Werewolves Of High-End Housing: You’ve Already Let ‘Em In
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By Jonathan Miller
Special Contributor
There was a great Wall Street Journal piece (free link) on the decline in available lower priced Miami home sales. It’s the result of prices rising so quickly and a shift in the mix to larger more high-end new product flowing into the market. The high-end market seems better equipped to weather the current economic environment as the chasm between the wealthy and the rest of us continues to widen. The rich own stocks and the middle class own real estate.
Miami Real Estate Is Shifting To The High-End
You can see that pattern in the table below I whipped up. The market has been growing and widening in the $10M+ single family subset over the past five years.
High-end sales boomed in the pandemic era and continued to be elevated coming out of the frenzied market, seeing many higher priced sales above $20 million becoming commonplace.
Cash & Strong Financial Markets Favor The Wealthy
With mortgage rates stuck at elevated levels, consumers with higher wages and/or greater net worth have been able to take advange of financial markets and finding ways of bypassing higher mortgage rates via cash.
The financial markets remain robust with outsized returns.
Affordable Listing Inventory In Miami Has Collapsed
Supply of affordable listing inventory has disappeared because prices have risen a lot. It’s not that there isn’t demand for sub-$500 thousand properties, but rather the price points have surged to much higher levels so the supply has moved to a higher price category. The discount that buyers once enjoyed coming to Miami from more expensive markets like the northeastern U.S., have evaperated in a hot market (pun intended).
The shift in the mix to higher end homes has been occuring for the past decade as reflected in the number of sales and the volume of sales.
Final Thoughts
Most U.S. housing markets I’m familiar with are seeing the same pattern we see in Miami – lack of listing inventory is driving prices upward, despite much higher mortgage rates. Affordable listings are becoming rare because prices have surged and new development product is much further in price from the existing market product while the existing market product is where the supply is more chronically low.
This market “will rip your lungs out Jim, I’d like to meet his tailor.” Wow, I feel fortunate that I saw him in concert back in college. Howoo!
Jonathan Miller is a housing analyst and professor at Columbia University. He is a syndicated columnist of “Housing Notes.”
