South Florida Real Estate Blues – Pending Home Sales Down Almost 20% In Miami And Fort Lauderdale, While Palm Beach Drops Off By Nearly 10%

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

South Florida’s real estate market has long been considered a key indicator of the state’s economic fortunes, and new data suggests there may be cause for deep concern. Redfin’s (NASDAQ:RDFN) National Home Data survey for March and April shows that pending home sales were down by almost 20% in Miami and Fort Lauderdale, while Palm Beach suffered a fall-off of nearly 10%.

Miami suffered the largest decline, with a 17.4% drop compared to the same period last year, and Fort Lauderdale checked in at minus 16%. The ritzy enclave of Palm Beach, where pending sales fell by 8.7%, is also showing signs of strain. These sharp fall-offs are especially concerning when you consider that the Redfin study showed an increase in pending home sales in almost half of America’s metropolitan areas.

Don’t Miss:

The dramatic declines, plus the disparity in market performance compared to the rest of the country, have many analysts wondering, “What’s wrong with South Florida?” It’s worth noting that the numbers, although disturbing, may not be as skewed as they appear. Redfin’s analysts believe the nationwide increase may only be temporary because much of the study data was collected before mortgage rates hit a six-week high of 6.95% in early April.

The report also shows that the average mortgage payment in America was already at an “all-time high” of $2,813. Based on that, the average borrower would need to earn $8,439 per month to reach the 3-to-1 ratio of income to mortgage payment that most lenders and underwriters prefer for loan approval. South Florida buyers are likely to see themselves priced even further out of the market as interest rates climb higher.

Although South Florida still has a strong appeal with prospective buyers due to its temperate winters, the area is also struggling with several unique challenges that are only growing in severity.  For many years, condo sales were the proverbial “bell cow” in South Florida real estate, but a rash of new regulations covering everything from building codes to condo association reserve budgets are troubling this once-reliable sector.