By Sunny Isles Real Estate Expert on February 28th, 2013
If Miami real estate history
does repeat and the economists are correct, 2012 was the new 2002.
Last year was the return to normal for Miami real estate. With annualized homes sales at $4.6 million nationally in 2012, we are close to 2002’s $5.5 million mark, which has now been defined as the normal level for sustainable real estate sales. Interestingly enough, a look back at 2002 in South Florida looks very similar to 2012. Ten years ago, combined numbers for Miami–Dade and Broward showed an overall inventory level of just over 20,000 residential properties for sale which at the rate of sales represented about 5 months of inventory, very similar to the numbers for 2012. It is when you start evaluating pricing that things really get interesting and the differences start to emerge.
The average Miami home sales price
in both Dade and Broward counties combined has risen from $446,000 to $620,000 in the last 10 years, with many peaks and valleys along the way. The most significant growth trend has been in what is referred to as the “super” luxury market. Not a high end grocery store, the super luxury market are those properties that define the top tier of property sales in a market. In the last 10 years, that market has gone from above $5 million to above $20 million. In 2002, 768 residential properties were sold over $1 million in both counties. By 2012, that number had grown to 1,911. The over $5 million market growth was even more pronounced in the same time period, with 4 times as many sales in 2012 as compared to 2002. In the super luxury category, over $10 million, there were no sales in 2002 and 30 sales in 2012. This is clearly an entirely different market now.
Rental prices continue to rise as well: 41% of all investors purchased more than one property last year. With rental prices going up, and a continuing strong demand, this too will remain an active segment of the market.
2012 also saw the return of the U.S. Northeast buyer in a very strong way. Income tax changes in many states in the U.S. and countries abroad has been the final impetus to clench that purchase decision in Florida, and South Florida in particular. These are buyers that can claim residency anywhere in the world and choose our backyard. Who can blame them?