By Robert Frank | CNBC
The Miami real estate slowdown is becoming a meltdown — with the most expensive areas getting hit hardest.
The number of sales and prices in posh Miami Beach — home to many of the city's most expensive and highest-profile properties — fell during the first quarter, according to a new report. Meanwhile, inventory soared by roughly a third compared with the prior-year quarter.
The report, released Thursday by Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants, found the average sale price in Miami Beach and the nearby Barrier Islands fell 7.5 percent year over year to $905,252. The median sale price fell 6.6 percent year over year to $408,750.
The total number of sales in the area also fell during the period, dropping 21.1 percent to 810 properties. Inventory surged nearly 33 percent, and there is now a 21.5-month supply of properties. That pileup means homes are taking longer to sell, with the number of days on market nearly doubling from 53 to 97 days year over year.
Real estate experts said the combination of weaker demand from overseas buyers and a vast crop of luxury condo towers under construction is driving down prices and sales, especially at the top end of the market. Prices for the top 10 percent of condos fell by 14.5 percent, to an average sale price of $3.13 million. Meanwhile, inventory for those properties skyrocketed 58 percent, contributing to a roughly 3½-year supply.
"The high end is softer than the broader market right now," said Jonathan Miller, president and CEO of Miller Samuel. "We are coming off this unusually strong period for the high end between 2011 and 2014 and now we're seeing normalization of that segment."
Indeed, the broader Miami market fared slightly better. The average sale price in the city's coastal mainland market was up 2.7 percent compared with last year, at $404,020, and the median sale price increased 7.4 percent, to $260,000. Still, the number of sales declined 17.5 percent year over year, to 3,583, and inventory was up 15 percent. The supply of homes jumped to 10.6 months, from 7.6 months last year.
Condos in the hyper-exclusive community of Bal Harbour saw the average sale price fall 38 percent over the year, to $1.02 million. The number of sales there dropped 32 percent, to 30.
Miami's loss, however, may be a gain for communities farther up the coast, as retirees and families increasingly find better value and a quieter lifestyle in Boca Raton, Fort Lauderdale and Palm Beach. Those markets also tend to be less dependent on foreign buyers, Miller said.
The average sale price in Boca Raton jumped 12 percent, to $304,196, while the number of sales increased 21 percent over the prior-year period, to 607.
"Of all the major markets right now in [southern Florida], Boca is the leader," Miller said. "I think it's an area that's less correlated to the foreign buyers and in Boca, the high end of the market is performing as well right now as the broader market."