The South Florida housing market is a captivating blend of luxury, diversity, and endless possibilities. With its sun-kissed beaches, thriving cultural scene, and thriving urban centers, South Florida has long been a magnet for those seeking an exceptional living experience. However, beyond the allure of its lifestyle lies a housing market that dances to the rhythm of its own trends and economic dynamics. In this report, we will learn the trends in the South Florida housing market.
South Florida Housing Market Report – Analyzing Miami's Real Estate Trends
Miami-Dade County's Resilience
The South Florida housing market, particularly in Miami-Dade County, demonstrated remarkable resilience in September 2023. Despite facing the highest mortgage rates in two decades, the real estate market in South Florida has shown strength and resilience, as per the latest report released by the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.
Record-Breaking Dollar Volume
Fueled by a significant increase in high-value transactions, Miami recorded a staggering single-family home dollar volume of $983.2 million in September 2023. This represents a 29.4% year-over-year increase and even surpasses the dollar volume recorded in September 2020 when mortgage rates were at near all-time lows. Only September 2021 outpaces this figure with a total of $1.2 billion in single-family dollar volume.
Miami's Luxury Real Estate Market
The Chairman of the Board of MIAMI, Ines Hegedus Garcia, emphasizes the uniqueness of Miami's luxury single-family homes market, which continues to attract both global and domestic buyers. Miami is seen as undervalued compared to other global cities like New York, making it a hot spot for real estate investment. Notably, cash buyers are less deterred by high mortgage rates, and there has been a double-digit rise in single-family home cash buyers in the past month.
Positive Trends in Home Sales
While the condo market faced challenges due to inventory constraints and rising mortgage rates, Miami single-family home sales increased by 2.9% year-over-year. This marks the first time single-family home sales have seen a year-over-year increase since January 2022. However, Miami existing condo sales decreased by 16.7% year-over-year in September 2023.
New Listings and Market Supply
In September 2023, Miami's high-demand, low-supply market saw a positive development with new listings rising year-over-year for the first time since August 2021. This increase in listings, both for single-family homes and condos, provides buyers with more options in the seller's market.
Showings and Mortgage Rates
Showings in South Florida have been on the rise for five consecutive months, indicating an increasing interest in home sales. This is happening even as mortgage rates reach their highest levels in 23 years, with the 30-year fixed-rate mortgage averaging 7.57% as of October 12, 2023.
Inventory Challenges
Miami-Dade's existing inventory is still down 53.7% from pre-pandemic levels in September 2019. While inventory for single-family homes decreased, condominium inventory increased slightly year-over-year. Both segments indicate a seller's market, with low months' supply of inventory.
Home Price Appreciation
Miami-Dade County has experienced impressive home price appreciation, with single-family home median prices increasing by 5.6% year-over-year in September 2023. This marks 142 consecutive months of price increases, setting a record. Existing condo median prices also increased year-over-year.
Wealth Migration Impact
The rise in local home prices is closely linked to South Florida's wealth migration. In-migration has significantly boosted household income in the region, with an influx of affluent households moving into Miami-Dade, Broward County, and Palm Beach County.
Economic Impact of Real Estate Sales
Real estate sales have a significant economic impact, generating income in various sectors and driving new construction. Miami-Dade's local economic impact from home sales reached $242 million in September 2023, with a total dollar volume of $1.67 billion.
Low Distressed Sales
Distressed sales in Miami remain low, reflecting a healthy market. Only 1.2% of all closed residential sales in Miami were distressed in September 2023, a notable improvement from the peak of distressed sales in 2009. Short sales and REOs accounted for a small percentage of total Miami sales.
Miami's Real Estate Performance
Miami's real estate market continues to outperform both the national and state averages. With a median percent of original list price received and relatively short time on the market, Miami's real estate market remains attractive to both buyers and sellers. Cash sales, a characteristic of Miami's real estate market, continue to represent a significant portion of closed sales.
The South Florida housing market, especially in Miami, is showcasing remarkable resilience and growth, attracting buyers and investors despite challenging mortgage rate conditions. Miami's unique appeal, coupled with positive trends in home sales and pricing, positions it as a standout real estate market in the United States.
How Did the South Florida Market Perform Last Year?
Last year, statewide closed sales of single-family homes in the Florida housing market were 287,352, a decrease of 18% year over year, while existing condo-townhouse sales were 125,494, a decrease of 21.7% year over year. The statewide median sale price for single-family homes in Florida was $402,500, up 15.7% year on year. It was $306,500 for condo-townhouse units, up 21.6% year on year, according to the latest housing data from Florida Realtors®.
The supply of for-sale homes continues to increase gradually, alleviating inventory constraints in many markets across the state. Last year, statewide inventory increased by 116.8% for existing single-family homes and 65.0% for condo-townhouse units. In 2022, the supply of existing single-family homes increased to 2.7 months, while the supply of existing condo-townhouse properties increased to 2.8 months.
