Multimillion-dollar home prices continue to make headlines. But in truth, Miami-Dade’s luxury home market is continuing to soften, said Ron Shuffield, CEO of Berkshire Hathaway HomeServices EWM Realty.
The problem: So many luxury homes on the market.
The oversupply in the residential luxury market drove third-quarter sales prices down — to 81% of the listing price for condos and 84% of the listing price for single-family homes. That data comes from the local and regional Multiple Listing Service (MLS) compiled by Berkshire Hathaway HomeServices EWM Realty.
The study compared activity in Miami-Dade’s $1 million-plus residential market from third quarter 2019 and third quarter 2018. The dwindling number of international buyers — thank immigration policy changes and foreign currency values, said BHHS EWM Realty CEO Ron Shuffield — is giving buyers an advantage.
Median sales prices for luxury condos dropped from $1.59 million in third quarter 2018 — or 87% of asking price — to $1.575 million — 81% of asking price — in third quarter 2019. The price per square foot took a hit — it was at $863.85 in 2018 compared to $800.02 in 2019, for a decrease of 4%.
Median prices for luxury single-family homes dropped from $1.65 million — 88% of the asking price — in the third quarter of 2018 to $1.61 million — 84% of asking price — in the same period of 2019. The price per square foot dropped less than 1%, from $600.03 in 2018 to $595.81 in 2019.
The luxury condo market fared worse than single-family homes because of over supply. The luxury condo market has 45.4 months of supply — up from 43.7 months of supply in the third quarter of 2018, said Shuffield. The luxury single-family home sector has 18.8 months of supply, down from 19.7 months in the third quarter of 2018.
The proper balance is between 12 to 18 months of supply, said Shuffield.
“Once you go over 18 months, the sales slow and inventory grows,” he said.
Many would-be condo sellers are taking their properties off the market because they don’t want to lower the price, said Shuffied. Some are renting out their condos instead.
“It matters because when people are trying to price their property, that affects the value,” said Shuffield.
Condo sales activity decreased as well. An average of 63 luxury sales per month closed during the third quarter of 2019, down from 66 in 2018.
But activity picked up for single-family homes. An average of 94 luxury sales per month closed during the third quarter of 2019, up from 87 per month during the same period in 2018.
Popular neighborhoods for both condos and single-family homes were Brickell, downtown, Coral Gables, Coconut Grove, Key Biscayne and Miami Beach.
While condo sales have slowed, Shuffield said he’s seen the greatest interest in luxury property during his long career.
The reduction in sales price compared to original listing price may benefit buyers, he said, “because they just don’t want to wait,” said Shuffield.
Developers are likely to stay in the planning phase for a while as they wait for the current supply to be absorbed, said Shuffield. But they might not have to wait too long with Florida’s continued population growth.
“Until this supply is absorbed, we’re not going to see lenders investing,” said Shuffield, “but it may be faster [than some expect] because we have so much interest.”