After several years of overheated gains, South Florida real estate may be in for a slowdown.
Prices have grown too high and the buyer pool is shrinking, say local brokers who are on the industry’s front lines. And it’s not just the usual summer doldrums.
“There are too many properties out there that are over-priced,” said Jeff Morr, an agent at Douglas Elliman and chairman of the Miami Master Brokers Forum, a local network of top real estate professionals. “The biggest thing that holds a property from selling is the price.”
The latest numbers from South Florida’s realtor associations confirm that resale prices are rising.
In Miami-Dade County, the median resale price for a single-family home hit $282,000 in May 2015, up from $250,000 in May 2014, according to a report released Tuesday by the Miami Association of Realtors. The price for a condo was $207,250, up from $186,500 a year ago.
At the luxury end of the market, new condos are going for $618 per square foot in Brickell and $869 in Miami Beach, with the highest-end projects selling for more than $1,000 per square foot. Single-family homes in exclusive Coconut Grove, Coral Gables and Miami Beach neighborhoods can also trade for more than $1,000 per square foot.
“Prices are getting too high,” agreed Cyril Bijaoui, a broker at Westside Estate Agency, a Los Angeles firm that recently opened a Coral Gables office. “Sellers’ expectations about what they can get have gone way up and people smell opportunities. But it’s creating buyer frustration and a definite slowdown.”
Broward County is seeing a similar price trend, especially for units in multifamily projects, according to a report from the Greater Fort Lauderdale Realtors.
The median resale price for condos and town homes in Broward grew to $135,000 in May 2015, up from $124,000 in May 2014. Single-family homes saw a smaller jump, rising to $297,000 from $295,000 the previous year.
Sales are still strong for single-family homes in both counties, rising 5 percent in Miami-Dade and .8 percent in Broward year-over-year.
But the condo market, where inventory is higher, has weakened: sales were down 2.6 percent in Miami-Dade and 9.4 percent in Broward.
Another factor holding the local market back: stagnant wages.
Between 2010 and 2013, Miami-Dade households saw their median income decline slightly to about $43,000, Census figures show. Broward’s median household income also barely budged at about $51,000.
Rising prices and static salaries have made South Florida one of the least affordable housing markets in the nation — and that’s putting a damper on buyers.
“The number of showings is not what you’d expect,” said Liza Mendez, a broker at Pedro Realty. “Something’s off. The market talks and we may have to readjust our prices.”
Buyers from Latin American and Europe have driven South Florida’s real estate market since the recession, but a strong dollar and currency crises abroad are limiting the pool of foreign money.
Foreign buyers — who often buy in cash — are still interested in purchasing property here but can’t afford ever-rising prices.
In Miami-Dade, all-cash deals fell from 56 percent of total sales in May 2014 to 49.5 percent in May 2015.
But Americans from the northeast and the west coast are helping buoy sales as they grow more comfortable with South Florida’s 50 percent deposit structure.
“The good news is that domestic buyers are making a big impact,” Bijaoui said. “People from Los Angeles are taking an interest in Miami, which is part of the reason our firm was eager to locate here.”
Even so, the market will need to correct its pricing in order to keep sales moving, said Christopher Zoller, a broker at EWM Realty International and president of the Miami realtor association.
“Most sellers are realizing that buyers are more educated and more cautious and are shopping around a little harder,” Zoller said. “We’re starting to see sellers getting more realistic on their pricing.”
While the market may be cooling down, developers still have plenty of luxury projects in the pipeline. But with fewer buyers on the horizon, they know it’s important to go for quality over quantity.
“We are seeing a steady flow of new projects coming in,” said Iris Escarra, a land-use lawyer at Greenberg Traurig. “But many developers are leaving units on the table in order to build luxury projects with less density but bigger units and more amenities.”