South Florida home prices rise by double digits, despite big interest-rate jump
Home prices in Miami-Dade and Broward counties rose by double digits over the past year, despite steadily increasing interest rates on mortgages. Above is an aerial view of residences in North Bay Village near Miami Beach.
Despite a sharp increase in interest rates on mortgages and other challenging market dynamics, South Florida’s median home prices again posted double-digit annual growth in October.
Prices for single-family houses and condominiums in Broward and Miami-Dade counties rose 10% to 20% last month compared with October 2021, according to the latest monthly sales report from the Miami Association of Realtors.
Click to resize
While the residential real estate market is wilting in many parts of the United States, the price of homeownership in South Florida continues moving further out of reach for a big chunk of the middle class. That’s despite a decline in total annual home sales and the highest inventory of homes available this year in the region, in addition to interest rates more than double last year’s level.
How can this housing market keep getting more expensive when the fundamentals typically needed to hold or reduce prices are in place? There’s still a long line of buyers from across the country and overseas buying homes here, undaunted by the price tags, real estate experts say. That leaves many aspiring middle-income and first-time buyers waiting on the sidelines, continuing to rent.
Miami-Dade’s median sales price in October stood at $575,000 for single-family homes and $388,531 for condos. Houses once sold for 17% less a year ago, a now nostalgic $490,000. Condos sold for 19% less in October 2021 at $326,790.
Broward’s prices hovered last month at $540,000 for a house, 10% higher than the $489,000 median last October. Condo prices jumped 15% to $262,000, compared with $227,950 in October 2021.
Eli Beracha, professor and director of the real estate department at Florida International University, said the “significant increase in population over the last two years” keeps pushing up prices, despite the strong improvement in supply of homes on the market.
Indeed, the inventory of houses to buy in Miami-Dade reached a 3.7-month supply in October — the most in 12 months — and a 3.8-month supply of condos, the best mark of 2022. Broward, meanwhile, has 2.9 months of houses available and 2.4 months of condos.
Beracha noted that a balanced real estate market for buyers and sellers consists of five to seven months of housing inventory. South Florida still falls short, giving sellers the upper hand.
The higher home prices and escalating interest rates have thwarted many local prospective buyers. Last week, the mortgage provider Freddie Mac reported a 6.61% average rate for a 30-year fixed mortgage, compared with 2.98% last year.
“Because of the high interest rates, the ability to get a mortgage is harder for middle-income folks,” said real estate agent Cordelia Anderson, founder of the Miami firm I Heart Real Estate LLC. “They are saying they want to wait until next year to see what happens with interest rates.”
Last month, Miami-Dade reported 2,067 home sales, a 44% plunge from 2,978 closings in October 2021. Broward had 2,222 sales, a 34% decline from 2,967 closings. Anderson said she saw a pronounced pause among buyers looking to spend between $350,000 and $800,000 for a home.
About 40% of those who did buy a home in South Florida in October paid cash, approaching double the national average of 24%.
Going into next year, Selma Hepp, interim chief economist at CoreLogic, a California-based financial service and research company, said South Florida’s housing market will likely calm to a 4% annual price increase by fall 2023. Don’t expect annual price declines next year in the region, experts say.
Higher-income individuals will continue to “sustain the market,” Hepp said.
This story was originally published November 22, 2022 5:30 AM.
