South Florida home prices rise by double digits, despite sharp rise in interest rates

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Home prices in Miami-Dade and Broward counties have risen by double digits over the past year, despite steadily rising interest rates on mortgages. Above is an aerial view of residences in North Bay Village near Miami Beach.

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Despite a sharp rise in mortgage interest rates and other challenging market dynamics, median South Florida home prices again posted double-digit annual growth in October.

Prices for single-family homes and condominiums in Broward and Miami-Dade counties rose 10% to 20% last month compared to October 2021, according to the Miami Association of Realtors’ latest monthly sales report.

As the residential real estate market wilts in many parts of the United States, the price of home ownership in South Florida continues to be out of reach for much of the middle class . This is despite a drop in total annual home sales and the largest inventory of homes available this year in the region, in addition to interest rates that have more than doubled from last year’s level.

How can this housing market continue to become more expensive when the fundamentals generally needed to maintain or reduce prices are in place? There’s still a long line of buyers from across the country and overseas buying homes here, unintimidated by the prices, real estate experts say. This leaves many mid-income aspirants and first-time buyers on hold, continuing to rent.

Miami-Dade’s median sale price in October was $575,000 for single-family homes and $388,531 for condos. Homes were once selling for 17% less a year ago, at a now nostalgic $490,000. Condos sold 19% less in October 2021 at $326,790.

Broward prices hovered last month at $540,000 for a home, 10% higher than the median of $489,000 last October. Condo prices jumped 15% to $262,000 from $227,950 in October 2021.

Eli Beracha, professor and director of the real estate department at Florida International University, said “the significant increase in population over the past two years” continues to push prices up, despite the strong improvement in housing supply. on the market.

Indeed, inventory of homes for purchase in Miami-Dade hit a 3.7-month supply in October — the most in 12 months — and a 3.8-month supply of condos, the best mark of 2022. Broward , meanwhile, has 2.9 months of homes available and 2.4 months of condos.

Beracha noted that a balanced real estate market for buyers and sellers consists of five to seven months of housing inventory. South Florida is still below, giving the upper hand to sellers.

Rising house prices and rising interest rates have thwarted many potential local buyers. Last week, mortgage provider Freddie Mac reported a 6.61% average rate for a 30-year fixed rate mortgage, compared to 2.98% last year.

“Due to high interest rates, getting a mortgage is more difficult for middle-income people,” said realtor Cordelia Anderson, founder of Miami-based company I Heart Real Estate LLC. “They say they want to wait until next year to see what happens with interest rates.”

Last month, Miami-Dade saw 2,067 home sales, a 44% drop from 2,978 closings in October 2021. Broward saw 2,222 sales, a 34% drop from 2,967 closings. Anderson said he’s seen a pronounced pause among buyers looking to spend between $350,000 and $800,000 on a home.

Cordelia Anderson.jpg
“Due to high interest rates, getting a mortgage is more difficult for middle-income people,” said Cordelia Anderson, founder of Miami-based real estate brokerage I Heart Real Estate LLC. . “They say they want to wait until next year to see what happens with interest rates.” 1st workshop

About 40% of those who bought a home in South Florida in October paid cash, nearly double the national average of 24%.

Heading into next year, Selma Hepp, acting chief economist at CoreLogic, a California-based financial services and research firm, said the South Florida housing market will likely calm down to a 4% annual price increase by fall 2023. Don’t expect an annual price drop. next year in the region, experts say.

High-income people will continue to “support the market,” Hepp said.

This story was originally published November 22, 2022 5:30 a.m.

Rebecca San Juan writes about the real estate industry, covering news on industrial, commercial, office projects, construction contracts, and the intersection of real estate and law for industry professionals. She studied at Mount Holyoke College and is proud to report on her hometown.
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