A Cooling Trend Brings Relief to Homebuyers in South Florida
As we step into 2023, prospective homebuyers in South Florida are sending a clear message – they have given up trying to buy homes in the area. The annual sales in January in Miami-Dade and Broward counties saw a significant decline, according to the monthly sales report released by the Miami Association of Realtors. Experts suggest that this housing slowdown after two years of rapid growth could bring some relief to residents waiting to buy a bigger house or move to a better neighborhood.
The sales in Miami-Dade plummeted by 47% in January, with 1,402 transactions compared to 2,645 sales the previous year. Broward also experienced a similar decline, with a 39% fall in closed home deals, from 2,559 in January 2022 to 1,552 last month. However, sellers in both counties remained stubborn, and home prices rose last month compared to the previous year. The median sales price of a single-family home in Miami-Dade was $545,000, up from $520,000 in January 2022. The midpoint price of a condominium was $400,000 compared to $360,000 a year ago. Similarly, in Broward, single-family home prices last month jumped to $540,000 from $500,000 in January 2022, and condo prices were $269,900, a boost from $240,000.
The current situation in the South Florida housing market is due to a decrease in inventory caused by a sudden rise in interest rates, which led to fewer sellers willing to upgrade. Although experts have predicted a gradual correction in the housing market, the demand for the limited supply of homes for sale continues to drive year-over-year prices. The question is whether the demand will slow down enough for annual home prices to fall.
The market has been going south in a zig-zag fashion since October, with a consistent decline in sales prices in Miami-Dade. In October 2022, the median sales prices were $575,000 for single-family homes and $395,000 for condos, which fell to $545,000 and $400,000, respectively, in January 2023. Broward also saw monthly fluctuations in prices.
Despite the decline in sales, certain condo sellers are finally accepting offers 15% below the asking price. Sales prices are expected to fall for condos priced between $500,000 and $3 million, as most buyers in this segment are either investors or people who depend on financing.
David Siddons, a real estate agent with Douglas Elliman, believes that sellers will eventually have to accept that the market has slowed down. He said, “All of the sellers are going to have to wake up. Some sellers are not just moving.” However, Siddons expects monthly prices to remain strong, as many single-family home buyers continue to come from out of state and purchase South Florida homes and condos with cash.
Nearly half of home deals in January were cash purchases in Miami-Dade and Broward, much higher than the 29% national average. While this trend shows strong demand, residents like Christina LaBuzetta are concerned about the city’s protracted housing affordability crisis and its impact on the area’s economic future.
The economy of supply and demand dictates the current housing market situation in South Florida. While prices may slightly drop year-over-year at some point in 2023, experts predict that they won’t fall significantly. The housing shortage is severe, and the area needs between five to ten years’ worth of new housing construction at the current pace of building. Higher interest rates since early last year have slowed down home building, and the housing shortage is unlikely to be resolved any time soon.
Feature Image: Vicki