Home sales plunge in South Florida’s housing market slowdown

Existing home sales in South Florida plunged during the first three months of the year, however, the steady stream of outside buyers pushed median prices of houses and condominiums higher, making them still unaffordable for many local residents.

Miami-Dade County recorded 5,607 sales of single-family homes during the first quarter, a 40% drop from 9,391 closings during the same period last year. In Broward, quarterly sales dropped 27%, to 6,517 single-family house purchases from 8,949 a year ago.

In March, single-family median home prices rose in Miami-Dade and Broward counties, according to the housing market update released Friday by the Miami Association of Realtors.

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Miami-Dade’s median price was $570,000 for houses, up from $540,000 a year ago. Single-family house prices have risen steadily since December, approaching Miami-Dade’s historic high of $579,000 posted last summer. Broward’s median price tag last month was $565,000, a jump from $545,000 in March 2022.

Condo midpoint prices, meanwhile, held last month at $400,000 in Miami-Dade, same as the prior year. In Broward, condo prices rose to $269,500, a boost from $238,500 last March.

Although the South Florida housing market has begun slowing after its frenetic peak pandemic pace, most budget-conscious and first-time homebuyers remain sidelined because they still can’t afford to buy homes.

Jason Damm, assistant professor of professional practice in finance at the University of Miami, said the influx of remote workers and corporate expansions continues to cushion the regional housing market.

“At the beginning of 2022, when rates were still low and we were coming out of the pandemic, the market got a little crazy and it overstepped. It became too much of a sellers’ market. We saw that with the drop in inventory to one of the lowest levels in five to 10 years. It became a hot market. We experienced rapid price growth,” Damm said.

“Now we’re cooling off. The market is healthier than where it was then. We’re going into a post-pandemic normal. It’s stabilizing.”

Still, higher-earning professionals from the Northeast and West Coast keep coming here, propping up home prices. They join the many others who relocated the past two years to South Florida for the region’s warm climate, lenient COVID-19 restrictions and lean taxes. Companies have followed the movement, opening offices in Miami, including hedge fund operator Citadel, private equity firm Thoma Bravo and French bank BNP Paribas.

The implications of the lofty housing market has politicians concerned about potential detrimental effects on the area labor market and economy. For example, former Florida Gov. Jeb Bush, who has largely kept a low profile recently, spoke emphatically Wednesday at the Miami Tech Summit about the need for the emerging tech sector to engage local residents — many of whom can no longer afford the city.

“It’s important to realize there are a lot of people struggling and the challenges we face,” Bush said. “A lot of people can’t afford to live here.”

While the incomes of technologists that have moved from cities such as San Francisco or New York may allow them to more easily deal with South Florida’s housing affordability crisis, the former Republican governor and Miami resident is concerned local residents are getting left behind.

“Our income has to grow as fast or faster than the cost of living,” he said. “A lot of people’s income hasn’t grown at the same speed a lot of newcomers have experienced. The costs of [property] insurance, getting to and from work and cost of housing have grown exponentially.”

Close to half of all March home transactions in South Florida closed with cash, a likely result of many purchasers avoiding higher interest rates. Freddie Mac now has a 6.39% fixed interest rate on a 30-year mortgage, up from 5.11% a year ago. Last month, Miami-Dade reported 41% of home closings were handled in cash, while 40% of them in Broward were cash deals, far above the national average of 29%.

Since the competitive push to buy has eased the regional housing inventory has nearly doubled over the past year. Miami-Dade has 3.5 months of houses and 4.7 months of condos available to buy. Broward has 2.7 months of houses and 3.2 months of condos on the market.

Recent homebuyers like Kassie Meiler found a challenging situation, despite more options in the housing market. Meiler, 27, founder of her social media agency Goat Social Media, landed a one-bedroom condo in Fort Lauderdale for $275,000 in December.

“I love South Florida and knew I wanted to be in Fort Lauderdale and close to Brightline in Miami,” said Meiler, a New York native. “I put four offers in, with three offers being for condos in the same building. The condo I got ended up being the best one.”

There was one catch: Meiler bought a unit that needed renovations. She spent about $60,000 renovating her 780-square-foot condo, tearing up her bathroom and replacing the carpets with a herringbone-patterned vinyl flooring.

“I ended up fixing everything,” she said. She tells buyers looking today to avoid holding out for perfection, saying, “If it’s something you can change, change it.”

Sellers are expected to luck out in South Florida’s busy summer home-selling season. However, expectations remain uncertain for autumn, winter and beyond due to the lackluster economy, geopolitical concerns and the volatile stock market.

Real estate experts expect condo prices to fall in late 2023 and early 2024, primarily the result of additional supply from developments finishing that started in recent years.

People holding out for a house in South Florida might want to strive to buy sooner rather than later, experts say. Despite falling sales that began last summer, single-family home prices are expected to hold steady or increase due to limited inventory and high land costs.

Another factor expected to affect the real estate market as early as January is a priority bill by Gov. Ron DeSantis that would limit buying ability of foreign buyers from seven countries, including China, Cuba, Venezuela, and Russia.

The potential blowback has Ron Yanks, a Broward regional manager for the Keyes Company real estate agency, worried because 10% to 12% of his branch’s home sales involve foreigners. He said both demand and prices will crumble, if this legislation passes in its current form and the governor signs it into law.

If foreign buyers limited by this legislation are “the highest and best people to buy your property, then yeah it will effect value,” Yanks said. “It’s not the open market anymore. I’m limiting my market.”