July 2017 Index
Coconut Grove | .83 - trending down
Miami Beach | 1.56 - trending up
Coral Gables | 1.13 - leveling off
It’s a question I’m asked every day. This year, the conversation has focused mostly on how inventory continues to grow in many of our neighborhoods, while buyers stand on the sidelines waiting for prices to drop. So when’s the best time to buy or to sell?
It is a basic economic fact that high supply and low demand cause downward pressure on pricing: as inventory builds, prices drop. Eventually those buyers on the sidelines find the “sweet spot” in pricing that encourages confidence to move forward with a purchase.
In spite of an abundance of inventory, more new listings kept coming onto the market. To analyze the data from a different perspective, we created an index that that looks at the ratio of new properties listed each month to the sum of those sold and put under contract in the same time period. The higher the index, the lower the prices. As this index drops, prices rise.
An in depth study of Miami-Dade overall shows the index was at its highest in the last 15 years in June 2008, at 4.75. Almost 5 times more new properties were listed that month than closed and pending sales combined, signaling the height of the real estate downturn. Since 2008, the index dropped as low as .63 in December 2012. It spikes high every January, which is when most new listings come onto the market each year.
Adjusting for seasonality, the moving average for Miami-Dade was trending upwards until February 2017, after which the index has again been on the decline, dropping below the 1.0 mark for the remainder of the year to date. In short, our market is improving.
In the coming months we’ll dive deeper into different aspects of the index. The working name to date has been the Butler Index, but would love your help giving it a permanent name. Share your ideas with me at email@example.com.
- Beth Butler