Miami-Dade’s exploding home prices set a record. Here’s when buyers could see relief
Miami-Dade County’s housing market barreled through September with another double-digit annual price jump, marking an astonishing 130 consecutive months — almost 11 years — of year-over-year price increases.
While the Miami Association of Realtors on Thursday happily called that a record streak of median-price hikes on single-family homes, that upward trend has closed the door particularly in recent years on many residents’ homeownership dreams.
Condominium median prices also ballooned last month in Miami-Dade by double digits, compared with last year. Condo midpoint prices now have jumped annually in 132 of the past 136 months.
As home prices keep climbing in South Florida, fewer and fewer people can afford to buy. That conundrum, worsened during the pandemic that began in March 2020, has caused a housing affordability crisis here like never seen before. In September, Miami-Dade reported 2,178 total sales, a 28% plunge from 3,031 sales the prior year, according to the newly released monthly housing report. Broward County had 2,348 sales in the same month, a 25% drop from 3,136 home closings in September 2021.
Buyers could get relief, if experts’ predictions for the real estate market come to pass. The dwindling demand is expected to force sellers to eventually lower prices. And median prices fell slightly month-to-month in July and August, but remained higher than a year ago.
“Sellers are still anchoring their expectations from the early 2022 demand. They are not moving sufficiently down,” said Mariya Letdin, a business professor at Florida State University. “That typically happens. People are quick to raise prices, but adjusting down takes longer.”
In Miami-Dade in September, median prices of single-family homes advanced 17% to $568,000, up from $485,000 a year ago, while condo prices soared by about 20% to $395,000 from $330,000. Meanwhile, in Broward midpoint prices for single-family homes increased by 13% to $565,000 from $499,450, and jumped for condos by 24% to $265,000 from $213,000.
Price declines are expected to take hold in the next six to nine months, said Letdin, who has expertise in real estate and banking.
Unhappy sellers can blame shrinking demand, limited inventory and high mortgage rates as culprits finally predicted to blunt the South Florida housing juggernaut. Miami-Dade has only 3.5 months of both houses and condos available, and Broward has an even thinning housing inventory, with 2.7 months of houses and 2.2 months of condos. A balanced housing market, according to real estate experts, consists of five to seven months of inventory.
Consistently rising mortgage rates — prompted by the Federal Reserve’s massive push since early this year to boost its benchmark interest rate to thwart inflation — have many people putting their home-buying plans on pause. In October, national leading mortgage lender and backer Freddie Mac raised its average 30-year fixed mortgage rate to a hair below 7%, up from about 3% a year ago. That means typical monthly mortgage payments of today’s buyers are sharply higher than people who bought homes last year or since the pandemic emerged.
Anxiety as motivation
Dr. Lawrence Rolle, 28, saw no other choice but to buy in this pricey housing market, which has been just as cruel to renters. He needed a stable place to live at least until 2025, when he expects to conclude his medical residency at University of Miami Jackson Health System. Rolle searched for a house in Coral Gables, Overtown and Liberty City — communities the Atlanta native prized for their history. He could afford to buy thanks to a special physician loan that required zero money down.
After house hunting for a year, Rolle said anxiety crept in. Rolle lost out four times to cash offers. Propelled by wealthy people who keep migrating here during the pandemic, South Florida has nearly double the rate of cash homebuyers — about 40% in Miami-Dade and Broward last month — compared to the national average of 22%.
To make matters worse, Rolle needed to leave the room he rented at his friend’s home because a new tenant was set to move in. He worried at one point that he would become homeless, having to sleep in his car.
Influencers Realty Group real estate agent Phillip Calloway — someone with about four years of working with first-time buyers in South Florida — suggested early this year the doctor look at a 1,047-square-foot house in Liberty City with three bedrooms and a bathroom. It was a done deal for Rolle. He closed on the house in May for $340,000.
Rolle feels lucky he landed his home. Over the past two years, he’s seen fellow physician residents displaced.
“I know residents that I’m friends with who had to relocate,” he said. “People in the community are being forced out.”
Rolle said since the union he belongs to, the Committee of Interns and Residents Service Employees International Union in Florida, fought last year to get starting salaries for medical residents boosted from $45,000 to $58,000 more of them can buy homes. He’s hoping Miami-Dade’s home prices will steadily drop in the coming months to give others a chance to buy.
“People are being displaced who make Miami. We are losing the city,” Rolle said. “We need changes. It is a critical period. I’m hoping things crash, even as a homeowner. I plan on having this home forever. I prefer for people to live and not suffering.”
Miami-Dade experienced its first month-to-month price drop in July, after prices steadily climbing from late 2021. Prices dipped again in August, but then rose in September.
‘Tough pill to swallow’
South Florida’s first-time homebuyers like Rolle have faced challenges for years. Calloway found that even though interest rates were lower at the start of the pandemic, some buyers were caught off-guard by the strong competition from cash buyers.
“A lot of first-time buyers were priced out of the market because they couldn’t get their offer accepted,” the real estate agent said. “If you’re getting in a bidding war and you have no money [to put] over appraised value and no money to close, your offer is not getting accepted.”
In recent months. Calloway has noticed more homes are staying on the market longer. Buyers have more ability to negotiate prices and face fewer competitive bidders for homes.
“Now, if I’m a first-time homebuyer, I don’t have to worry about 15 offers competing against me,” he said. “In most cases, I haven’t written a contract putting money over appraised value in a few months.”
On the other hand, Florida State’s Letdin said home sellers who still expect to make a tidy profit are slow to drop asking prices.
“That’s not the market anymore. It’s a tough conversation with sellers,” she said. “It’s a tough pill to swallow. Bad news takes longer for residential sellers to absorb.”
This story was originally published October 21, 2022 at 5:30 AM.
