorb the sharp increase in the new listings in these areas, which is a promising sign for robust market activity going forward.
Figure 4: Percentage Change Number of Active Listing (MOM)
Figure 5: Percentage Change Number of Active Listing (MOM)
Figure 6: Percentage Change Number of Active Listing (MOM)
In the Post-COVID lockdown setting, realtors are also discovering a new trend where buyers are starting to shift their preference towards single-family homes over condos due to homeowner association restrictions on unit showings for sales, as well as move-in/move-out access.
Figures 7 and 8 illustrate this development in the pending number of sales. While both segments experienced positive MoM increases from April 2020. The boost in the market for single-family homes seems to be much higher and nearly catching up to the May 2020 level. Whereas the boost in condos in May 2020 is still far below the level in May 2019.
Figure 7: Number of Pending House Sales by Counties (May 2020)
Figure 8: Number of Pending Condo Sales by Counties (May 2020)
With regard to prices, the median price of homes in May 2020 experienced a slight fall compared to April 2020 as the market starts to return to normal; but median prices still show positive YoY growth, remaining generally higher than prices in May 2019.
However, there is a developing trend in which the luxury condos segment (priced at more than $1 million) in Miami is not performing well in the post-COVID setting. The segment is experiencing a sharp price decline due to oversupply, which is expected to persist into the future months.
Ron Shuffield commented: “In markets which had been dealing with excessive months of supply for four years prior to COVID, the growing months of supply will have a downward impact on pricing — particularly within the high-end condo markets.
Figure 9: Median Price for Condo (May 2020)
Figure 10: Median Price for Single Family Home (May 2020)
May 2020 brought with it a slew of positive indicators vis-a-vis the Miami real estate market. An increase in pending sales and new listings, coupled with lower inventory, cautiously point to the beginnings of a recovery following COVID-19 related economic impacts. While total sales fell by just over 8%, this is expected to improve as pending sales are finalized.
Analysts are also observing a trend in which buyers’ attention is shifting towards single-family homes as opposed to condos. While this might be good news for the single-family segment of the market, it has resulted in a slower market recovery for condos. This is especially true of the luxury condo market in Miami where condos priced above $1 million are in oversupply.
Predicting the future in a COVID world has proven especially difficult. With levels of infections increasing in several states, including Florida, it’s uncertain whether or not the gradual easing of restrictions will continue, or whether officials will be forced to reinstate measures that could further slow the real estate market. Nevertheless, any news is good news — and May featured some good news for Miami’s real estate market.