Home Prices Soar in South Florida Real Estate Market Despite Significant Drop in Sales
The real estate market in Miami-Dade County experienced record-breaking prices for homes sold in June, despite a significant decline in sales due to higher interest rates. Industry experts provided a pessimistic outlook for prospective homebuyers, predicting that prices would either remain stable or continue to rise.
According to data from the Miami Association of Realtors, total home sales in Miami-Dade and Broward during the first half of 2023 were considerably lower compared to the same period in 2022. Miami-Dade recorded 12,605 closings, a sharp 33% decrease from the 18,925 closings in the first half of the previous year. Broward followed a similar trend with 15,500 transactions, representing an 18% drop from 18,838 in 2022.
Despite the decline in sales, home prices reached all-time highs. In June, the median sales price for single-family homes in Miami-Dade reached $622,500, while condos reached $418,000. These figures surpass the previous peak of $620,000 for single-family homes in May. In comparison, prices in June 2022 were $579,000 for houses and $410,000 for condos.
Broward also experienced an increase in home prices, with a median sales price of $615,000 for single-family homes and $280,000 for condos. These figures indicate a rise from $590,000 and $265,000, respectively, in June 2022.
Real estate experts attribute the decrease in buyers to higher interest rates. As of July, the average 30-year fixed-rate mortgage stood at 6.78%, compared to 5.54% a year prior. However, those who are actively purchasing homes are willing to spend more due to the limited inventory available.
Contrary to earlier predictions of a potential housing bubble, the market has remained robust, and Miami is considered an attractive destination. Ron Shuffield, CEO of Berkshire Hathaway HomeServices EWM Realty, noted the resilience of the market, saying, “Interest rates have slowed down the overall market, but Miami continues to be a desirable location compared to other cities worldwide. Perception plays a significant role in long-term community success, and Miami is viewed as the future.”
The shortage of inventory persists in South Florida, with less than ideal market balance. Normally, a balanced market would consist of six to nine months of listings. However, Miami-Dade has only 3.3 months of houses listed for sale and a five-month supply of condos. Broward fares even worse, with 2.7 months of single-family homes and 3.4 months of condos available on the market.
The continuous influx of individuals relocating to South Florida is a noteworthy trend. One such example is Dave Silver, a 31-year-old who made the move to the MiMo neighborhood in May 2023 to extend REC Philly, an entertainment incubator he co-founded, to Miami. Silver, an avid cyclist, sought a residence within convenient biking distance of REC Miami’s location in Little Haiti.
Reflecting on a two-day property shopping experience involving visits to 12 different locations, Silver expressed initial apprehension about the high cost of living in the area. Given his background as a startup entrepreneur from Philly, he questioned whether his budget would suffice while ensuring his safety. However, he ultimately found satisfaction in what he discovered.
Silver now pays $2,400 monthly for a one-bedroom condo, which is equivalent to the combined rent that he and his two roommates paid for a three-bedroom apartment in Philadelphia. The additional amenities, such as a patio and gym, coupled with the proximity to Key Biscayne, justified the price for him.
The allure of South Florida for remote workers, executives, and corporate expansions grew during the pandemic due to its business-friendly environment, absence of state income tax, and pleasant climate. Shuffield, a real estate agent, confirms that prospective buyers, even from states like California, Illinois, and New York, continue to show interest. Furthermore, there has been an increase in inquiries from Latin America, particularly since the arrival of soccer star Lionel Messi.
Out-of-state buyers often outcompete long-time residents and natives in the housing market due to their higher salaries. For many South Floridians who have long waited to purchase a property, the challenges persist: intense competition and unreachable prices. Additionally, cash remains the preferred method of payment, with 43.5% of all deals in Miami-Dade and 40.9% in Broward being closed in cash, nearly double the national average.
Experts in the real estate industry project an ongoing high demand for South Florida homes. In June, members of the Miami Association of Realtors reported 233,675 showing requests, a 7% increase compared to the previous year.
Prospective buyers contemplating a purchase in the region are advised to act sooner rather than later, according to Mariya Letdin, a business professor at Florida State University. The local job market suggests that home prices will remain elevated in the foreseeable future.
According to the U.S. Bureau of Labor Statistics, the metropolitan areas of Miami, Fort Lauderdale, and West Palm Beach currently have a strong employment market with 2.89 million people employed and a low unemployment rate of 2%. These conditions have not been seen in South Florida for nearly 20 years. With such favorable employment prospects, potential homebuyers are expected to have stable job conditions that can support a mortgage.
Shuffield, a real estate expert, expressed confidence that home prices in the region will remain strong and not decline to pre-pandemic levels any time soon, if ever. The high demand for properties and the ongoing improvements being made through remodeling projects in many neighborhoods are considered positive factors for those interested in moving to the area. Shuffield concludes by emphasizing the importance of actively participating in the real estate market to take advantage of the current opportunities.