2021 was a record year for South Florida real estate, but the last eight months of 2022 have been about the market slowing down. Questions remain about how bad the decline in the market is and whether it is headed for a crash.
There’s no doubt the market has slowed in the past six to eight months: closed sales are down as buyers struggle with rising interest rates, it’s taking longer to sell a home and bidding wars aren’t as common as they once were.
That doesn’t necessarily mean the South Florida market is collapsing.
“There’s a lot of confusion when people talk about the slowdown. They automatically think the market is crashing, but it’s not,” said Roni Sterin with Keyes Company in Weston. “The market corrected because it had to.”
Comparing 2022 to the pre-pandemic housing market of 2019 can add additional context to what’s happening now, since 2021 was so exceptional.
“The it was such a national phenomenon that comparing our data to last year, the change looks very severe in isolation,” said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton. “Now, the pendulum is starting to swing toward a more normal market.”
To gauge where the South Florida housing market stands, the South Florida Sun Sentinel looked at data from 2019, the most recent “non-pandemic” housing market, and compared it to 2022. We looked at trends in median prices, inventory levels , the development price and how long it takes to sell a house.
As of October, the latest numbers from brokers in Broward, Palm Beaches and St. Lucie Realtors show that while median single-family home sales prices in the tri-county area continue to post double-digit year-over-year growth, on a monthly basis, prices have either started to decline or moderate.
It’s not indicative of a recession or housing slump, rather it indicates that median home sale prices in South Florida are on a path to possible stabilization.
“When people look at houses online, for example, they see prices going down and they have the mindset that the market is going down,” Sterin said. “What they don’t see is that the same home that sold in 2020 or 2021 or even 2019 is still above market.”
On a monthly basis, home prices in South Florida currently look like they are in the early stages of stabilizing. For example, in Palm Beach County, the median home sale price in July was $600,000, before falling to $565,000 in August. In September it reached $580,000, before falling to $570,000 in October.
In contrast, prices in Palm Beach County were relatively flat on a monthly basis in 2019. In July, August and September the median home sales price was around $355,000. It increased to about $359,000 in October 2019.
And prices now, while in flux, are significantly higher than they were in 2019.
In Broward County, the median sale price of a home is 49% higher than it was three years ago. In Palm Beach County, it’s about 58% higher and in Miami-Dade County it’s about 57% higher.
A big indicator of the housing boom in 2021 was how quickly homes flew off the market as buyers rushed to make offers on a home, fearful of missing out on lower mortgage rates.
Now, buyers have become more hesitant, in part because they have more to choose from as inventory levels have risen. Also, higher mortgage rates have drawn some buyers to the sidelines, cooling the frenzy.
Because of that, it’s taking a little longer to get a home under contract, according to the latest numbers from Broward, Palm Beaches and St. Louis realtors. Lucie Realtors.
In 2022, the median time to contract on a single-family home increased in Palm Beach County to 28 days, in Broward to 27 days and in Miami-Dade to about 30 days.
However, homes are still selling faster than they did three years ago. In 2019, it took about 50 days to get a home under contract in Miami-Dade County, 46 days in Broward County and 54 days in Palm Beach County.
“It’s no longer the market where properties sell in five days. Especially since the properties are still on the market for maybe a week or two,” Sterin said.
Buyers began to see more homes come on the market in recent months as sellers rushed to list their homes to try to catch the wave before interest rates cooled the market.
2021 has been marked by record low inventory levels, with most of the tri-county region seeing a supply of homes on the market just over a month at a time.
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Now, there are almost twice as many homes as there were a year ago. There is currently about a three-month supply of homes in the triad area.
While the jump was significant, it is still well below the supply of homes on the market in 2019.
Buyers have more choices now than they did a year ago, but it’s still nowhere near a balanced market, which experts say is about six months of supply on the market. And the increase in supply is not enough to cause the market to crash.
“The inventory is not inflated,” Heatzig said. “When the frenzy stops and stocks build up, then we have a crisis. We don’t have that now.”
For the most part, experts say that despite the leveling off, South Florida’s housing market is still strong and unlikely to collapse.
The current housing market is largely driven by low levels of inventory due to years of infrastructure, strong demand from families looking to relocate, and until recently, record low mortgage rates. The market crash a decade ago was caused by risky lending practices and oversupply in the market.
“Crashes happen when there is an extreme imbalance between supply and demand. Right now we have the opposite. It would take an extreme market move to go from where we are today to a market on the verge of a crash,” said Tim Costello, president and CEO of Builder Homesite Inc.