Miami-Fort Lauderdale-West Palm Beach Area Local Market Report, Second Quarter 2021 reflecting the impact of COVID-19 on the local economy
Today's Market… Median Price (Red Line) and One-year Price Growth $600,000
30%
$500,000
25%
$400,000
20%
$300,000
15%
$200,000
10%
$100,000
5%
$0
0%
2012 Q2 Q4 2013 Q2 Q4 2014 Q2 Q4 2015 Q2 Q4 2016 Q2 Q4 2017 Q2 Q4 2018 Q2 Q4 2019 Q2 Q4 2020 Q2 Q4 2021 Q2
Local Price Trends Price Activity Current Median Home Price (2021 Q2) 1-year (4-quarter) Appreciation (2021 Q2) 3-year (12-quarter) Appreciation (2021 Q2)
Miami
U.S.
Local Trend
$485,000 28.0% 37.4%
$351,267 21.9% 32.3%
Prices continue to grow relative to last year
3-year (12-quarter) Housing Equity Gain*
$132,000
$85,667
7-year (28 quarters) Housing Equity Gain*
$220,000
$139,433
9-year (36 quarters) Housing Equity Gain*
$280,000
$170,333
Gains in the last 3 years have extended the trend of positive price growth after the recession
*Note: Equity gain reflects price appreciation only
Conforming Loan Limit** FHA Loan Limit Local Median to Conforming Limit Ratio
Miami $510,400 $373,750 95%
U.S. $765,600 Not all buyers have access to government$765,600 backed financing in this market not comparable
Note: limits are current and include the changes made on January 1st 2020.
Local NAR Leadership
The Miami-Fort Lauderdale-West Palm Beach market is part of region 5 in the NAR governance system, which includes all of Georgia, Florida, Alabama, Mississippi, Virgin Islands, and Puerto Rico. The 2021 NAR Regional Vice President representing region 5 is Andrew Barbar.
Benefits of Ownership: Total Equity Appreciation Total Equity Accrued to Owner by Year and Quarter of Purchase $350,000 $300,000 $250,000
$227,510
$200,000 $150,000
$112,903
$100,000 $50,000 $0 2008 Q2
2010 Q2
2012 Q2
2014 Q2
2016 Q2
2018 Q2
2020 Q2
Total Equity Gained** through 2021 Q2 from quarter in which home was of purchased Miami
U.S.
1-year (4-quarter)
$112,903
$68,283
3-year (12-quarter)*
$148,224
$97,874
5-year (20-quarter)*
$203,593
$134,190
7-year (28 quarters)*
$252,544
$165,448
9-year (36 quarters)*
$315,714
$201,855
Price Activity
Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession
*Note: Equity gain reflects price and principle payments since purchase, prevailing 30-year fixed rate mortgage at time of purchase and a 10% downpayment. Downpayment is not included in total equity
Drivers of Local Supply and Demand… Local Economic Outlook
Miami
12-month Job Change (Aug)
133,900
12-month Job Change (Jul)
125,000
36-month Job Change (Aug)
-68,000
U.S. Not Comparable Not Comparable Not Comparable
Current Unemployment Rate (Jul)
5.6%
5.4%
Year-ago Unemployment Rate
13.8%
10.2%
1-year (12 month) Job Growth Rate
5.4%
-0.8%
Employment has held up and is on an upward trend Miami's unemployment rate lags the national average, but has improved relative to the same period last year Local employment growth is strong compared to other markets
Share of Total Employment by Industry Miami-Fort Lauderdale-West Palm Beach Area
U.S. Natural #N/A #N/A Resources andNatural MiningR0.4% 0.4% Government Construc Other8.5% Services 14.3% Manufac 3.9%1.9% Leisure Trade/Tr & 14.4% Hospitality 10.8%Informa 1.9%
Natural #N/A #N/A Resources andResourc Mining Natural 0.0% Construction 0.8 0.0% 5.4% Government Construction 5.4% 138.9 Manufacturi 11.0% ng Manufacturing 3.4% 87.9 3.4% Other Services Trade/Transporta 4.4% Leisure & Information Hospitality 11.1% Financial Activ
Prof. & Busine
22.8%
581.5
1.8%
46.6
7.5%
190.7
17.6%
449.8
Educ. & Healt
15.4%
Leisure &Health Hos Services Other Services
11.1% 4.4%
Educ. & 15.4%
397.2
283.5 112.3 Prof. & 11.0% Business 282.6 Services #N/A 17.6% #N/A
Trade/Trans portation/Uti lities 22.8%
Construction 8.5%
Manufacturin g 1.9% Trade/Transp ortation/Utilit ies 14.4%
Financia14.4% Professi14.4%
Information 1.8% Financial Activities 7.5% 94.9%
Educatio15.9%
Financial Activities 14.4%
Educational & Health 10.8% Leisure Services Other S 3.9% 15.9%
Information 1.9%
Governm14.3% Professional #N/A & Business #N/A #N/A #N/A Services 14.4% #N/A #N/A #N/A 12-month Employment Change by Industry in the Miami-Fort Lauderdale-West Palm Beach Area (Aug - 2021) 1,400 NA Goods Producing Information Natural Resources/Mining/Construction 6,700 NA Financial Activities Natural Resources and Mining 0 24,800 Prof. & Business Services -500 12,100 Construction Educ. & Health Services Government
Manufacturing Service Providing Excluding Government Trade/Transportation/Utilities
State Economic Activity Index 12-month change (2021 - Jul) 36-month change (2021 - Jul)
1,500 NA 21,100
Leisure & Hospitality
55,100
Other Services
8,800
Government
-6,000
Florida
U.S.
