November 17, 2022
The COVID effect: The surprising impact of the pandemic on Miami-Dade real estate
Months of stay-at-home orders, growing numbers of infections and deaths, working remotely while the kids are attending school in the next room, stop-and-start business closures, and no end in sight to the COVID-19 pandemic have all had an unexpected — and seismic — impact on Miami-Dade’s real estate market. It’s just not what you probably think it is.
COVID-19 has turned out to be an unexpected boon for the residential real estate market and yet another hurdle for out-priced home buyers. Historically low interest rates and condo-cabin fever have driven up demand (and prices) for single-family homes and are even moving the needle on the sluggish, overstocked condo market.
According to the MiamiReport Q3 Update released this week by RelatedISG International Realty, a joint venture co-founded in 2011 by Craig Studnicky, president of RelatedISG, and Related Group CEO Jorge Perez, only 0.67% of all single-family homes in Miami-Dade County — or 4,516 out of 678,860 — are currently listed for sale or rent on the Miami Multiple Listing Service.
The report shows that the percentages of foreign buyers versus domestic U.S. buyers have flipped since 2010, from 49% foreign and 21% domestic to the current 23% foreign to 49% domestic. Using data from tax returns, the study also indicates that Florida is the No. 1 choice for people relocating from New York, New Jersey, Illinois and Massachusetts. That’s a huge improvement from April, when the world shut down and the volume of real estate transactions suddenly stalled to a trickle.
Five months later, the country is still wrestling with the pandemic, but the real estate market has rebounded with an unexpected strength. “Houses are selling at such a feverish pace, inventory is getting unbelievably tight and prices are going up,” Studnicky said. “Now buyers are saying ‘Show me some condos’ because houses are a seller’s market now. Buyers are not going to find a bargain anymore. If they want a bargain, that’s condos now.”
Ron Shuffield, President and CEO of Berkshire Hathaway HomeServices EWM Realty, said the drop of inventory of single-family homes has been dramatic. Ideally, a healthy housing inventory should rest between a six-to-nine-month supply, meaning it would take that amount of time to sell all the properties on the market.
But since May 2020, the single-family home inventory has shrunk dramatically, from 7.3 months of supply to 3.2 months at the end of August. Median sales prices have also risen due to demand, from $375,000 in May to $425,000 in August (including last-minute closings). That’s the highest on record since 2007, when the median sales price hit a then-record $380,000, according to the Miami Association of Realtors, even though the existing inventory was much larger.
The change in the condo market is equally dramatic, from a 24-month supply in May to a 12.8-month supply by the end of August. Median sales prices in that market have also started to creep up — from $259,000 in May to $275,000 in August — but there is still enough inventory to make condos a buyer’s market.
NATIONAL HOME PRICE GROWTH
The same phenomenon is happening nationally. According to the September Monthly Housing Trends report by realtor.com, the number of single-family homes on the market is down 39% year-over-year from last September, equaling 529,000 fewer listings. Homes are selling 12 days faster than in 2019 and three days faster than August 2020. And the median sales price has shot up to $350,000, a year-over-year growth of 11%.
The report shows that even though the median sales price of homes in the Tri-County area keeps creeping up — $410,000 in September, slightly lower regionally than in Miami-Dade and Broward — South Florida clocked in at a lowly 47 in the list of the top 50 U.S. metros with the biggest jump in median prices year-over-year.
The top five slots on the list were taken by Cincinnati ($318,000, with 16.9% growth), Boston ($677,000, up 16.4%), Philadelphia ($344,000, up 15.6%), Indianapolis ($286,000, up 15.2%) and Buffalo ($230,000, up 15%). Only Orlando, Pittsburgh and Los Angeles came in lower than South Florida.
The boom in sales is also drawing new investors to the area. Jadon Newman, founder and CEO of the Austin-based Noble Capital Group, a private equity firm that specializes in real estate lending, said the company plans to expand into 25 markets around the U.S. — including Miami-Dade — after focusing on Texas for the last 18 years.
“We look at leading indicators such as shortage of housing and population growth, which are big factors in Miami,” Newman said. “The only way a market will continue to breathe is if new construction starts and there’s rehabilitation of older housing stock in downtown and college areas. Those markets are starting to soften a little bit, with people moving out to the suburbs.
“This pandemic has brought out whatever courage was needed to make life changes,” Newman said. “But the final impact of the pandemic is yet to be determined. Can you save money by letting your employees work from home? If so, how will that affect the real estate market?”
To keep reading the most up-to-date information in the real estate world follow our blog https://whiteandbluetitle.com/blog/.
Source: Rene Rodriguez
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