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.
In August, closed sales of single-family homes statewide totaled 24,877 units, down 15.8% from August 2021, according to data from the Florida Realtors Research Department in collaboration with local Realtor associations. The median sales price for single-family homes was $407,000, up over 15% year-over-year. The Median Percent of the Original List Price Received was 98.5% in August 2022.
The average sale price reported for the month (i.e. total sales in dollars divided by the number of sales) was $555,148, +11.9%. The sum of the sale prices for all sales which closed during the month was $13.8 Billion, -5.8% YoY. It is a powerful predictor of the strength of the real estate business in a market, and real estate professionals, investors, and analysts are especially interested in it. Months Supply of Inventory in the Florida Housing Market was 2.4 months, +84.6% YoY.
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 the 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. Miami-Dade County total home sales outperformed its pre-pandemic totals as single-family home inventory rose for the fourth consecutive month in August 2022, according to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.
Miami-Dade County single-family home median prices increased 10.1% year-over-year in August 2022, increasing from $500,500 to $551,250. Miami single-family median prices have risen for 129 consecutive months (10.75 years), the longest running streak on record.
Months’ supply of inventory for single-family homes increased 43.5% to 3.3 months year-over-year in August, which indicates a seller’s market. Inventory for existing condominiums decreased by 26.1% to 3.4 months, which also indicates a seller’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.
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.
Similarly, in Palm Beach County, the single-family home median prices increased 17.7% year-over-year in August 2022, increasing from $480,000 to $565,000. Existing condo median prices increased 25.4% year-over-year, from $232,000 to $291,000. Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Inventory for Palm Beach single-family homes (2.7 months) and condos (2.1 months) is low. Also, one of the supports for home prices is rents and rents are rising strongly.
Broward single-family home sales decreased 26% year-over-year, from 1,625 in record-breaking August 2021 to 1,202 in August 2022, due to a lack of inventory and rising mortgage rates. Broward's existing condo sales decreased 16.6% year-over-year, from 1,797 record-breaking August 2021 to 1,498 in August 2022, due to a lack of inventory and rising mortgage rates.
Months’ supply of inventory for single-family homes increased 66.7% to 2.5 months year-over-year, which indicates a seller’s market. Inventory for existing condominiums stayed even at 2.1 months, which also indicates a seller’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.
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 (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.