Rising Interest Rates Bring Uncertainty to South Florida Real Estate Market
As 2023 nears its conclusion, South Florida’s real estate landscape is undergoing notable shifts, but the future trajectory remains uncertain as we approach 2024.
Fluctuating home inventory has enticed some sellers to reduce prices, while soaring insurance rates and taxes have prompted potential buyers to exercise caution.
Furthermore, elevated mortgage rates have cast a shadow over the South Florida housing market. These rates, currently at a historical high, have led some prospective buyers, including veterans like Larry Burns, to reconsider their plans.
“It’s nearly impossible for anyone,” Burns remarks. “I’m a veteran, and even those rates have risen.”
Michelle Smith, a seasoned mortgage broker, concurs, highlighting the 8 percent mortgage rate as the highest in 23 years. Nevertheless, she emphasizes the sustained demand for homes, and bidding wars are still in play, despite the high mortgage rates. Smith advises potential buyers to consider making a purchase with an eye toward future refinancing, provided they are comfortable with the initial payments and their budget allows it.
In response to whether individuals should take the plunge in the current market, Smith suggests, “Yes, but only if they can afford it.”
For Larry Burns, lower interest rates are the determining factor. “If interest rates were lower, I would probably do it,” he states. “My kids live in Charlotte, North Carolina, so I don’t want to sell and go up and pay a high interest rate that may not match what I have down here.”
Amid rising inflation, housing costs, stagnant wages, and the growing chasm between renting and owning, achieving homeownership becomes a more formidable challenge.
CBS Miami has delved into the data from the Health Resources and Services Administration to uncover the income requirements for housing affordability in South Florida:
Miami-Dade County, 2021
A single adult would need an annual income of $32,982 to cover basic necessities, equivalent to approximately $16 per hour or $2,749 per month.
Housing consumes 45% of the $2,749 monthly income.
A single adult and one school-age child would need an annual income of $52,955, translating to about $25 per hour or $4,413 per month.
For a family of two adults and two school-age children, an annual income of $70,790 is required, roughly $34 per hour (or $17 with two income earners) and a total of $5,899 per month.
These income breakdowns underscore the financial challenges faced by individuals and families in South Florida as they strive for homeownership.
While the direction of South Florida’s real estate market remains uncertain, potential buyers and sellers should remain informed, patient, and adaptable in the face of changing market conditions.