This year is shaping up to be one of stability for South Florida real estate following a “reset” in 2016, according to new market reports released Thursday.
The luxury residential segment continues to be soft at the top in Miami and some of its neighboring cities, particularly in the luxury condo market where developers have flooded the market with new units. But in many ways, first quarter metrics improved over the end of 2016, a sign that the South Florida market is stabilizing, according to Douglas Elliman’s first quarter reports for Miami and its neighbors.
The median price for a luxury condo in the Miami coastal mainland, one of the most troubled segments in the area, rose 21.2% from last quarter, though it was still down 27.5% from a year ago, according to the report. Miami condo sellers took smaller price concessions from a year ago—the average listing discount fell to 7.8% in the first quarter compared to 8.4% a year ago.
Meanwhile, the luxury market in neighboring Miami Beach and the barrier islands has performed better than on the mainland. The median sales price for a luxury condo rose 14.2% from a year ago to $3.025 million, according to the report. Price per square foot in Miami Beach and the barrier islands increased 9.6% year-over-year to $1,328.
Since 2013, the Miami market swung from a post-recovery boom to a drop off last year that industry experts are now calling a “reset,” said Jonathan Miller of Miller Samuel, which prepares the quarterly reports for Douglas Elliman.
“You went from boom to reset, and now … I would characterize this as stability,” Mr. Miller said.
In Miami mainland, the median luxury house price increased 4.3% in the first quarter to $1.2 million from the previous quarter, though prices are still down 12.8% from a year ago.
The median sales price of a house across all price points was a little over $4 million in Palm Beach, where New Yorkers “are the new foreign buyer,” Mr. Miller said. Though Palm Beach is more than 1,200 miles from New York, he considers the pricey beachfront a competitor to the Hamptons on Long Island.
Like Miami luxury, Palm Beach saw the median price of a house rise from the prior quarter, up 37%, but fall short 13.3% from a year ago, when the median sales price was $4.7 million.
A general shift toward smaller houses and condo units explains part of the recent drop in average sales prices in places like Miami and Palm Beach, said Jay Parker, CEO of Douglas Elliman’s Florida Brokerage.
“We don’t believe it’s a trend, but it definitely influenced median sales price,” Mr. Parker said.
And while the market is weaker at the top than other sectors, it’s improving, judging by the first quarter market results, he added. “We were afraid that the Q1 report would come out and it would show really scary inventory or days on market,” he said.
“We were most comforted that there was really no smoking gun,” he added. “We firmly believe that Miami still represents an extraordinary discount to other major luxury markets.”
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