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The Miami Market's Unsustainable Boom has Ended

Douglas Elliman just published their 2Q 2015 Real Estate Market Reports covering Miami, Fort Lauderdale, Boca Raton, and Palm Beach. As always, report author Jonathan Miller of Miller Samuel, lover of charts and graphs, is back to break down the South Florida market for us. Take it away Jonathan!

Time flies, especially when there is a lot of activity going on. Douglas Elliman published our South Florida market research today covering the second quarter of 2015 and wanted to talk through the results with you here on Curbed. Douglas Elliman's Jay Parker, CEO, Florida Brokerage summed up these markets quite succinctly when he said "Market conditions are shifting from a previously unsustainable pace to one with a better long term outlook."

Miami's mainland showed more overall strength than the Beach this quarter, a continuing trend from the prior quarter. The key difference between the regions was the number of sales since housing prices and inventory moved higher in both areas. Rising sales activity (more transactions) are a better indicator of market health than price trends are, especially in a market with a lot of high end new development sales skewing the overall numbers higher and falling distressed sales activity. The market share of non-distressed sales (foreclosures and short sales) rose 6.8% to 73.8% of the market.

Several years of rising prices has finally begun to pull more supply into the Miami Beach market, in addition to new development activity. After bottoming in late 2013, listing inventory has continued to expand. While prices generally moved higher, sales fell short of year levels. Cash buyers have been accounting for about 75% of all purchases over the past few years but fell to 68.9% in the current quarter. Perhaps (slightly) easier access to mortgages and fewer international buyers are the reason. Incidentally, 90.8% of all purchases were non-distressed this quarter, a far cry 37% four years ago.

Prices moved higher across the Boca Raton housing market. Inventory fell in both the overall markets for condos and single family homes and their luxury market equivalent (the top 10% of the market). The absorption rate shows the market continues to be one of the fastest paced markets in South Florida.

Fort Lauderdale showed different results between the condo and single family markets. The condo market saw rising prices but a slowing rate of absorption. Price indicators for the single family market declined across the board but after factoring in the 9.7% decline in the average square footage of a sale, prices were not down.

Lack of inventory continued to hamper the Palm Beach housing market. Total inventory (condo + single family) for the second quarter was at it's lowest level in at least 3 years. The lack of supply was most notable at the top of the market, given the 14.2% drop in the average home square footage for luxury sales, pulling average price trends down as a result. Median prices were up across the market.—Jonathan Miller

· Douglas Elliman 2Q 2015 Reports [Douglas Elliman]
· Market Reports [Curbed Miami]