Data from the University of Florida's Shimberg Center for Housing Studies show that prices in Miami-Dade County, home to Miami, Miami Beach, and other municipalities popular with new arrivals to the state, have returned to levels not seen since the mid-2000s housing boom, a period of intense real estate speculation in the region that forced millions into foreclosures in the aftermath of the Great Recession.
While recent inflation, supply chain bottlenecks, and revived interest in the South Florida real estate market have added gasoline to the fire, home affordability has long been a problem for South Floridians. Although the steep increase in rents is a recent trend, the fundamental disparity between incomes and housing prices is not.
South Florida Housing Market Forecast for 2023-2024
Price appreciation has been a constant in South Florida, with median prices steadily increasing. The influx of wealth migration has significantly contributed to the region's economic growth, boosting household incomes and strengthening the real estate market.
Forecast
As we look ahead to 2023 and 2024, several key trends are expected to shape the South Florida housing market:
- Continued Resilience: The market is likely to remain resilient, with high-value transactions and cash buyers driving growth.
- Divergence in Sales: Single-family home sales may continue to outpace condo sales, influenced by inventory constraints and mortgage rates.
- New Listings and Inventory: The rise in new listings will provide buyers with more options, but inventory challenges may persist.
- Market Attractiveness: South Florida's appeal to domestic and international buyers is expected to endure, further fueling the market.
- Price Appreciation: Home prices are likely to continue their upward trajectory, particularly in the luxury segment.
- Wealth Migration: The influx of affluent households into South Florida will contribute to economic growth and real estate demand.
While the South Florida housing market faces challenges, it remains a dynamic and attractive destination for real estate investment. The region's ability to adapt and thrive, even in the face of rising mortgage rates, positions it as a promising market for 2023 and 2024.
If mortgage rates continue to rise next year, affordability will deteriorate. While we believe the South Florida market will remain strong in 2024 and do not anticipate a meltdown, waiting until there is even more inventory and loan rates are much higher would merely prolong the sales process. And we believe that by the end of the year, the days on the market will have increased significantly.
It will take far longer to sell a property than people have become accustomed to in the previous two years. This is an excellent opportunity to be both a buyer and a seller. If you've been sitting on the sidelines, now is the moment to act. The demand for real estate in South Florida is being driven by new residents and corporate relocations from high-tax metropolitan regions such as New York.
While rising home prices may be terrible news for many homeowners, it's good news for rental property investors, helping to explain why rental growth and demand in South Florida are so high. South Florida has around 100 cities and villages, including Miami, Fort Lauderdale, West Palm Beach, Boca Raton, Boynton Beach, and North Miami.
South Florida, sometimes known as the Greater Miami Area, is the seventh-largest metropolitan area in the United States and the second-largest in the southeastern United States, trailing only the Washington-Arlington-Alexandria MSA. More than 6.7 million people live in the region, which encompasses more than 6,000 square miles and three counties: Miami-Dade, Broward, and Palm Beach.
It is important to note that the housing market is influenced by various factors, including economic conditions, government policies, and global events. Therefore, this forecast is subject to change based on future developments. Monitoring the market closely and adapting strategies accordingly will be essential for buyers, sellers, and industry professionals operating in the South Florida housing market.
Will the South Florida Housing Market Crash?
The housing market in South Florida is still strong and unlikely to crash in 2023. There are several factors that drive housing demand in South Florida:
Climate: South Florida has a warm, tropical climate that attracts many retirees and snowbirds, who are looking for a place to escape the cold weather during the winter months. This demand for seasonal housing helps to drive up housing prices in the region.
Tourism: South Florida is home to many popular tourist destinations such as Miami, Fort Lauderdale, and West Palm Beach. The steady flow of tourists in the area helps to boost the economy and creates a demand for both short-term and long-term rental properties.
Job Market: South Florida has a diverse economy, anchored by industries such as finance, healthcare, and real estate. The strong job market in the region helps to attract new residents and supports the demand for housing.
International Buyers: South Florida is a popular destination for international buyers, particularly those from Latin America and Europe. The strong demand from these buyers helps to drive up housing prices in the region.
Demographics: South Florida's population is growing and is expected to continue to grow in the future, which is a driver for housing demand. Additionally, the increasing population of retirees in the area is also driving demand for housing.
Bottom line: We're not seeing any major home price decline or crash in the South Florida housing market just yet. The current supply of homes in South Florida still favors sellers. In the long run, it is hoped that higher interest rates would result in more days on the market (which gives buyers more choices). The price rise will ultimately slow as a result of higher interest rates. With the deceleration of price rise, total inventory might expand in the future. Historically, inventory grows six months after interest rates rise, but today’s market is unlike any other.
Sources:
- https://www.floridarealtors.org/tools-research/reports/florida-market-reports
- https://www.miamirealtors.com/category/news-releases/
- https://www.miamirealtors.com/news/south-florida-market-stats/
