Residential real estate prices continue to escalate across South Florida and in key cities within key US markets. According to a recent report from Miami Realtors, Miami residential real estate prices have reached 2004 levels. In February, residential real estate and did a total of $812.5 million sales. Miami is also recognized as the fourth most expensive luxury market in the US with a median luxury home price of $2.73M. New York is first followed by San Francisco, Los Angeles and then Silicon Valley. While some claim that home prices are at historic highs, we have definitely seen luxury market prices climb higher than in other regions. In competitive cities, the real estate market is booming. At the same time, in cities such as Miami and across South Florida where there is high demand, the market still has not reached 2007 bubble levels.
Sales slowed down in the first quarter compared to this time last year but homes are selling at close to list price and prices continue to appreciate for the fifth year in a row. The market is steady and healthy. Adjustments are also expected to qualify more condos for FHA loans, which will help first time buyers in Miami-Dade. Distressed sales are also declining. According to Miami Realtors, “Short sale transactions dropped 25.6 percent year-over-year while REOs fell 39.9 percent.” It’s a sellers’ market for single family homes, and a buyers’ market for condos. There are fewer single family homes on the market while there are a number of condos due to the building spree that has taken place in the last few years. For residential real estate, single family homes are in demand and short supply compared to condos.
Developers are beginning to slow down the pace of new construction across South Florida. Miami saw a real building boom and now supply is catching up with demand. In the luxury market, most condos are at least 50 percent sold before beginning construction, which means developers secured the funding to cover their costs mitigating large financial risk. What we’ve seen since the crash, there is more reluctance to take on debt, which is curtails over market risk. We’re less in danger of approaching a full on crash because of tighter lending standards and less debt. The residential real estate market is in a solid position overall, and we expect this trend to continue for now.
Michelle Farber Ross