South Florida’s housing market bucks U.S. trend. Economic uncertainty looms, though
While the U.S. housing market in February faltered, snapping a streak of almost 11 years of monthly price jumps, it’s a much different story in South Florida where the housing sector keeps getting pricier as overall sales dwindle.
In fact, median sales prices of single-family homes increased from a year ago and last month, according to the housing report released Tuesday by the Miami Association of Realtors.
While the housing landscape in Miami-Dade and Broward counties gained momentum in February, real estate experts cautioned that the uncertainty swirling around the U.S. banking industry and whether the Federal Reserve keeps hiking interest rates could have a detrimental effect on the regional housing market in the coming months.
Miami-Dade reported a median sales price of $555,000 for single-family homes last month, up from $545,000 in January and $536,00 in February 2022. Broward experienced even bigger price boosts with the median for houses hitting $560,000 in February, advancing from $540,000 in January and $519,000 in February 2022.
That pricing resilience shows how mighty the South Florida housing market remains, when compared to the rest of the country. According to the latest report from the National Association of Realtors, median sales prices on houses fell to $367,500 in February — the first decline after 131 consecutive months of price increases.
The condo piece of the regional real estate market softened last month. In Broward, condo prices barely moved ahead from January to February’s $272,000 median but jumped considerably from $240,000 a year ago. In Miami-Dade, condo prices actually retreated in February to $390,000 from a median of $400,000 in January, but an increase from $380,000 last year.
As the supply of homes for sale remains tight, February sales plunged on an annual basis in South Florida but jumped from January to February.
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ONE Sotheby’s International Realty real estate agent Reid Heidenry said strong demand for South Florida living sustained the housing market last month.
“People come down during winter,” he said. “This time of year is strong for us.”
Why does the South Florida residential real estate market stay strong when others have begun a backslide? Miami’s pandemic transformation into a corporate magnet, experts say. Company newcomers have brought their employees with them, in many cases.
“We’re growing rapidly,” Heidenry said. “Now we have a lot of people that are a lot more full time in the Miami area.”
Still, long lines of prospective buyers waiting outside open houses or people placing bids on homes site unseen are gone. As a result, overall house and condo sales activity dropped 40% last month compared to last year in Miami-Dade, where there were 2,807 closed deals, and 32% in Broward, which had 2,687 deals.
Nearly half of South Florida home purchases were cash buyers in February, well above the national average of 29%.
Although the lofty South Florida housing market makes the region look like a star nationally, many people here remain priced out and can’t afford to buy a home.
Kendall resident and licensed housing inspector Robert Kuiper began shopping for a new condo in July 2022. To his dismay, he has seen countless homes that he thinks are not well maintained. He said many consumers are under such duress in looking for a home to buy that they are not doing their due diligence in making sure homes are up to current standards.
“I looked at 15 or 20 condos in Kendall and Hammocks since July,” he said. “Every single property I looked at, condos, apartments or townhomes, have been remodeled without permits. People aren’t doing research on this work and it’s a mess.”
By law, real estate agents are required to disclose to any client potential problems with homes.
As Kuiper continues to shop for a new condo in a frothy market, he doesn’t think he can afford to retire in Florida.
“I lived here 44 years,” he said. “I’m 66 and can’t afford to retire in Florida. I can’t afford to buy another home in Dade County. A one-bedroom condo is between $250,000 and $300,000. In Ocala, a three-bedroom and two-bathroom home has a garage, sits on a corner and is fenced in for $200,000.”
The Fed’s yearlong posture of boosting Interest rates has depressed the regional real estate market somewhat and builders have slowed construction, said Mark Thibodeau, assistant professor at Florida International University’s Hollo School of Real estate.
“The threat of a banking crisis can encourage the Fed to be less aggressive in terms of increasing rates or even relaxing a bit. If that’s the case, you would see more transactions and investment of housing and supply,” Thibodeau said. “You would see more development and people moving.”
The Fed’s decision what to do this week with interest rates is clouded by the fallout from the failure of Silicon Valley Bank — the second-biggest bank failure in U.S. history — and the ensuing turmoil and fears in the banking sector.
The bank opened a local branch in Brickell in 2021, and its closure has shaken South Florida’s blooming technology sector. SVB was a California-based bank that catered to tech startups nationwide.
Thibodeau said more bank collapses would trigger alarms that could blunt the South Florida real estate market.
“The problem is inflation. The Fed has made it clear they want to bring down inflation,” he said. “A banking crisis in the midst of that would be the last thing we would want to see.”
Black Luxury Realty managing broker Nathaniel Crawford said South Florida’s desirability has translated to consistent interest from buyers outside the region. Also, international interest remains high, he said.
“A lot of these international buyers are not comparing the U.S. economy to what it was 10 or 20 years ago, they’re comparing the economy to what the economy is in their own country,” Crawford said. “The U.S. economy at its worst is still better than many economies at their best. As someone recently told me, I’d rather put a million in a condo in Sunny Isles that is still there, and see its price go down rather than put it in a Venezuelan account and it evaporates.”