Home prices in South Florida continued their steady rise in October while home prices nationwide set a record, according to a closely watched housing market barometer.
In Miami-Dade, Broward and Palm Beach counties, home prices rose 6.5 percent compared to October 2015, the S&P CoreLogic Case-Shiller Index found. Nationwide, home prices were up 5.6 percent year-over-year in October, breaking a record high set in September.
Experts say the growth doesn’t signal another housing bubble: South Florida home prices still stand at 78 percent of their peak in 2006, when cheap credit and speculation artificially inflated values.
6.5 percent Year-over-year growth in South Florida home prices in October
“A decade ago, growth in the housing market was driven primarily by loose and predatory lending, speculation and over-building,” Svjena Gudell, chief economist for real estate website Zillow, said in a statement. “The growth we’re seeing today is, instead, a natural reaction to basic economic fundamentals. More and better opportunities for American consumers means high demand for housing, and that demand is not being met by an adequate supply of homes for sale — and so prices rise.”
So far in 2016, South Florida home prices have grown at an average rate of 6.6 percent, compared to 7.9 percent in 2015 and 12.1 percent in 2014. A strong dollar is slowing the foreign investment that brought the local housing market back from the dead after the recession.
High prices coupled with lagging wages mean the pace of growth should slow more, according to David Blitzer, managing director at S&P Dow Jones Indices.
“Mortgage interest rates rose in November and are expected to rise further as home prices continue to outpace gains in wages and personal income,” Blitzer said in a statement. “With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends. Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely.”
The metro areas nationwide with the fastest annual rates of growth in October were: Seattle (10.7 percent), Portland (10.3 percent), Denver (8.3 percent), Dallas (8.1 percent) and Tampa (7.8 percent).