
Housing inventory levels in Florida are up the most in the nation on a year-over-year basis (34%), but the bulk of the increase is really concentrated in sections of Southwest Florida. In particular, in markets like Cape Coral and Fort Myers, which were hard-hit by Hurricane Ian in September 2022.
Whatever the national real estate market experiences, South Florida's market overdoes it. That's the usual playbook. But commercial real estate experts here and elsewhere think the region's commercial real estate market should be largely immune to the difficulty other areas are experiencing. And there are plenty of worries about commercial real estate and the risks it may pose to the banking industry and economy.
Home foreclosures in Florida rising
New foreclosure numbers from analytical firm ATTOM reveal an uptick in foreclosures in Florida. Depending on the size of certain population statistics, the three biggest areas where foreclosures are on the rise were Lakeland, Orlando, and Miami. According to the South Florida Business Journal, this year’s numbers in South Florida are up nearly 50% compared to February 2022.
South Florida homebuyers may need to dig deeper into their wallets if they want a residence. Single-family home and condo prices are at an all-time high. Miami-Dade County has a median sales price of $650,000 for a house and $420,000 for a condo; Broward saw prices rise to $625,000 for a house and $290,000 for a condo, according to the latest monthly home sales report by the Miami Association of Realtors.
Housing premiums in the Miami metropolitan area increased once again despite rising interest rates, a potential worrying sign for the housing market, according to researchers at Florida Atlantic University and Florida International University.
According to the end of March data from the Top 100 U.S. Housing Markets, the typical home in South Florida is 34.7 percent overvalued compared to its long-term pricing trend, up 15-basis points from the month before.
“This trend does concern me as prices are still going up in the Miami metropolitan area, but not in the rest of the measured areas in Florida,” said Ken H. Johnson, Ph.D., real estate economist with FAU’s College of Business. “Price growth should be tepid considering the slowdown in rents and rising interest rates, but South Florida prices continue to rise despite these market forces.”
The Top 100 U.S. Housing Markets, a part of FAU’s Real Estate Initiative, calculates how overvalued or undervalued the typical home is in the country’s 100 most populated metros. Johnson and fellow researcher Eli Beracha, Ph.D., director of FIU’s Hollo School of Real Estate, examine the difference in actual average home prices in a city and compare it to the long-term home pricing trend for the same city to calculate how overvalued or undervalued a housing market is using publicly available data from Zillow.
“South Florida’s rise in premiums suggests there is a dynamic on the supply side of the market specific to the local market that has yet to be addressed. We want property prices for an area to closely track the area’s long-term property pricing trend,” Johnson said. “This allows purchases today to be worth more soon without worrying about home prices violently swinging above and below the trend. This is a key factor in ensuring the American dream of homeownership. Unfortunately, this has not happened for the last two cycles in South Florida.”
Other metropolitan areas in Florida, however, showed positive signs of returning to their long-term trends. Measured against the previous month’s data, Cape Coral posted a 63-basis point decline in premium; North Port, a 48-basis point decline; Deltona, a 32-basis point decline; Lakeland, a seven-basis point decline; and Tampa, a four-basis point decline.
“As prices slowly make their way back to normal, it is a tossup between renting and reinvesting monies that would have otherwise been put into ownership and buying a home and building equity in terms of wealth creation,” Beracha said.
Johnson disagrees slightly as “it bothers me that home prices continue to increase despite slowing rents and rising mortgage rates. While I do not anticipate a major crash, the area could be in for a prolonged period of home price stagnation, making it slightly better to rent and reinvest at this point.”
One of the notable trends in the South Florida housing market is the incredible wealth migration the region has witnessed in recent years. With a steady influx of individuals from out-of-state and a thriving economy attracting business expansions and relocations, the share of million-dollar homes to total sales has been steadily climbing since 2019.
In 2023, the share of million-dollar homes to total single-family sales rose to 17% (compared to 6% in 2019), while for condos and townhomes, it increased to 9% (up from 5% in 2019).
Migration into Southeast Florida remains strong, with 153,347 driver licenses exchanged for a Florida license in 2023 alone, marking an 8.3% increase from the previous year.
Despite certain challenges, the South Florida housing market continues to demonstrate resilience and growth. Miami-Dade's total home sales increased by 0.8% year-over-year in February 2024, with single-family home sales experiencing a 5.1% increase while existing condo sales saw a slight 2.5% decrease.
However, within the condo market, there has been a surge in mid-market condo sales, particularly in the $400,000 to $600,000 price range, which witnessed a 16.4% year-over-year increase.
One of the encouraging signs for prospective buyers is the increase in new listings, providing them with more options to explore. Miami has seen a steady rise in new listings over the past six months, nearing pre-pandemic levels.
In February 2024, Miami's total new listings increased by 25.87% year-over-year, contributing to a more diverse inventory. Although new listings are up compared to recent years, they still remain slightly below the levels seen before the pandemic.
It's evident that despite challenges, the region continues to attract buyers and investors alike. With favorable market conditions, increased inventory, and a thriving economy, South Florida remains a compelling destination for those seeking to invest in real estate.
Top 10 Metros in Florida with the Fastest Growing Sales Price
East Lake, FL 46.4%
Miami Beach, FL 40.9%
Lauderhill, FL 28.8%
Palm City, FL 28.8%
Sunny Isles Beach, FL 28.8%
Doral, FL 26.8%
Plantation, FL 23.5%
Sunrise, FL 22.8%
Dunedin, FL 22.4%
Boca Raton, FL 20.9%
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