Closed sales have gone down in South Florida, with more inventory coming back to the market, signaling a potential shift in what has been a two-year housing boom.
“There is definitely a slow down, “said Patty Da Silva, real estate broker with Green Realty Properties in Cooper City. “It’s palpable. We have less visits and less offers. We don’t know if that means buyers are taking a little break or if this regrouping is part of a larger trend.”
Here is where the South Florida housing market stands in terms of sale prices, closed sales, and rents:
Numbers from the Broward, Palm Beaches and St. Lucie Realtors, indicate that demand is lessening and some buyers are dropping out of the market.
One indicator is closed sales, which tracks the number of transactions that close in a given month. According to numbers from the Broward, Palm Beaches and St. Lucie Realtors, closed sales dropped 20% in Palm Beach County compared to the year before, 12% in Broward County and 12% in Miami-Dade County.
“While prices might continue to rise, the number of transactions starts to fall because people are getting sidelined. On the buyer side, the price is just too high and for some sellers, if they sell their house, where are they going to go,” said Ken H. Johnson, real estate economist with Florida Atlantic University.
Active listings have also started to increase as some sellers, believing that the market is reaching the top, are trying to list their homes now to try and get the best price, noted Whitney Dutton of the Dutton Group in Fort Lauderdale.
Active listings have increased 23% over the last year in Palm Beach County, 5% in Broward County and less than 1% in Miami-Dade County.
“They [sellers] think we are at the height of what values are,” Dutton said. “They think now is a good time to cash out.”
Despite sales dropping, the rise in home prices hasn’t slowed down yet, mainly due to lack of inventory and an influx of newcomers still heading down to South Florida.
The median sale price for a single-family home in Palm Beach County shot up almost 30% to $615,000 when compared to the year before. In Broward County, the median sale price went up 26% to $586,000. In Miami-Dade County, the median sale price is $575,000, an increase of 15% to the year before.
“We are in such an inventory shortage, and we have people moving here in such unprecedented numbers, that it’s just working to were the prices are holding,” Johnson said.
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Mortgage rates have continued to tick up over the past few months as the Federal Reserve tries to combat inflation. Currently, interest rates are almost 6%, a stark increase from the low interest rates of 2.75% in 2021.
The uptick has made homebuying even more unaffordable when combined with the record high sales prices.
“I think the buyers feel a little uneasy at the moment: ‘how can I pay so much for a home and have the mortgage payment be high as well,” said Da Silva. “Some buyer are taking a step back and hoping for some relief on prices or if the rates are going to continue to rise. “
It’s not just interest rates that have helped cool buyer demand, Dutton added. Fears of a recession and a possible stock market correction have some buyers wary of putting more of their money on a down payment for a home.
Rental increases have made it difficult for people to find affordable places to live and it doesn’t appear that the trend will be slowing down anytime soon.
The median rent for at two-bedroom apartment for West Palm Beach increased 30% to $2,108 compared to the year before. In Fort Lauderdale, the median rent for a two-bedroom apartment increased by 22% to $1,968. For Miami, the median rent for a two-bedroom apartment rose 26% to $2,122, according to numbers from Apartment List.
Inventory shortages continue to plague the South Florida housing market, contributing to the rise in prices. There are a few new developments on the way, though not enough to help with the shortage.
- Almost 300 units are heading to West Palm Beach in a new apartment complex. The plan is for a six-building, four-story complex, called Broadstone Locklyn. It will bring a total of 280 units, ranging from 822 sq. feet to 1,326 sq. feet, to the market.
- A development featuring 107 new homes also recently opened up for onsite sales and model home tours in Jupiter. Called the Bridgewater community, it is built by a division of PulteGroup on some of the last areas of larger plots of land in South Florida. Homes will be on one-acre lots.
- A group of luxury townhomes is headed to Delray Beach on a .33-acre plot of land a few minutes west of the Intracoastal Waterway. The plan is to build three, two-story units that will be between 2,200-2,740 square feet ranging in price from $2.5 million-$3 million.