As residential sales and prices flatten out overall in South Florida, the luxury real estate market is taking a beating while local buyers scramble to find affordable single-family homes.
In Miami-Dade County, the total number of existing home sales fell 4.3 percent year-over-year in December, according to a report released Tuesday by the Miami Association of Realtors. In Broward County, home sales fell 3.7 percent, according to the Greater Fort Lauderdale Realtors.
But a strong dollar, economic instability in Latin America and overbuilding have hit luxury real estate much harder than other parts of the market.
“We have more luxury inventory than we’ve ever had in our history,” said Ron Shuffield, president and CEO of EWM Realty International. “And sales are as low as they’ve been for several years.”
In Miami Beach, the number of luxury sales slumped 22 percent year-over-year in the fourth quarter of 2016, according to a report from brokerage Douglas Elliman and appraisal firm Miller Samuel. In mainland Miami, luxury sales fell 13 percent, the report found.
(Luxury is defined by Douglas Elliman as the top 10 percent of sales.)
Sellers are going to have to lower their asking prices while the market stabilizes, said Jay Parker, CEO of Douglas Elliman’s Florida brokerage.
The market is not weak or in tailspin.
Jay Parker, Douglas Elliman Florida CEO
“The market is not weak or in tailspin,” Parker said. “What we’re seeing are price adjustments by sellers to account for the explosive growth we’ve experienced since the last recession. The increased inventory is helping us to bring those sellers to a point of acceptance. ... It’s a buyer’s market.”
He said the luxury market peaked in 2014 when a weak dollar led to a record-breaking buying frenzy and has been returning to normalcy since.
Sellers are cutting their demands, especially for condos, industry data show. For instance, Douglas Elliman found median sales prices for Miami luxury condos dropped 32 percent year-over-year in the fourth quarter. It’s either sell below asking or wait .... and wait ... for better days. On the Beach, the number of days luxury condos spent on the market ballooned from 62 to 171 over the last year.
That’s partly because of the competition from new construction.
After months in the doldrums during the run-up to the U.S. presidential election, condo developers are reporting that sales have picked back up.
At the Auberge Beach Residences in Fort Lauderdale, developers say they signed contracts for $30 million worth of units in December. In Sunny Isles Beach, Turnbery Ocean Club said it sold $25 million. And in downtown Miami, Zaha Hadid’s One Thousand Museum reported $30 million worth of sales.
“2016 was a tough year,” Parker said. “We had currency issues, we had an election, we had Zika.”
Luxury single-family homes fared better than condos. In Miami and its major suburbs, including Coral Gables, median sales priced ticked up 2.2 percent year-over-year.
Total sales volume for existing homes in Miami-Dade dropped 16.4 percent, from $954 million in December 2015 to $798 million in December 2016.
While high-end homes struggles, the middle of the market is hot.
The number of sales for homes priced between $300,000 and $600,000 jumped 27 percent year-over-year in December, according to the Miami Realtors’ association.
Driving the boom is an influx of new residents and a shortage of new construction at attainable price points.
27 percent Annual jump in sales of mid-market homes in Miami-Dade County
“Low supply and high demand for Miami single-family homes have fueled five-plus years of residential price growth,” said Christopher Zoller, the association’s chairman, in a statement.
Distressed sales also declined dramatically as the local real estate market continues to recover from the recession. In Miami-Dade, short-sales and real-estate owned transactions fell from 23 percent of all home sales in December 2015 to 14 percent in December 2016. They made up an astounding 70 percent of deals in December 2009.
Overall, South Florida home prices are still going up.
In Miami-Dade, the median price for a single-family home rose to $305,000 in December, up 9.5 percent year-over-year. Condo prices inched up to $210,000, up 1.3 percent. In Broward, the median single-family home sold for $320,000 in December, up 5.9 percent year-over-year. Condo prices jumped to $149,700, up 13.4 percent.
Correction: A previous version of this story misstated sales figures at Turnberry Ocean Club and One Thousand Museum.