16.8%
6.8%
5.7%
2.7%
Florida's economy is stronger than the nation's, but slowed from last month's 17.22% change
New Housing Construction Local Fundamentals
Miami
U.S.
12-month Sum of 1-unit Building Permits through Aug 2021
8,949
not comparable
8-year average for 12-month Sum of 1-Unit Building Permits
6,796
not comparable
Single-Family Housing Permits (Aug 2021) 12-month sum vs. a year ago
25.3%
26.8%
10,000
Production above trend for an extended period of time could cause prices to moderate as inventory is built up. Construction is on the rise relative to last year, suggesting that the local inventory has stabilized
Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line)
9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
The current level of construction is 31.7% above the long-term average
State Total Foreclosure Rate vs. U.S Average (U.S. Average in Blue Dashed Line)
Source: Mortgage Bankers' Association
Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, U.S. Average in Green)
30% 25% 20% 15% 10% 5% 0% 2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Miami
U.S.
Ratio for 2020
12.3%
14.4%
Ratio for 2021 Q2
14.7%
16.0%
Historically strong, but weaker than the first quarter of 2021
Historical Average
15.0%
18.0%
More affordable than most markets
Monthly Mortgage Payment to Income
Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line)
18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2019 Q3
2019 Q4
2020 Q1
2020 Q2
2020 Q3
2020 Q4
Median Home Price to Income
Miami
U.S.
Ratio for 2020 Ratio for 2021 Q2 Historical Average
2.4
2.8
2.9 2.3
3.2 2.7
2021 Q1
2021 Q2
The price-to-income ratio is high by historic standards and getting worse Affordable compared to most markets
Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, U.S. Average in Green)
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
The Mortgage Market 30-year Fixed Mortgage Rate and Treasury Bond Yield 280
6.0%
240
5.0%
200
4.0%
160
3.0%
120
2.0%
80
1.0%
40 0
0.0% 2016 Q2
Q4
2017 Q2
Q4
2018 Q2
Spread (left axis)
Q4
2019 Q2
Q4
2020 Q2
Q4
2021 Q2
30-Year FRM (Right axis)
In the second quarter of 2021, mortgage rates were higher than the previous quarter as the economy grew faster than expected with millions of Americans resuming traveling, going to restaurants, bars, events and shows. Nevertheless, mortgage rates were still lower than a year earlier. According to the mortgage finance provider Freddie Mac, the 30-year fixed mortgage rate was 3.00 percent in Q2 2021 compared to 3.23 percent a year earlier. What to expect from mortgage rates in the upcoming quarters? Rates are expected to rise further as the Fed will likely start reducing its bond purchases before the end of the year and raise interest rates by the middle of next year. NAR forecasts the 30-year fixed mortgage rate to reach 3.5% by mid-2022.
REALTOR® Price Expectations REALTOR® Price Expectations for the Next 12 Months (U.S. Average in Blue Dashed Line) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0%
Source: NAR
REALTOR® Price Expectations
Florida
U.S.
2021 - Aug
0.0%
1.1%
Prior 12 months
2.0%
1.4%
REALTORS® expect weaker price growth in Florida than in the U.S. in the next 12 months. Their price expectations for the local market are more modest than a year ago.
Geographic Coverage for this Report The Miami area referred to in this report covers the geographic area of the Miami-Fort Lauderdale-West Palm Beach metro area as officially defined by the Office of Management and Budget of the U.S. Government. The official coverage area includes the following counties:
Broward County, Miami-Dade County, and Palm Beach County
More information on the OMB's geographic definitions can be found at https://obamawhitehouse.archives.gov/omb/bulletins_default/