Luxury condos in Miami Beach sold for 20.5% more in the second quarter than a year before, according to a market report released today. Other key metrics in the same study, though, speak of a more standard activity.
The double-digit growth in the median sales price for luxury condominiums and townhouses, which went up to $2.8 million, is more a reflection of larger properties coming to the market, not higher values per se, explained Jonathan Miller, president and CEO of Miller Samuel Inc.
“It’s Miami getting bigger,” said Mr. Miller, whose real estate appraisal and consulting firm released their Miami Beach/Barrier Islands report for the second quarter today on behalf of Douglas Elliman Real Estate. About 95% of the properties in the report were resales.
Miller added that the Miami Beach market is “definitely softer” than last year, as other indicators seem to show.
Luxury condos—meaning the upper 10% of sales—spent on average 119 days on the market in the second quarter, more than double a year ago, when it took about 56 days for a high-end apartment to find a buyer. Sellers, who raised the inventory by 32% to 1,048 units over the same period, also offered bigger discounts amid the increased supply. The average discount in the second quarter was 9.6%, compared with 8.8% in the same three-month period in 2015. All in all, the number of closed sales went down from 106 to 83, according to the report.
And while the average sales price for Miami Beach properties of all kinds stood at $1.017 million, up 12% from last year and the highest figure in a decade, sales went down by 25% year-over-year to 893 transactions. Mr. Miller attributed the decline in closed deals to a yearly 55% drop in distressed sales, which include short sales and foreclosures.
Miami hits the middle ground
The new data, however, shouldn’t be taken pessimistically. Rather, it should be a sign that the Miami residential market is resetting to a more sustainable activity from the frenzy it experienced the last couple of years, Mr. Miller said.
“After the financial crisis, sales were historic low, then around 2012 sales were historic high, now we are more kind in the middle,” he said. “It’s a slower-paced market.”
Jay Parker, CEO of Douglas Elliman’s Florida brokerage, agreed.
“We believe that the market is cooling and will probably continue to cool, but it is a healthy shift that shouldn’t raise concern,” Mr. Parker said. “I would look at the market positively, because a shift to sustainability is what we should be looking for rather than price records.”
Mr. Parker also noted that it is a year of general elections in the U.S., which, paired with global uncertainty, could push some buyers to postpone purchasing decisions. Still, he believes foreign buyers, in particular, will continue to look to U.S. real estate as a safe place to invest their money.
Key Metrics for Miami Beach Luxury Condo Market
|2Q 2016||2Q 2015||% change|
Source: Douglas Elliman/Miller Samuel
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