2021 was a record year for real estate in South Florida, but the last eight months of 2022 were all about the market slowing down. Questions remain about how bad the market decline is and whether it is headed for a crash.
There’s no question that the market has slowed down over the past six to eight months: Closed sales are down as buyers grapple with rising interest rates, it takes longer to sell a home, and the price wars offers are not as common as they once were.
That doesn’t necessarily mean the South Florida market is collapsing.
“There is a lot of confusion when it comes to slowing down. They automatically think the market is crashing, but it isn’t,” said Roni Sterin of Keyes Company of Weston. “The market corrected itself because it needed to.”
Comparing 2022 to the pre-pandemic housing market of 2019 can add further context to what is happening now, since 2021 was so exceptional.
“It it’s been such a national phenomenon that when you compare our data to last year’s data, the change seems very serious on its own,” said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton. “Now, the pendulum is swinging. starting to swing towards a more normal market.”
To gauge where the South Florida housing market is, 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 median price trends , inventory levels, price growth and how long it takes to sell a home.
As of October, the most recent numbers from Broward, Palm Beaches and St. Lucie realtors show that while average single-family home sales prices in the tri-county area still show double-digit year-over-year increases, up on monthly basis, prices have started to decline or moderate.
It’s not indicative of a real estate crash or decline, rather it means that average single-family home sales prices in South Florida are on track to stabilize.
“When people look at homes online, for example, they see prices are going down and they have a mentality that the market is crashing,” Sterin said. “What they don’t see is that the same home sold in 2020, or 2021, or even 2019 is still above market.”
On a month-to-month basis, home prices in South Florida currently appear to be in the early stages of stabilizing. For example, in Palm Beach County, the median sale price of a home in July was $600,000, before dropping to $565,000 in August. It hit $580,000 in September, before falling to $570,000 in October.
In contrast, prices in Palm Beach County were relatively stable on a month-to-month basis in 2019. In July, August and September, the median sale price of a home was approximately $355,000. That increased to about $359,000 in October of 2019.
And prices now, while in flux, are significantly higher than they were in 2019.
In Broward County, the average home sale price is 49% higher than it was three years ago. In Palm Beach County, it is about 58% higher, and in Miami-Dade County, it is about 57% higher.
A big indicator of the 2021 housing boom was how quickly homes flew off the market as buyers rushed to bid on a home, fearful of missing out on lower mortgage rates.
Now, shoppers have become more hesitant, in part because they have more to choose from as inventory levels have risen. Additionally, higher mortgage rates have pushed some buyers to the sidelines, dampening the frenzy.
Because of this, it takes a little longer to get a home under contract, according to the latest issues from Broward, Palm Beaches and St. Lucie Realtors.
In 2022, the average time to contract for a single-family home increased to 28 days in Palm Beach County, Broward increased to 27 days, and Miami-Dade increased to approximately 30 days.
However, homes are still selling faster than they were three years ago. In 2019, it took approximately 50 days to get a home under lease in Miami-Dade County, 46 days in Broward County, and 54 days in Palm Beach County.
“It is no longer the market where you sell properties in five days. It’s more that the properties are still on the market for maybe a week or two weeks,” Sterin said.
Buyers have started to see more homes hit the market in recent months as sellers have rushed to list their homes to try and catch the wave before interest rates cool the market.
2021 was marked by record inventory levels, with most of the tri-county area seeing just over a month of supply of homes on the market at any given time.
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Now, there are nearly double the number of homes there were a year ago. Currently, there is about three months supply of homes in the tri-county area.
While the jump was significant, it is still well below market supply for homes in 2019.
Buyers have more options now than a year ago, but it’s still nowhere near a balanced market, which experts say is about six months of supply in the market. And increasing supply isn’t enough to crash the market.
“The inventory isn’t bloated,” Heatzig said. “When the frenzy stops and stocks pile up, then we have a crisis. We don’t have it now.”
For the most part, experts say that despite the rebalancing, the housing market in South Florida is still strong and unlikely to collapse.
The current housing market has been driven in large part by low inventory levels due to years of underconstruction, intense demand from families looking to relocate, and, until recently, low mortgage rates. The market crash a decade ago was caused by risky lending practices and oversupply in the market.
“Slumps occur when there is an extreme imbalance between supply and demand. We currently have the opposite. It would take an extreme movement in the market to go from where we are today to a market on the verge of a crash,” said Tim Costello, president and chief executive officer of Builder Homesite Inc.