Powerful new rush of buyers sends housing prices soaring
residential real estate experts are reporting a powerful new wave of buyers, increasing the demand on an already low housing inventory throughout Miami-Dade County.
While no one has a crystal ball to know exactly how long the strong demand will last, in the next three to five months more properties will start to come on the market and will affect the pricing, according to Ivory Cooks, a realtor at Coldwell Banker Realty and Master Brokers Forum’s advisory board member.
“As more competition comes on, we should start to see more competitive pricing and this should open the market for more buyers,” he said.
Specifically, in Coconut Grove, Mr. Cooks said there are a few reasons why more properties will come on the market soon. One, some sellers are now more comfortable with putting their homes on the market because they know more people are getting vaccinated, and two, some sellers are riding the wave and they see how high the prices have gotten and they want to take advantage of it.
“They also feel that no one knows how long this will last and they would rather get their money now,” he said.
The Coconut Grove neighborhood market is extremely strong as demand in both condos and single-family homes continues to rise, Mr. Cooks said.
“Condos and single-family homes are selling at 97% of the contract price,” he said. “In April 2021, the average days on the market for condos was 56 days and for single-family homes 119 days.”
Mr. Cooks said he sees the prices in the Coconut Grove market continuing to rise also due to the increasing number of people moving into Miami-Dade from California, New York and Texas.
“It is really difficult to predict the pricing market two or three years from now, but I think the rise in prices will continue but will probably start to slow down in the next few months,” he said.
A 2021 Homebuyer Insights Report from Bank of America found that across all generations, individuals are looking for a sense of connectedness and belonging when it comes to where they live. About 51% of younger generations – those ages 18 to 43 – and nearly 32% of older generations – ages 57 to 75 – say the community has become more important. Homeownership has long encouraged residents to connect with neighbors, build a community and put down long-term roots that give homeowners more reason to become involved in their neighborhoods.
A huge influx of buyers who have been renting for a really long time are trying to now achieve homeownership, said Vincent Viscomi, vice president and area lending manager for Bank of America.
“Low housing inventory and interest rates are in part driving today’s competitive market,” he said. “Interest rates are still at historic lows where you can still buy and be approved below 3% sometimes depending on the property.”
For buyers ready to start their homebuying journey, Bank of America continues to offer its Digital Mortgage Experience, which allows buyers to secure preapproval online so they can begin the house hunt with a competitive edge. Also, the bank’s real estate center page provides a simple way to research neighborhoods, shop for homes and identify properties that may be eligible for the bank’s homebuyer grants, Mr. Viscomi added.
The powerful new wave of domestic buyers, purchasing more expensive primary residences and second homes with longer stays, is a direct result of the pandemic catapulting the remote working trend, tax reform creating tax refugees, Florida’s no state income tax, the influx of technology and finance companies, and “the awesome quality of life here and the enhanced buying power because of low-interest rates,” said Ralph De Martino, broker and president of Ocean International Realty and Master Brokers Forum’s board member.
Comparing January through April of this year to 2020, the statistics show that huge amounts of money are pouring into Miami real estate, he said.
Looking specifically at the Miami Beach condominium market, in 2020 there were 504 closed sales at a median price of $349,700. Fast forward to 2021, there were 1,122 sales with a median price of $525,000, Mr. De Martino said. “That’s a median price increase of 50% – keep in mind that median is the price in the middle, with half of the sales sold for less and half for more. It is not the amount any particular property appreciated, and the number of sales increased by 123%.”
Miami Beach single-family homes saw 61 closed sales in the same period of 2020 at a median price of $1,925,000. So far this year, 245 homes have sold with a median price of $2,390,000, marking a 24% increase and 302% increase in closed sales, according to Mr. De Martino.
“The average price is less of an indication of price movement, but it reflects the fact that more expensive properties are selling,” he added.
The condominium 2020 average sale price was $695,693 compared to 2021’s $1,351,555, which is 94% higher and 332% more money being spent, Mr. De Martino said. In the single-family market, the 2020 average was $3,132,162 compared to $4,983,939 in 2021 – a 59% increase and a 539% increase of dollars being spent.
“My prediction is that looking forward, because of the consensus that this new wave of interest will continue, the market will continue to see substantial upward pricing pressure but not at a sustained rate of this year’s numbers.”