South Florida continues to see a surge in domestic and international wealth migration, as homebuyers from high-tax, high-density states relocate and purchase prime properties of $1 million and up. The region's real estate market is unique due to the significant number of cash transactions and the high rate of migration.
Pending sales rose 16.9% month-over-month, from 2,288 in January 2023 to 2,674 in February 2023, while showing appointments in the Southeast Florida MLS, which is owned by MIAMI REALTORS®, increased 1.6% month over month to 237,395 showings in February. Miami February 2023 condo sales increased versus February 2019, but are down in comparison to last year.
Miami existing condo sales decreased 46.6% year-over-year, from 1,807 in February 2022 to 965 in February 2023, due to a lack of inventory and rising mortgage rates. In comparison to February 2019, however, in February 2023 sales increased by 3.3%, from 934 to 965. Miami-Dade County single-family home median prices increased 3.5% year-over-year in February 2023, while existing condo median prices increased 2.6% year-over-year.
Miami single-family median prices have risen for 135 consecutive months (11.25 years), the longest-running streak on record. South Florida's real estate market continues to outpace national trends, and the region remains a bargain for prime property compared to other global cities. The Miami-Dade luxury ($1-million-and-up) transactions rose 111.5% in comparison to pre-pandemic, from 122 in February 2019 to 258 in February 2023. About 67.1% of Miami-Dade luxury buyers pay all cash.
Homebuyers from high-tax, high-density states continue to relocate and purchase in South Florida. Florida ranked No. 1 in the U.S. in the largest net gain of adjusted gross income (AGI) due to domestic migration, gaining $23.7 billion, according to the most recent IRS-SOI migration data.
South Florida's housing market trend for 2023 continues to be on the rise, albeit at a more modest rate. However, the region's real estate market is unique due to the significant number of cash transactions and the high rate of migration. As the economic and lending conditions continue to favor regions with strong real estate market fundamentals like South Florida, the region's housing market will continue to see a surge in domestic and international wealth migration, and prices will continue to rise.
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
The South Florida housing market is forecasted to remain strong in 2023, according to the MIAMI Association of Realtors and the Multiple Listing Service. Although total sales decreased by 29.9% year-over-year in February 2023, this is in comparison to a historic February 2022, and the current market has lower inventory in specific price points and higher rates.
Palm Beach County condo new listings have increased by 1.4% year-to-date, and total pending sales have risen by 10.8% month-over-month. Palm Beach single-family and condo markets remain in a seller’s market with just 3.3 and 3.7 months of supply, respectively. Palm Beach County single-family home median prices have increased 2.7% year-over-year while existing condo median prices have increased 9.1% year-over-year.
South Florida ranks in the top 10 in the US in median homebuyer growth, with Miami and West Palm Beach showing a substantial growth in median homebuyer income. The supply and demand for housing determine home prices. Lower supply and higher demand create higher prices, and inventory for Palm Beach single-family homes and condos is low.
South Florida is one of only two US markets forecasted to see price appreciation in 2023, according to the Goldman Sachs forecast. Wealth migration, cash buyers, and global companies continue to relocate to South Florida, which is expected to contribute to the strong housing market.
If mortgage rates continue to rise this year, affordability will deteriorate. While we believe the South Florida market will remain strong in 2023 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 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.
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.