The Florida housing market had more new listings, higher median home prices, and signs of easing supply constraints in June and the second quarter of 2022 compared to June and the second quarter of 2021, according to the latest housing data from Florida Realtors®. However, higher mortgage rates and inflation continue to impact sales.
Last month, closed sales of single-family homes statewide totaled 28,296 units, down 17.2% from June 2021, while existing condo-townhouse sales totaled 11,796 units, down 27% from June 2021, according to data from the Florida Realtors Research Department in collaboration with local Realtor associations. New listings for existing condo-townhouse properties last month rose by 4.7% year-over-year.
In June, the median sales price for single-family homes was $420,000, up over 20% year-over-year but unchanged from May. This is the first time since 2008 that the median sale price of single-family homes has not increased from May to June, indicating that prices are beginning to respond to purchasers' rising access to inventory.
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
Rates will continue to rise this year, we believe significantly, and affordability will deteriorate. If you're a seller, take advantage of the market while it's still very excellent, as well as this drop in interest rates. While we believe the South Florida market will remain strong throughout the year 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 South Florida Housing Market Crash?
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Demand for Miami real estate is at all-time highs. Inventory for Miami single-family homes (2.8 months) and condos (2.9 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.
Long term, the hope is higher rates will lead to more days on the market (give buyers more choices). Higher rates will eventually lead to a moderation of the growth rate of pricing. With the growth rate of pricing cooling, total inventory could grow later. Historically, inventory expands six months after rates rise, but today’s market is unlike any other.
The total economic impact of a typical Florida home sale is $112,500, according to NAR. Miami-Dade County sold 2,891 homes in June 2022 and had a local economic impact of $325.2 million. Miami total dollar volume totaled $2.5 billion in June 2022. Single-family home dollar volume decreased 17.4% year-over-year, from $1.5 billion to $1.2 billion. Condo dollar volume decreased 19.8% year-over-year, from $1.6 billion to $1.3 billion.
Similarly, in Palm Beach County, the single-family home median prices increased 24% year-over-year in June 2022, increasing from $500,000 to $620,000. Existing condo median prices increased 31.6% year-over-year, from $237,500 to $312,500. Demand for Palm Beach real estate is at all-time highs. Inventory for Palm Beach single-family homes (2.3 months) and condos (1.7 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly. Locally, the greater share of Palm Beach luxury sales is also part of the reason for the large year-over-year increase in median prices.
Broward's total home sales decreased 22.9% year-over-year, from 4,121 to 3,178, because of the rapid rise of mortgage rates from an average of 3% to 6% in six months and low inventory. Single-family home sales decreased 20.1%, from 1,803 to 1,440. Broward County single-family home median prices increased 18.4% year-over-year in June 2022, increasing from $498,203 to $590,000. Demand for Broward real estate is at all-time highs. Inventory for Broward single-family homes (1.9 months) and condos (1.7 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.
Bottom line: We're not seeing any major home price decline or crash in the South Florida housing market just yet. The present 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 (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.