April 25, 2016
Recent Miami market reports have shown a slight downturn in the luxury real estate market, but local experts are convinced that this does not mean another housing crisis is on the way. There are several key factors that separate the current housing market from the last real estate bust.
In 2015, luxury single-family home sales valued between 1 million dollars and 5 million dollars saw a slight decrease from 2014. While sales went down, inventory increased. This allowed buyers to be more selective in their search for a new home. However, many sellers were not being quite realistic with their pricing, which caused some deals to run stagnant. For property exceeding 5 million dollars, single-family home sales in Miami increased slightly.
Existing condominium sales in Miami-Dade County fared a bit worse in 2015. Sales of condos priced between 1 million dollars and 5 million dollars dropped to 866 from 1,027 in 2014, while inventory increased. Sales of condominiums priced between 5 million dollars and 10 million dollars held steady, and condos priced above 10 million dollars decreased by 2 sales.
The slowdown in the real estate market in Miami can be partially blamed on global economic. Many luxury buyers were affected by the plunging stock market and uncertain economies in other countries. The current political climate and upcoming presidential election may also be causing some reluctance to purchase property. Many buyers are simply waiting until after the inauguration.
In better news, the pre-construction condo market in Miami is currently 73 percent sold out. That sector of the real estate market has protected itself by requiring large deposits, and the vast majority of pre-construction condo deals are paid in all cash. The condo market went bust in 2008 because of liberal lending to unqualified buyers. That is not the case today.
So, while 2016 may be slower and less predictable, comparatively lower inventory and stricter deposit requirements should protect the current market.
For the most comprehensive knowledge on the South Florida real estate market, contact Niki Higgins at +1-954-817-2500 or +1-888-242-4422.
Source: The Real Deal
