Miami home prices continued to rise this spring, according to a report released Tuesday by in the S&P/Case-Shiller Home Prices Indices.
Sale prices of existing homes rose 6.4 percent in April over the same period in 2015, according to the report. The data covers the tri-county area of Miami-Dade, Broward and Palm Beach.
Nationally, the price of existing homes rose 5 percent during the same month.
“The housing sector continues to turn in a strong price performance with the S&P/Case-Shiller National Index rising at a 5 percent or greater annual rate for six consecutive months,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, via a release. “The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook.”
But the numbers don’t tell the full story, according to Dr. Svenja Gudell, chief economist for Zillow, an online real estate tracking service.
“Today’s Case-Shiller data shows continued fast growth in the housing market, but there is also a growing divide between the top and bottom of the market that the Case-Shiller numbers don’t reveal,” said Gudell, via a release. “Home values for the least-expensive homes are growing twice as quickly as they are for the most-expensive homes, and the gap is widening.”
In no place is that gap more obvious than in Miami, where multimillion-dollar condo sales routinely make headlines. Earlier this month, Trulia named Miami one of the most unaffordable housing markets by in the country.
According to online site Zillow, the median price of the most affordable homes in the Miami-Fort Lauderdale area rose 13 percent over the last 12 months, from $102,000 to $116,000.
Despite those price increases, demand for affordably priced houses has skyrocketed. While overall sales in Miami-Dade slid 10.4 percent in May 2016 over the previously year, the number of sales for homes in the mid-priced range of $200,000 to $600,000 grew 5.9 percent, according to Miami Association of Realtors, homes in the bottom tier ($175,200 and below) grew 12.5 percent.
“Affordability is always going to be an issue in Miami’s real estate market,” said Christopher Zoller, a broker at EWM Realty International and chairman-elect of the Miami Association of Realtors. “The extremely low interest and mortgage rates we’re seeing are creating a huge opportunity for people wanting to get into the market.
“Miami is a very attractive city, and that is likely why we have seen our housing prices rise 1.5 percent more than the national average this year.”
While home prices in Miami continue to rise across the board, the total number of existing home sales is falling. Total existing home sales in Miami-Dade fell to 2,435 in May, down 10.4 percent annually, according to data from the Miami Association of Realtors.
A decrease in the number of foreclosures for sale on the market is also contributing to tighter supply. Tuesday, CoreLogic reported a foreclosure rate of 2.6 percent in the Miami area, down from 3.9 percent in April 2015. The national rate for April 2016 was 1.03 percent.
Zoller said he isn’t concerned with the decrease in distressed inventory: It’s a sign that Miami is in demand.
“There’s nothing but good news in these numbers,” Zoller said “It’s good to see prices increase in Miami-Dade, and that the banks are selling off these foreclosed homes.”
While some experts believe the decrease in the value of European currencies following Britain’s recent vote to exit the European Union will discourage foreign investment, others think European instability may drive even more foreigners to South Florida.
“It’s still early. But our thinking is that the uncertainty will push Londoners to pick up housing assets in places like Miami and New York,” said Gerard Yetming, executive vice president at Colliers International South Florida.
“People concerned about the conservation of capital are still interested in American housing. The U.S dollar is strong for a reason — it’s seen as a flight to safety,” Yetming said.