2020 has been a most unique year. Coming into the first quarter, South Florida experienced a great surge in business and was tracking for an excellent year in real estate. With the pandemic, the market began to adjust based on the issues created by shelter-in-place orders, business closings, the economy, and the health crisis itself.
Another factor unique to 2020 is that it is a presidential election year. In nonpandemic election years, we normally see heightened activity at the beginning of the year and a slowdown as the election approaches; buyers tend to hesitate until the results are clear in order to feel confidence in the markets. This year, the surge in buying was particularly strong as shelter-in-place orders lifted and real estate professionals learned to navigate the art of selling in this new environment.
In data based on all of Miami-Dade county (including that for both condominium and single family homes), you can see the sharp upward trend in “Accepted Offers” during May and June; that’s a great indicator of buyer activity because the properties will not close for 30 to 60 days. You can also see the downward trend of total inventory, even though there is still significant inventory on the market.
Despite the number of sales and decreasing inventory, the months of supply of inventory has remained fairly steady and has not dropped below six months, which tends to indicate a shift from “buyer’s market” to “seller’s market.” The market is healthy and steady, with an average of eight to nine months of inventory consistent from January to June of this year. (There are, of course, market areas where the inventory is currently lower.)
So where are we now? To understand our market, it is important to comprehend and balance the impact of the pandemic, and to factor in Florida’s zero state income tax, Miami’s outstanding weather, beaches, world-class sports and cultural events, shopping, water sports, proximity as the geographic portal to the Americas, and our wonderfully diverse population.
Miami houses more than 100 consulates, foreign trade offices, and bi-national chambers of commerce and headquarters countless banks, law firms and other businesses large and small, including an increasing number of innovative startup companies. We have amazing schools, universities, and hospitals attracting people from all corners of the globe. We have beaches, water features and parks sprinkled everywhere. We have two of the world’s finest airports and seaports, and our public transportation options have improved dramatically. With each passing day, we earn our reputation as “the magic city.” These factors matter, and they insulate our market in ways that other areas do not enjoy.
Other trends I have noticed include heightened activity from buyers who have been saving for their first home, encouraged by historically low interest rates and less competition from investors. These amazing low rates have allowed existing homeowners to purchase larger residences with home offices and gyms. Investors and professionals are shifting their funds from the stock market to real estate while realizing that they can live in our beautiful city and successfully run their business from anywhere in the world.
In such an unusual market, it is important that both buyers and sellers work with experienced real estate professionals to get all the information they need to make good decisions. Our sellers and buyers have benefited from how quickly we have adapted to the technology necessary to market and sell in this new environment. Social- distancing measures have put a dramatic emphasis on the need to showcase homes online, using technology such as drone videos, 3D model floor plans, virtual walk-throughs, FaceTime-based showings, and digital-only closings.
While the pandemic, the election, and hurricane season make the future of 2020 more challenging, I feel confident that correct pricing will remain the primary factor in Miami home sales in the months to come. You have likely heard the cliché about the key to real estate being location, location, location, but my 40-plus years in the business has taught me it is price, price, price!
Pat Klock Parker is a board member of the Master Brokers Forum, a network of real estate professionals in Miami, and a Realtor-associate with Coldwell Banker Real Estate. She can be reached at (305) 773-6343 and/or [email protected]