SOUTH FLORIDA’s HOUSING MARKET IS STRONG.
Home prices continue to climb and inventory is still quite limited. It is a seller’s market with many sellers getting top dollar. It is also because more people and businesses in the United States are relocating to South Florida from high-tax, high-density areas (no income tax, pro-business). An increase in foreign purchasers is also helping the state of Florida’s property market.
The Miami metropolitan area is the seventh-largest metropolitan area in the United States and the 72nd-largest metropolitan area in the world. The metropolitan area includes the City of Miami (the financial and cultural core of the metropolis), Miami-Dade, Broward, and Palm Beach counties which are the first, second, and third most populous counties in Florida. Greater Miami includes a larger area defined by the United States Census Bureau as the Miami-Port St. Lucie-Fort Lauderdale Combined statistical area.
This larger area includes Martin, Saint Lucie, and Indian River counties to the north of Palm Beach County. The typical value of homes in Miami-Fort Lauderdale-West Palm Beach Metro is $445,114. Miami-Fort Lauderdale-West Palm Beach Metro home values have gone up 13.5% over the past year and Zillow predicts they will rise 2.0% in the next twelve months.
The Miami real estate market also continues to remain strong even though the interest rates remain high. According to a new report by Goldman Sachs analysts, the Miami metropolitan region is predicted to be one of the few major housing markets that do not suffer a house price fall in 2023. Goldman Sachs predicts that Miami’s home prices would climb modestly by the end of the year, making it one of only two large markets in the research to see an uptick.
The Miami-Dade County real estate market had a successful year in 2022, with 31,627 total homes sold and 19,377 condos sold, ranking second all-time in Miami history, according to the MIAMI Association of Realtors and the Multiple Listing Service system. Despite the rising mortgage rates in 2022, the real estate market in Miami showed its resilience and unending demand. The 30-year fixed mortgage rate, which started at 3% in 2022, is currently at 6.11%.
The MIAMI REALTORS® Chief Economist predicts that inflation will lead to a decrease in mortgage rates to 5% – 5.5% by the end of 2023, which could result in a more active housing market in the latter half of 2023. Although the overall inventory is increasing, most of the growth is in the luxury segment of the market. There is still a shortage of inventory in the $400K to $600K price range.
Miami’s real estate market has been on a steady upward trend for over a decade, with property prices continuing to rise, albeit at a more modest rate. According to MIAMI Chairman of the Board Ines Hegedus-Garcia, Miami’s real estate market is unique due to the significant number of cash transactions and the high rate of migration. The recent normalization from the pandemic-fueled era of home buying indicates that sellers are increasingly open to negotiating contract terms, offering greater flexibility.
Despite the challenges of the past two years, Miami-Dade County’s single-family home median prices increased by 3.5% year-over-year in February 2023, rising from $536,000 to $555,000. This marks the 135th consecutive month of price growth, the longest-running streak on record. Meanwhile, existing condo median prices increased by 2.6% year-over-year, from $380,000 to $390,000. Condo median prices have increased in 136 of the last 141 months.
One factor driving Miami’s real estate market is the increase in local household incomes. Miami and West Palm Beach are among the top 10 cities in the U.S. for median homebuyer growth (2019 vs. 2021). According to a Redfin report, Miami’s median homebuyer income grew by 16.9% to $104,000 in 2021, while West Palm Beach’s median homebuyer income is $110,000.
Home prices are determined by supply and demand, and in Miami’s case, low supply and high demand have created higher prices. Inventory for Miami single-family homes (3.8 months) and condos (4.5 months) remains low. Additionally, one of the supports for home prices is rents, which are also on the rise.
Active inventory at the end of 2022 totaled 10,730, down 48.7% versus pre-pandemic levels in 2019. However, total active listings at the end of February 2023 increased by 37.4% year-over-year, from 7,484 to 10,282. This suggests a potential increase in supply.
The inventory of single-family homes increased by 63.5% year-over-year in February 2023, from 2,212 active listings last year to 3,617 last month. Condominium inventory also increased by 26.4% year-over-year to 6,665 from 5,272 listings during the same period in 2022. Despite this increase, new listings of Miami single-family homes decreased by 20.6% to 1,206 from 1,519 year-over-year. New listings of condominiums also decreased by 22.7%, from 2,419 to 1,871 year-over-year.
Months’ supply of inventory for single-family homes increased by 123.5% to 3.8 months year-over-year, indicating a seller’s market. Inventory for existing condominiums increased by 73.1% to 4.5 months, which also indicates a seller’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.
In conclusion, the Miami housing market continues to show resilience, despite the challenges posed by the pandemic. The region’s unique characteristics, including a high rate of migration and cash transactions, are driving demand and helping to keep prices high. While the low inventory levels have created a seller’s market, the recent increase in supply could potentially benefit buyers in the coming months.
What are the Miami real estate market predictions for 2023? According to NeighborhoodScout’s data, Miami real estate appreciated 203.48% over the last ten years, which is an average annual home appreciation rate of 11.74%, putting Miami in the top 10% nationally for real estate appreciation.
In the last twelve months (between 2021 Q4 – 2022 Q4) Miami’s appreciation rates continue to be some of the highest in the U.S., at 24.03%. Miami’s appreciation rates in the latest quarter (between 2022 Q3 – 2022 Q4) were at 2.87%. All these figures corroborate experts’ positive forecasts for Miami’s housing market.
Let us look at the price trends recorded by Zillow over the past year. Since the last twelve months, the median home price in Miami-Dade County has appreciated by nearly 22.4% (Zillow Home Value Index). The typical value of homes in Miami-Dade County is $498,818. This value is seasonally adjusted and only includes the middle price tier of homes.
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