Residential real estate in South Florida has always been marked with confidence and anticipation. As we look around in our daily lives, we are constantly reminded why individuals and families flock to South Florida: our beaches, our variety of entertainment and our weather stand out to the casual observer above all else. There has always been a sense that those attributes which make South Florida so special creates the same excitement we enjoy in the real estate market.
Confidence can only be measured by the stability in numbers that back it up. Understandably, buyers and sellers have the memory of a recent past that saw an all-too-quick inflation and subsequent market correction. Even though those memories are fresh, there continues to be new data each month that supports the stability of our housing market. Combined with the newest outlooks on employment in our region and nationally, it’s no wonder why South Florida home buyers, and sellers, are feeling better and better with each passing day, making the 2015 calendar year one to truly look forward to.
With the release of Freddie Mac’s Multi-Indicator Market Index at the end of December, we saw our big three South Florida counties (Miami-Dade, Broward and Palm Beach) score a 72. This range is based on a score out of 100, which would equal perfection and where 80 is deemed favorable. To put this into context, the South Florida housing market has improved by 70 percent over the past five years, one of the largest jumps in the country. South Florida is improving largely due to the nearly 16 percent increase in the Current on Mortgage indicator over the past three months. Another key factor in this Multi-Indicator Market Index is the employment numbers South Florida has seen, jumping up 2.7 percent, which nearly doubles the national average during that time of 1.4, which really does show the impact employment has on a long-term, sustainable housing market.
This stability index is consistent with what we’ve seen in residential real estate over the past several months. Single-family homes and townhouses/condominiums remained on the rise or constant throughout 2014 within several key indicators such as closed sales, median sales and other determinants. As the distressed market numbers continue to drop, more and more home buyers are looking for traditional single-family homes and townhomes/condominiums to buy within our region, a search the sellers of South Florida are willing to provide as the number of new listings continues to rise across the board. One of the key indicators of this is the inventory (active listings) and months supply of inventory that Broward County has continued to see rise. In the year over year turnover from last year, inventory has risen by 28 percent and the months supply of inventory has risen by 26 percent. The biggest positive, even through the rise in inventory, is the fact that people are still able to sell their homes in a relatively short, manageable timeframe, clocking in on average of 41 days on the market for single-family homes and 50 days for townhomes/condominiums.
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Likewise, the drop in the distressed market (such as short sales and foreclosures) shows the decrease in that section of housing inventory. These distressed numbers have been reflected in nearly every month of the 2014 calendar year, as shown by the nearly 40 percent drop in short sale closed sales from November of 2013 to November of 2014 (158 to 95 total). Although these total closed sales are down significantly, we see that those properties within the single-family short sale market are still holding their own value, remaining almost constant from November of last year to November of 2014 ($180,000 to $185,000).
In a region that always harbors so much potential for buyers and sellers of residential real estate, it is welcoming to see the confidence our market can provide to back up that excitement. As a Realtor, I can personally attest, along with our fellow agents and brokers, how gratifying it is not only help new buyers and sellers work through some of life’s biggest accomplishments, but to be able to see they are not only making a great investment in their lives, but also their futures. Those investments are only backed up by the confidence that seems to be springing up around us, whether it be through employment or simply a recovery in fair market value, it certainly looks as though South Florida is in for a very exciting future.
John L. Castelli is a senior partner in Castelli Real Estate Services based in Fort Lauderdale. www.CastelliHomes.com.
Freddie Mac Multi-Indicator Market Index (MiMi)
For October 2014: 72. (80-120 is in range.)
Monthly change: +1.12 percent
Three-month change: +3.15 percent
Annual change: +12.5 percent
Who’s moving MiMi in the Miami area? The MiMi is the average of the four indicators in the chart below for October 2014. Of the MiMi indicators, two are in range and two are weak. Among the top 50 metros, Miami was ranked 26th and has increased 11 spots from one year ago.
SOURCE: Based on figures released on Dec. 23 by Freddie Mac.