By Lani Kahn Drody
Broker + President
Have you made an offer on real estate recently and not been able to connect with the seller on price? Or similarly, are you trying to sell your home and buyers just aren’t connecting with your expectations? It’s a sign of the times.
As we enter the end of the first quarter of 2019, trends are emerging and as the future comes into focus, we are starting to see how the rest of the year will shape up. We wish we had a crystal ball, but we don’t. Nonetheless, here is some recent data pulled from the Miami Realtors Association that paints a picture of where we stand. From it, we can draw some conclusions about where we are headed in the near future.
January’s numbers are out and here’s how January 2019 compared to January 2018 (Year over Year):
We work with a lot of buyers. Many are local lateral, size up and size down buyers. We also work with people relocating to Miami (currently a large number are coming from the Northeastern US). We believe there is a lot – read A LOT of pent up demand for our local market. Job growth is strong. Our state’s economy is now fueled by a healthy variety of sectors. Our no state income tax status makes us one of the most popular states in the Union. And our weather remains incredibly appealing. Buyers are swarming, just waiting to pounce on the right opportunity.
National Association of Realtors Chief Economist, Lawrence Yun stated a couple weeks ago at the Miami Broker Summit, “My South Florida forecast is you have even faster job growth than the rest of the nation. You have retirees coming in and foreign buyers. I would say that comfortably home sales will be about the same (in 2019), but prices will rise 3-5 percent.” Yun’s remarks are right on target for the market as a whole, however, in the luxury market (homes over $1million), we don’t think prices will increase this year.
Overwhelmingly, the feedback we continue to hear from buyers is that the homes they are considering are priced too high – they are having trouble seeing the value in what they deem to be an inflated market. For many of our luxury clients, it’s not a matter of affordability. A lot of buyers are capable of paying cash, rather many are afraid of making a foolish mistake. Now, more than ever buyers want to make good, educated decisions. The Great Recession was just a short 12 years ago and memories are raw. Many people suffered big losses and they are a little older and wiser this time around. Our market dynamics resemble nothing of the past, except that pricing is getting pretty close to the peak pricing we saw in 2007. To give you some perspective, sales pricing of single family homes is 6.6% lower than it was at the peak of the market in 2007, but it is 105% higher than the depths of the recession in 2011. And condo pricing is 13.6% lower than it was in 2007, but 106% higher than 2011.
If you are serious about selling your home, it is important to price your home wisely and in line with the market today. As sales absorption slows, more pressure will be put on pricing. It is important to get ahead of it and not be in a position later on where you feel you chased the market down. Our friend and colleague, Ron Shuffield, CEO of EWM International recently stated in his 2019 Insight Report, “While we are having more and more discussion with buyers anxious to purchase homes and condos in South Florida, each of these potential buyers is keenly focused on his or her opinion of perceived value and reticent to spending time making offers for properties that are perceived to be exceedingly overpriced.” He goes on to state that, “the proof of this statement lies in the fact that during 2018 (much the same during 2017), our research showed that the average final sale price of a Miami-Dade home or condo in excess of $1 million sold at 84% of the property’s original asking price. In comparison, the average sold price of a luxury property four years earlier in 2014, sold for 91% of its original asking price.”
If you plan to sell and buy in the same market, while you may not reach your sales goals on the sell side, you should absolutely plan to find great opportunities on the buy side. If you are in the market to buy, don’t be afraid to make an offer on that home you are passionate about. You might be surprised to see a willingness from a seller to engage in conversation!
1537 San Remo Avenue
Coral Gables FL 33146
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