Hard-hit Miami has rejoined the ranks of recovering housing markets.
The metro area, which saw overbuilding during the boom and rampant foreclosures during the bust, made it onto the list of 80 markets the National Association of Home Builders says boast improving economic health.
Miami is the biggest city added to August’s list after not appearing in July. (Miami was on the list in February, but then fell off.) Others added this month include: Palm Bay, Fla.; Hinesville, Ga.; Terre Haute, Ind.; and Lubbock, Texas.
To make the cut, a region’s employment, house prices and single-family housing permits need to show improvement for at least six months. According to the builders, nearly one quarter of all U.S. metros are currently designated as improving.
The addition of big-city Miami is a good sign for struggling markets working to improve. During the boom, developers raced to Miami to develop high-end condo towers, only to be saddled with unsold units when the market crashed. Prices on condos and homes, many of them in foreclosure, plunged by 50% or more.
Jack McCabe, a housing analyst with McCabe Research & Consulting in Deerfield Beach, Fla., said that foreign buyers — including Canadians, Russians and Latin Americans — flush with cash have helped shrink the area’s glut of unsold homes. “It’s a rush of investors and affluent international buyers that are looking for a safe haven for their money,” he said. “If it wasn’t for them this market would still be in shambles.”
Meanwhile, Miami has just 2,900 unsold, completed condo units left over from the boom years, down from about 10,000 in 2010, Mr. McCabe said. Lower-priced units under $250,000 — which might have commanded between $400,000 and $600,000 during the peak — are even seeing bidding wars, something this market hasn’t had in several years.
The Miami area’s average sales price was $399,440 in the second quarter, up 18% from the prior year, according to Douglas Elliman Florida and appraiser Miller Samuel Inc. Average single-family home prices climbed 14% from the prior year, while condo prices gained nearly 20%.
Still, given the region’s large number of all-cash and international buyers, Mr. McCabe warned: “It’s not returning to a normal market,” he said.
Miami isn’t the only market in the Sunshine State that can boast improvement. Other cities on the builder’s list include Cape Coral, Orlando and Tampa.
The home-building group introduced its healing markets list last September. The group’s monthly confidence index, which is measured on a 100-point scale, fell to the depressing single digits after the housing market crashed. But that index is improving along with the housing market. The monthly confidence reading recently ticked up to its highest level in about five years.
With both reports showing strength, it’s easy to assume the housing crisis is over. While most industry watchers agree that the market has struck the long-awaited bottom, the sector faces continued headwinds. Mortgage standards remain tough, keeping many buyers out of the market, while many homeowners still owe more than their home is worth. As unemployment increases, concerns are also rising that the economy could weaken again.
Indeed, several markets fell off the latest healing list, including: Tuscaloosa, Ala.; Hickory, N.C.; and Brownsville, Texas.