Figures out of Miami this week showed residential sales are down almost 21% from the same time last year. But as bad as this double-digit decline may seem, it pales in comparison to what’s happening at the high end of the market.
A close look at transactions for properties of $1 million or more in July shows just 73 single-family home sales, representing an annual decline of 31.8%, according to a new report by the Miami Association of Realtors. In the case of condos in the same price range, the number of closed sales fell by an even wider margin: 44.4%, to 45 transactions.
More:Miami Agents See Less Activity from Foreign Homebuyers
The Miami housing market, and its luxury segment in particular, has been softening for the past year with high-end condos sitting on the market for twice as long as they did a year ago and sellers offering bigger discounts amid an increased supply.
In July, townhouses and condos of $1 million or more waited, on average, 162 days for a buyer, a 1.9% increase over a year ago and the longest time of any other price range, according to the report.
A strong dollar, which has significantly increased the value of properties in other currencies, has negatively affected sales to foreigners—an important client base, since international buyers acquire more homes in Florida than in any other state, according to the National Association of Realtors.
Real estate appraiser and data expert Jonathan Miller said that Miami is behaving like most of the rest of the U.S. housing market, which is in fairly good shape overall "but soft at the top."
In the case of Miami, like in other coastal markets such as New York and Los Angeles, the housing boom was heavily boosted by foreign buyers, who have scaled back their purchases due to the strong dollar.
"The international component is not as intense," Mr. Miller said.
Cash, the preferred form of payment of foreign buyers in the U.S., was used to close 42.7% of all sales in Miami in July, down from 48.1% the same month last year, according to the latest figures.
In fact, cash sales for townhouses and condominiums, an indicator of investor activity, hit their lowest level in a year last month: 633 transactions, representing a 30.4% year-over-year decline, according to the report.
As for the forecast for the coming months, sales activity doesn’t look likely to surge. There were 1,272 pending sales of townhouses and condos in Miami in July, which means 25.4% fewer transactions waiting to close than in the same month in 2015 and the lowest number so far this year.
Additionally, sellers of high-end condos will continue to face stiff competition. Inventory is up 47.8% from last year, with 2,482 units worth $1 million or more waiting to change hands.