Lofty home prices expected to squeeze middle-class buyers in 2022 South Florida market
Escalating costs to buy homes in Miami-Dade could reach a point next year in which many people can’t afford homeownership, while more wealthy professionals from other parts of the country keep relocating here and buying houses and condominiums, area economists and real estate experts say.
The hot housing market also has certain homeowners here sitting on the sidelines, opting to stay in their homes rather than looking to sell and buy another house at seemingly the high end of the residential real estate cycle.
The latest housing data released last week by the Miami Association of Realtors shows this double-edged sword. The median price to buy single-family homes in the county in November jumped to $502,750, up 11% from $450,000 a year ago. The median price of condos soared 28% to $346,000 from $270,000 last year.
Of the 1,168 house sales closed last month, 98% of buyers paid full prices. On closed condo sales, 97% of buyers paid the asking prices. That underscores the strong demand to live in Miami and confirms that plenty of buyers, often from out of state or outside the country, have the money to afford the homes and condos even as prices keep increasing.
Also, the frenetic sales activity in 2021 pushed the county’s 35,961 sales of single-family homes and condos through 11 months past the annual record from 2013. The heavy sales volume has greatly depleted the supply of homes that remain on the market.
Florida International University economic and housing expert Ned Murray said a trend to watch in 2022 is the aggressive pace of inflating home prices in Miami-Dade County. Prices have increased by 34.5% since June 2020 and gone up since then by double digits or nearly that every month.
Murray doesn’t think the rapid price growth is sustainable, saying it is pricing out middle-class people who can’t afford the lofty home prices and apartment rentals. The shortage of property inventory has made the situation worse.
“The big issue is this will continue because of a supply shortage,” he said of the home price inflation. “We’re almost at a point where we’ve exhausted our inventory of homes. We’re certainly not constructing a level of housing supply that can help us with the supply and demand problems we’re having. We’ve never seen anything like this.”
Indeed, inventory of single-family homes in Miami-Dade declined 27.9% year-over-year in November to 2,805 active listings, from 3,889 last year, according to new Realtors’ association data. Condo inventory fell 48.1% to 7,179 listings, from 13,820 in November 2020. Total active listings at the end of November slid 43.6% to 9,984, from 17,709 a year ago.
Ken H. Johnson, an economist in Florida Atlantic University’s College of Business, said next year he expects homeowners to continue holding onto properties that they would have already sold in a balanced housing market. Because of the tight supply, they are opting not to participate in this booming South Florida market.
“As prices have gotten higher and higher, many people have just withdrawn from the potential sales process,” Johnson said. “What they’re worried about is, if they’ll be able to find another property. The tendency is to not take any action at all, because they’re worried about not finding new homes.”
Monthly supply of homes listed in Miami-Dade has fallen since July 2019 for single-family houses, reflecting strong demand. A balanced housing market between buyers and sellers typically means there’s six to nine months of homes available for sale. However, in November single-family home available inventory was only 2.1 months, while condo supply was slightly better at 3.7 months. However, both inventory numbers are sharp annual declines.
Citing the latest median prices of homes in Miami-Dade and Broward counties, EWM Realty CEO Ron Shuffield said Florida’s residential real estate values are catching up with other major cities in the country.
In Broward, median sales prices for single-family homes in November increased 14.1% to $485,000, compared to $425,000 a year ago. Similarly, condo median sales prices rose to $232,500, up 14% from $204,000.
Professionals with high-paying jobs, often in finance or technology, are moving to South Florida in growing numbers ready to buy or rent homes, Shuffield said.
“Looking at New York, California and Washington, D.C., their prices have been full for a number of years,” he said. “We always thought our prices were lower than they should be compared to Florida’s offerings. Now that higher-paying jobs are relocating to Miami, that’s going to have an impact on our value as well, with more demand on housing and vacant lots to build housing.”
Total value of single-family homes sold in Miami-Dade in November increased to $1.1 billion, a 15% jump from $932.6 million a year ago, according to Realtors’ association data. The value of condos sold last month soared 92.8% to $1.1 billion, from $586 million in November 2020.
Even the new omicron variant that has begun to disrupt business and industry won’t hinder the brisk buying in Miami next year, Shuffield predicted.
“We’ve been dealing with COVID now for 18 months,” he said. “The activity we’ve been experiencing since COVID first arrived is continuing.
“People are not changing their attitudes about buying or selling because of COVID. The variant has created some extra precautions but we still have the same number of people coming here looking for properties. We’re not getting any cancellations on purchases or listings.”
This story was originally published December 26, 2021 at 6:00 AM.
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