During the real estate roller coaster ride of the past decade, there have been times when sellers have had the upper hand, times when buyers had an edge, and times when it was just flat-out bad for everyone. It’s been a long, wild ride, but things appear to be moving toward level ground again.
The best real estate markets are those that are good for both buyers and sellers, and it looks like we are finally making progress in that direction. This can primarily be credited to a growing supply of inventory that’s beginning to hit the market throughout South Florida.
Real estate is driven by the law of supply and demand — higher inventory levels tend to drive prices down, while lower inventory has the opposite effect because buyers have fewer homes to choose from and need to compete with other offers. Currently, the inventory of homes for sale remains low, but new construction is expected to add a significant amount in the coming months.
Without question, the defining factor of South Florida’s 2015 real estate market has been inventory levels — and new construction is the driving force behind it. More than 10,000 new units are coming on the market in the downtown Miami area alone. New construction activity is also robust in Fort Lauderdale, both on the beach and downtown, with another 1,000 or so units on the way. In the next six to 12 months, buyers will have a greater variety of purchasing options, both in single-family homes and condos.
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The importance of new construction and other market drivers can be seen in the third-quarter edition of Coldwell Banker Residential Real Estate’s Market Viewpoint, a detailed report showing the latest local real estate trends and housing stats. Here are a few highlights.
Inventory of homes is down: Overall inventory levels have steadily declined since November 2014. In Miami-Dade, inventory in November was down 0.9 percent from 17,095 in October, and down 20.1 percent from 21,225 in November 2014. Broward has shown similar declines: November inventory was down 1 percent from October, and down almost 22 percent from November 2014.
With fewer homeowners listing their properties for sale, it’s up to new construction to make up the gap. A few projects are hitting the market now, which will begin to alleviate the stress on inventory, but many more won’t be completed until sometime next year. Until then, we are continuing to see multiple offers. For buyers looking to find a home, it’s important to begin the search early and be prepared to act quickly when the right property comes along.
Sale prices are rising: The continuing low inventory is also keeping sale prices on the rise in Miami-Dade: The median property price in November was $250,000, up 10.6 percent over November 2014 when it was $226,000 and up 4.2 percent over October when it was $240,000. The average sales price was up even more: $430,459, up 12.9 percent from November 2014 when it was $381,394 and up 6.3 percent from the average sales price in October of $404,884.
Prices in Broward have shown similar year-over-year increases, although not quite as steep. November median sale price was $200,000, up 14 percent from $175,500 in November 2014, but down 0.6 percent from $201,250 in October. Average sales price in November was $289,017, up 15.8 percent from $249,568 in November of 2014 and up 0.7 percent from $286,917 in October.
Sales down slightly: Here again, another impact of low inventory: The number of sales are down simply because there are fewer homes available for purchase. In Miami-Dade, there were 1,714 sales in November, down 17.4 percent from 2,075 in November 2014 and 26.3 percent lower than the 2,325 sales in October. In Broward, there were 1,888 sales in November, down 4.4 percent from 1,974 in November 2014 and 25.1 percent lower than the 2,522 sales in October.
While low inventory and rising prices have been an ongoing trend in South Florida for the past few years, we are seeing signs that things are evening out. In addition to the steady influx of new construction inventory, we’re also noticing buyers becoming pickier and less aggressive with their offers. At the same time, sellers are starting to become more reasonable with their pricing and negotiating.
What will happen in the months to come? Clearly no one has a crystal ball. However, with more than 11,000 condos coming on the market in the next several months, there should be lots of opportunity for both buyers and sellers.