Miami-Dade housing prices stay hot as sales wane. Find out when price declines expected
South Florida’s home prices broke records yet again in June, despite a huge drop in sales compared with a year ago. The sales retreat finally may be a promising sign for buyers waiting on the sidelines for months hoping for cheaper price tags.
One housing expert predicted that regional home prices would begin a decline early in 2023, and by late next year fall by up to 30%.
Median prices of existing home sales sharply increased in Miami-Dade and Broward counties, as the limited supply of available homes continued pushing prices further out of reach for most buyers. The region remains in a protracted and severe housing affordability crunch, experts say.
Miami-Dade reported a median sales price of $579,000 for single-family homes last month, a jump from $500,000 a year ago, and $410,000 for condominiums, up from $340,000 in June 2021. In Broward houses fetched a median price of $590,000, up from $498,203 in June 2021, and $265,000 for condos from $221,000 a year ago, according to a June housing report released Wednesday by the Miami Association of Realtors.
Since September, there’s been a steady climb in prices from $485,000 in Miami-Dade for single-family homes. In Broward, it’s been the same monthly trend upward since November, for both houses and condos, from $485,000 and $232,500, respectively. Condo prices continue fluctuating in Miami-Dade, dropping slightly from May to June.
Meanwhile, sales activity plummeted in June compared with the previous 12 months. Miami-Dade reported a 30% drop, to 2,891 home transactions from 4,057. Sales in Broward declined 23%, to 3,178 from 4,121. Still, 44% of total homes sales in the two counties were cash deals, higher than the 25% national average.
In this long overheated South Florida housing market, tables are turning from sellers to aspiring buyers.
“Usually when you enter into a correction cycle, you see the sales decline. You see inventory increase, but the prices lag behind those leading indicators,” said Jack McCabe, owner of Jack McCabe Expert Services, a Deerfield Beach real estate and economic research firm. “We’ve had temporary artificial variables come together that are now changing.”
Home inventory improved slightly in both counties last month. Miami-Dade reported 1.9 months of houses and 1.7 months of condos for sale. Broward has 2.8 months of houses and 2.9 months of condos available for buyers.
Sellers can partially blame the slowdown in sales activity on increasing mortgage interest rates, after the Federal Reserve has multiple times boosted its benchmark interest rate . The average rate on a 30-year fixed-rate mortgage sits at 5.51%, up from 2.88% a year ago. It leaves buyers with less purchasing power, paying more money for less square footage than a year ago.
Prospective buyer Anthony Nunziata of Biscayne Park feels the effect of higher mortgage rates. The 45-year-old vice president of a real estate investment trust has shopped around for a 3-bedroom, 2-bathroom house to buy since July 2021. He’s playing the waiting game, hoping prices will cool.
“You don’t have any choice unless someone is going to come along and give me a million dollars to pay for a house,” he said.
Real estate developers are trying to offset swelling interest rates by building more condos.
“We can get worried about inflation — not being sure how long the situation will last — as well as the cost of building which is up worldwide,” said brothers and Melo Group condo developers Martin and Carlos Melo in a joint response via email.
Despite the slowdown in regional home sales activity, Edgewater’s Melo Group and co-living Downtown Miami pioneers PMG say they’re maintaining an annual increase in condo sales. PMG, in particular, recently converted its rental building Society Biscayne into The Elser Hotel & Residences, after an influx of demand from prospective buyers.
Looking ahead, McCabe said South Florida home buyers can expect more housing options and prices starting to decline early next year. One of the few lone wolves that called the 2008 regional housing crash long before it occurred, McCabe expects median sales prices to decrease between 25% and 30% by late next year and even more by 2024.
“We’re going to see fewer buyers from the Northeast,” McCabe said. “The ability to work remotely is changing as more companies want employees back to the office, as they’ve gotten the level of work under supervision. The interest rates have doubled.”
What’s more, the pace of corporate expansions or relocations to Miami will slow, McCabe said. That will greatly benefit local residents who for many months have been competing for homes against high-paid newcomers relocating from the Northeast, Midwest and West Coast, plus outside the United States.
Corporate executives, he said, will eventually hesitate to continue expanding and relocating workers here, if it means doubling their salaries to afford homes.
“We’re trying to roll the dice thinking that the market will correct itself,” said Nunziata, who earns $100,000 a year. ”We’re already starting to see some corrections. Houses that have been on the market are already starting to drop their prices.”
This story was originally published July 20, 2022 at 6:36 PM.
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