In 2022, 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. In 2022, 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 2023
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. According to 2022 year-end and December 2022 statistics released today by the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system, Miami-Dade County real estate recorded its second-best total home sales year ever in 2022, while annual condo sales ranked second-best in Miami's history.
While overall inventory is on the rise, most of the growth in listings is at the top end or luxury segment of the market. Miami single-family inventory in the $400K to $600K price range, for example, is at 2.6 months of supply, well below a balanced market (6 months). In fact, Miami-Dade active listings are still down 49% versus pre-pandemic numbers (year-end 2022 vs year-end 2019).
Single-family home sales decreased 45.1% year-over-year, from 1,356 in record-breaking December 2021 to 744 in December 2022, due to a lack of inventory and rising mortgage rates. Miami existing condo sales decreased 50.2% year-over-year, from 2,077 record-breaking December 2021 to 1,035 in December 2022, due to a lack of inventory and rising mortgage rates.
Miami-Dade County single-family home median prices increased 1.1% year-over-year in December 2022, increasing from $525,000 to $530,900. Miami single-family median prices have risen for 133 consecutive months (11+ years), the longest-running streak on record. Existing condo median prices increased 5.5% year-over-year, from $355,000 to $374,500. Condo median prices have increased in 134 of the last 139 months.
Similarly, in Palm Beach County, 13,720 condos were sold in 2022, the 7th-most in history. Palm Beach sold 15,118 single-family homes in 2022, the 9th-most in history. In terms of monthly sales, December 2022 sales in Palm Beach County declined 40.2% year-over-year, from 3,062 to 1,812. Transactions declined because it was compared to a historic December 2021, mortgage rates have quadrupled in the past year, and there is a dearth of inventory in some price ranges.
The majority of the increase in listings has occurred in the high-end or luxury portion of the market, despite the fact that overall inventory is growing. For example, Palm Beach's single-family inventory in the $400,000 to $600,000 price category is considerably below a balanced market at 2.4 months (6 months). In December 2022, the median price of a single-family home in Palm Beach County climbed by 3.8% from $525,000 to $545,000.
The median price of an existing condominium rose 14% annually, from $263,125 to $300,000. The cost of a home is controlled by supply and demand. Reduced supply and increased demand result in increased pricing. Inventory levels are low for single-family houses (3.2 months) and condominiums (3.1 months) in Palm Beach. Also, rentals are one of the factors supporting housing prices, and rents are on the rise.
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.