High-end Home Sales Take a July Hit in Miami

by 26 Aug 2011

Miami-area July home sales slowed more than usual from June – especially for $500,000-plus homes – and dipped slightly below the year-earlier level as sales of newly built homes dropped to a record low. The median sale price inched up from June but fell year-over-year for the 46th consecutive month, though the decline was the smallest in three and a half years, a real estate information service reported.   In July, 8,820 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was down 10.5 percent from the prior month and down 1.1 percent from a year earlier, according to San Diego-based DataQuick. The firm tracks real estate trends nationally via public property records.   On average, sales have fallen 3.4 percent between June and July since 1997, when DataQuick’s complete Miami-area statistics begin.

Last month’s total sales fell 26.9 percent below the average July sales tally of 12,064 since 1997.   July’s larger-than-usual slowdown in sales relative to June was most pronounced in the $500,000-plus market, where sales dropped 16.3 percent month-to-month. Transactions below $500,000 fell 9.8 percent month-to-month. The above-average dropoff in activity from June was likely the result of more potential homebuyers getting nervous about the worsening economic news, as well as concerns at the time that political leaders in Washington D.C. wouldn’t find a way to avoid a default on U.S. obligations.   The 4,251 condos that resold last month marked a 13.4 percent decrease from June but a 2.4 percent increase from a year earlier. It was the highest number of condo resales in the month of July since 2005, when 5,213 condos resold. Condo resales made up 48.2 percent of total Miami-area home sales last month, compared with 46.5 percent a year earlier and a monthly average of about 35 percent over the past decade.

In July, resales of condos and single-family detached houses combined (excludes new-home sales) fell 10.4 percent month-to-month and increased 1.1 percent year-over-year, marking the eighth consecutive month in which the resale market has risen above the year-earlier level.   But new-home sales continued to suffer last month as builders struggled with the weak economy and competition from distressed sales. July's 459 closed escrows for newly built homes, which fell 12.7 percent from June and fell 29.2 percent from a year earlier, marked the lowest new-home tally on record for July. Last month’s new-home sales made up just 5.2 percent of all transactions – close to an all-time low and far below the new-home market’s decade-long average of roughly 19 percent of total monthly sales.   In the Miami region’s multi-million-dollar luxury market, 78 houses and condos sold for $2 million or more last month, down 24.3 percent from June but up 30.0 percent from a year earlier. During the first seven months of this year, 517 homes sold for $2 million or more, up 15.7 percent from the same period last year. The figures are based on public property records, where either a price or loan amount was available.    Foreign buyers purchased about 5.5 percent of all homes sold in the Miami region last month, based on a review of public property records where foreign addresses were available. Of the foreign buyers that could be identified, about 73 percent had mailing addresses in Canada. The next-most-common country was Brazil, representing 3.5 percent of the buyers with a foreign address available in the public record, followed by Venezuela and Argentina, which both represented 2.6 percent. Some foreign buyers use a U.S. mailing address and therefore cannot be identified with public records.

Resale condos represented 77 percent of all homes purchased by the foreign buyers who could be identified last month, while 14 percent of the homes were resale detached houses and 9 percent were newly built homes (houses and condos combined). Foreign buyers paid a median $103,500 for resale condos in July, while the highest price paid for those condos was $1.6 million, according to public records. Foreign buyers paid a median $203,500 for resale detached houses, with a high of $3.7 million. The median paid for newly built homes was $348,000, with a high of $1.28 million.   The median price paid for all new and resale houses and condos sold in the Miami region in July was $136,000, up 0.7 percent from June but down 2.9 percent from a year earlier. It was the smallest year-over-year decline since January 2008, when the median at that time, $274,636, fell 2.6 percent from a year earlier.   Several factors helped tug the July median sale price below last year’s level, including: home price erosion; near-record levels of purchases by cash and investor buyers, who tend to target lower-cost properties; the unusually high concentration of condo resales; and the ultra-low concentration of new-home sales.   The July median stood 53.1 percent below the peak $290,000 median in June 2007.    There were continued signs that prices in some market segments might be in the early stages of stabalizing. For example, the median price paid per square foot for resale single-family detached houses held at $99 in July, the same as in June and the highest level for this year. However, last month’s figure was still 4.8 percent lower than a year earlier, and it stood 53.1 percent lower than the peak of $211 reached in May 2006.    At the county level last month, the median paid per square foot for resale houses held steady at $99 in Broward County, the same as in June but down 4.8 percent from a year earlier.

The figure rose to $101 in Miami-Dade County, up 6.3 percent from June and up 2.2 percent from a year earlier. Palm Beach County’s median paid per square foot dipped to $97 last month, down 4.0 percent from June and down 11.4 percent from a year earlier.   Last month saw another decline in the use of a popular form of low-down-payment financing used by first-time homebuyers – government-insured FHA loans. FHA loans accounted for 37.9 percent of all Miami-area purchase loans in July, down from 39.5 percent in June and 45.5 percent a year ago. Two years ago it was 42.6 percent. Last month’s figure was the lowest since December 2008, when FHA loans made up 35.4 percent of the purchase-loan market.   Absentee buyers purchased a near-record 37.5 percent of all homes sold in the Miami area last month, compared with 37.1 percent in June and an all-time high of 39.4 percent this March. A year ago the figure was 32.2 percent. July's absentee buyers paid a median $93,000, up from $90,700 the month before but down from $96,000 a year earlier. Absentee buyers are investors, second-home buyers and others who indicate at the time of sale that their property tax bill will be sent to a different address. (Absentee statistics go back to January 2000).   Many absentee buyers are also cash buyers, who purchased 62.8 percent of all homes sold last month. That was down from 64.2 percent the prior month and a record 68.6 percent this March.

A year ago the figure was 56.4 percent. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage, and in some cases they might take out mortgages after their purchases.   On the lending front, use of adjustable-rate mortgages (ARMs) continued to edged higher in the Miami area. In July, 11.4 percent of the home purchase loans were ARMs – the highest since August 2008, when ARMs were 11.5 percent of purchase loans. Last month’s figure was up from 10.6 percent the month before, 6.9 percent a year ago and 4.9 percent two years ago. The low point for ARM use in the current real estate cycle was 4.4 percent in May 2009. Last month’s ARM level was still far below the Miami area's decade-long monthly ARM average of 30 percent of all purchase loans.   (chart below)  
Miami-Fort Lauderdale-Miami Beach, FL  MSA    
Number of sales





Resale houses





Resale condos





New homes





All homes





Median price





Resale houses





Resale condos





New homes





All homes





Source: DataQuick, DQNews.com      


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