Resale prices of South Florida’s existing single-family homes continued to rise in January, outpacing annual growth nationwide, according to a closely watched market barometer. But the rate of growth is slowing down, signaling a more stable market, analysts said.
Housing prices in Miami-Dade, Broward and Palm Beach counties grew 8.3 percent year-over-year, according to the S&P/Case-Shiller Home Price Indices. That was the second highest annualized rate of growth in the nation, after the Denver area, where prices grew 8.4 percent.
Nationally, home prices were up 4.5 percent compared to January 2014.
South Florida had seen double-digit annual pricing growth in 2013 and 2014 as the real estate market recovered from the recession. But monthly growth slowed down in the latter part of the year and that trend appears to be continuing into 2015, said Kwame Donaldson, an economist at Moody’s Analytics.
Local housing prices grew by .9 percent from December to January, putting South Florida in the middle of the pack of the 20 metro areas surveyed nationwide by Case-Shiller.
That was the same as the rate of growth between November and December. (The numbers have been adjusted to account for seasonal changes in the market).
The cities with the most monthly growth were San Diego (1.9 percent), Portland (1.5 percent), San Francisco (1.1 percent) and Chicago (1.1).
“Miami has had a huge acceleration lately, and a natural slowdown was inevitable,” Donaldson said. “But there is still room for slow growth.”
David Guarino, an analyst who covers Florida housing at California-based John Burns Real Estate, said that South Florida’s growth over the last year had been driven in part by low inventory for single-family homes and an influx of foreign cash.
“There’s more demand but the supply is historically tight, so we’re seeing an imbalance,” Guarino said.
Miami-Dade County currently has a 5.5 month supply of single-family homes, according to the Miami Association of Realtors. A healthy market is considered to have between six months and nine months of supply.
And room for new construction is limited, pushing up the value of existing homes, said Manuel Garcia-Linares, an attorney who specializes in real estate at the law-firm Richman Greer in Miami.
“There’s not many places in Miami where developers are building single-family homes unless you’re going out west or up north,” Garcia-Linares said. “There really isn’t a lot of land to build on.”
Because condos dominate the new construction market and single-family prices are going up, affordable housing is becoming harder to find.
Average hourly wages for private-sector employers grew by 2.2 percent over the year, according to Department of Labor statistics, failing to keep up with the increase in housing prices.
“We’re finding that it’s very difficult for people who aren’t already wealthy to purchase a new home in Miami,” said Alayne Unterberger, a researcher on social and economic policy at Florida International University. “Buying a home requires better credit, a bigger down payment and more money than it did before recession.”
The most recent Case-Shiller numbers show that prices in South Florida have returned to 2004 levels, about 30 percent lower than their peak during the real estate boom in 2006.
As the market slows down, real estate watchers say they aren’t worried about a bubble forming for single-family homes.
“I think the underlying fundamentals are strong,” said Jon Gelman, who practices real estate law at Greenberg Traurig. “Interest rates are still favorable, the job market is still favorable, and so are the demographic trends of people wanting to move down here.”
After Miami and Denver, metro areas with the largest annual growth include Dallas (8.1 percent), San Francisco (7.9 percent), Portland (7.2 percent) and Seattle (6.8 percent).