Third Quarter statistics are in for South Florida, comprised of the Palm Beach–Broward-Miami-Dade Metro Area. The numbers look solid as year over year metrics continue to increase. Growth is seen across all segments, except in luxury condo sales, which had a small decrease from Q3 in 2018.
Single Family Homes
Q3 shows very solid growth versus 2018, as sales increased by almost 7%. With current inventory levels as they are, the absorption rate is 4.7 months. Using 6 months as the benchmark for a balanced market, South Florida remains in a Seller’s Market for single family homes.
One interesting bit of information regarding this segment, was the increase in Median Time to Contract. This metric measures the number of days between the initial listing of the home and the signing of the Sales Contract which eventually leads to a closed sale. The Median Time to Contract for Q3 2019 for single family homes is 49 days, versus 42 in Q3 2018, or a 17% increase in time. On its own, this metric may mean very little, but it is something to keep an eye on.
Growth is more restrained in condo sales, at 2.4%, but it is important to point out, it is still growth. Given the lack of financing facilities for this segment and growing inventory, the fact sales remain dynamic says a lot about the market in South Florida. New FHA rules are now in effect, and it will be interesting to see how these impact sales numbers going forward. Though it may seem the rule changes may not dramatically affect condo financing capabilities in South Florida specifically, any change will positively influence this segment.
At current inventory levels, the absorption rate is 7.7 months. Placing residential condominiums between a balanced market and a slight buyers’ market.
The luxury homes segment, defined as properties over the $1MM threshold, remains strong in South Florida. Single family homes posted an impressive 11.7%, gain over Q3 2018. Condominiums did not perform as well, holding steady with a slight 0.6% decline over Q3 2018.
There is a marked difference in the luxury market between Single Family and Condominium performance. Single Family Homes remain in a Seller’s Market, with a 5.3 month supply, while Condominiums are at 11.7 months, clearly favoring buyers. As a whole, the luxury market performed very well, highlighting South Florida’s popularity as a unique lifestyle destination, attracting high net worth individuals.
Mortgage rates remain historically low, and Q3 experienced a small reduction, meaning more individuals are entering the market. A steady flow of buyers is a main reason behind the sustained growth in residential real estate. General concern in the economy, means interest rates will remain low. This fact in the mortgage market translates into stability.
Residential real estate in South Florida remains healthy and stable in general terms. The market is dynamic with many interesting story lines and niches. The future remains bright and dynamic.