Home prices in the metro continue to rise, affecting affordability
IRVINE AND SILICON VALLEY, CALIF. – August 8, 2017 – Ten-X, the nation’s leading online real estate transaction marketplace, has released its First Quarter 2017 Economic and Single-Family Housing Market Outlook Report for Miami, which shows that the metro’s home sales moderated slightly but were still up 4 percent year over year.
“Home sales in Miami started to cool in the first quarter as prices continued to rise due to tight inventory,” said Ten-X Executive Vice President Rick Sharga. “Although housing supply was up 1.3% from a year earlier, it remained unusually tight, which has impacted affordability throughout the area.”
Homeownership in the Miami-Fort Lauderdale-Palm Beach metro measured 59.6 percent during the quarter, an increase of 170 bps from a year ago but 410 bps lower than the U.S. homeownership rate. The rate has lagged behind the national average since 2009 and has hovered between 57 percent and 60 percent since 2012.
Miami Homeownership Remains Lower Than National Average
Sources: US Census Bureau, Ten-X Research
Miami Home Sales Keep Moving in Positive Direction
Sources: IHS, Ten-X Research
Following multiple years of choppy growth, home sales in Miami increased 4.0 percent year over year to a seasonally adjusted rate (SAAR) of 62,563, within 60 bps of the U.S. rate.
The inventory of homes for sale during the quarter was 45,320, up 1.3 percent from a year earlier. The average time a home for sale sat on the market declined slightly from the previous quarter to a seasonally adjusted 84 days, but remained 20 percent longer than a year earlier. Home construction was subdued compared to prior cycles. While single family home completions increased 6.5 percent year over year, housing starts fell 15.2 percent and permits 28.2 percent, suggesting that completions may also see a decline in future months.
Miami Home Prices Continue to Rise
Sources: FHFA, Census, IHS, Ten-X Research
Home price appreciation for the first quarter continued to outpace the national average, as it has done for the past five years. Miami’s median home price climbed to $265,630, a 9.5 percent year-over-year increase. While prices in the metro have appreciated at a rapid clip, they remain roughly 12.2 percent below Miami’s 2007 peak. This suggests room for further growth.
As single-family home prices rose, affordability decreased. In the first quarter, home buying in Miami continued to be slightly less affordable than apartment renting.
“Miami’s single-family affordability has been on the decline since prices took off in 2012 and is now below that of renting,” said Sharga. “This is a cause for concern because it could shift demand and limit price growth.”
Economic and Demographic Fundamentals
Miami continued to see modest economic expansion in the first quarter of 2017. Although the metro encountered some choppiness in the last half of 2016, payrolls saw a 2.3 percent year-over-year gain. Local unemployment dipped below 5 percent for the first time this cycle, down 50 bps and trending just above the U.S. level.
Miami’s local economy remained fairly diversified in the first quarter. Education/healthcare services and professional/business services sectors measured close to U.S. average shares and stood out as the metro’s two largest job suppliers. Retail trade and leisure/hospitality rank third and fourth, but had much higher employment than national averages. Together, these four sectors accounted for more than 55 percent of Miami metro employment. Financial services, wholesale trade, and transportation/utilities had smaller shares, but they were still larger than U.S. averages for these sectors.
Miami’s population grew 0.8 percent in the first quarter, as the metro added 20,352 residents. This marked Miami’s fourth consecutive year of population growth deceleration.
It should be noted 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, with an above-average concentration of residents over the age of 65. These older residents are typically past their home buying years.
Ten-X is the nation’s leading online real estate transaction marketplace and the parent to Ten-X Homes, Ten-X Commercial and Auction.com. To date, the company has sold 292,000+ residential and commercial properties totaling almost $48 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions online. Ten-X is headquartered in Irvine and Silicon Valley, Calif., and has offices in key markets nationwide. Investors in the company include CapitalG (formerly Google Capital) and Stone Point Capital. For more information, visit Ten-X.com.