IRVINE AND SILICON VALLEY, CALIF. – April 19, 2017 – Ten-X, the nation’s leading online real estate transaction marketplace, has released its Fourth Quarter 2016 Economic and Single-Family Housing Market Outlook Report for Miami, which reveals that the metro’s home sales reached a cyclical high, price growth continued to beat the national average and available inventory, while still tight, finally began to loosen.
“The Miami housing market, like many others in Florida, continues to steadily recover from the Great Recession,” said Ten-X Executive Vice President Rick Sharga. “Home sales and prices continue to grow at rates well above national averages, but homeownership, which was higher than the rest of the country during the housing boom, continues to lag far behind.”
Homeownership in the Miami-Fort Lauderdale-Palm Beach metro, which has lagged behind the national average since 2009 and hovered between 57 percent and 60 percent since 2012, measured 58.9 percent during the quarter, down 20 bps from a year ago and 460 bps lower than the national homeownership rate.
Miami Homeownership Still Awaiting a Recovery
Sources: US Census Bureau, Ten-X Research
Miami Home Sales Making Measured Progress
Sources: IHS, Ten-X Research
Following multiple years of choppy growth, home sales in Miami increased 6.3 percent over the past year to a high seasonally adjusted rate (SAAR) of 62,268, narrowly outpacing the US rate.
The inventory of homes for sale during the quarter was 45,368, up 18.2 percent from a year ago. The average time a home for sale sat on the market declined slightly from the previous quarter to a seasonally adjusted 77 days, but remained 17.3 percent higher than a year ago. Home construction was subdued compared to prior cycles. While single family home completions increased 29.6 percent year over year, housing starts fell 22.9 percent and permits 19.3 percent, suggesting that completions may also see a decline in future months.
Miami Home Prices Still Soaring
Sources: FHFA, Census, IHS, Ten-X Research
Home price appreciation for the fourth quarter continued to outpace the national average, as it has done for the past five years, pushing Miami’s median home price in Miami to $261,411, a 10.9 percent year-over-year increase. While prices in the metro have appreciated at a rapid clip, they remain roughly 14 percent below Miami’s 2007 peak. This suggests room for further growth.
Affordability for single-family homes has declined as Miami’s median family income has seen inconsistent gains over the past five years while prices shot up at a rapid rate. Home buying in Miami continues to be slightly less affordable than apartment renting, which could become a concern if the gap continues to widen.
“Declining affordability is likely one of the reasons that Miami’s homeownership rates haven’t bounced back,” said Sharga. “Although demographics may play a role as well – Miami has the oldest population of the markets we cover, and a lower percentage of residents in their peak home buying years.”
Economic and Demographic Fundamentals
Miami’s continued to forge ahead in its economic expansion through the fourth quarter of 2016. Although the metro encountered some choppiness in the last half of the year, payrolls saw a 2.8 percent year-over-year gain. Local unemployment hovered in the 5 percent range, down 20 bps and trending just above the US level.
Miami’s local economy remains fairly diversified, with its education/healthcare services and professional/business services sectors measuring close to US average shares and standing out as the metro’s two largest sectors. Retail trade and leisure/hospitality rank third and fourth, but are much more heavily concentrated than the national average. Together, these four sectors account for over 55 percent of Miami metro employment. Meanwhile, financial services, wholesale trade, and transportation/utilities are smaller, but still oversized sectors compared to the US average.
Though still ahead of the national average, Miami’s population growth cooled in 2015 to 0.9 percent as the metro added 24,214 residents. This marked Miami’s fourth consecutive year of population growth deceleration. Also worth consideration is the fact that the broader Miami-Fort Lauderdale-Pompano Beach MSA’s population is among the oldest of the 51 metro areas covered by Ten-X Research. The area has an above-average concentration of residents above the age of 65, and a below-average percentage of residents between the ages of 25 and 44, typically the prime home-buying years.