The Lamacchia Realty South Florida Housing Report presents overall home sale statistics and highlights the average sale prices for single families, condominiums/townhomes in Broward County, Miami-Dade County, and Palm Beach County for May 2022 compared to May 2021. It also looks at other metrics like New Listings and New Pending Sales as they are often the best indicators for predicting future trends in the market
The inventory crisis last year caused demand to spike higher than ever by fall and into the winter, which in turn caused prices to continue to increase significantly. This rise has continued to present day without reason to expect they’ll decrease anytime soon, though the hope is that the rate of increase will slow down especially now that mortgage rates have risen.
Broward County single family and condo/townhome closed sales and pending sales decreased. Condo/townhome listings remained the same year over year, but single family listings increased slightly. Average price increased in both property types.
Miami-Dade & Palm Beach Counties
In May of 2022, Miami-Dade single families and condos/townhomes saw decreases in closed sales, new listings, and pending sales, but average price increased.
Palm Beach County saw a decrease in closed sales, new listings, and pending sales, but an increase in average price for single families and condos/townhomes.
South Florida Inventory
Despite South Florida active inventory levels remaining low compared to previous years, we are starting to see a steady trend upward in the levels, and it is expected that the direction will continue to rise in the months to come as increased mortgage rates keep the market cooled. Important to note that this uptick may take more time in South Florida compared to other regions given the prevalence of cash buyers in the market more so than we see in other areas.
The effects of rising mortgage rates can already be seen in the South Florida housing market with closed sales down significantly again for both single family homes and condos/townhomes. Pending sales are also down significantly which is a strong indicator that we will see closed sales down again in next month’s data. Conversely, inventory levels have increased and, in some counties for certain property types, new listings have increased, showing again how increased mortgage rates have done their job to slow the real estate market down (i.e., inventory isn’t being cannibalized by frenzied buyers).
Average prices for single family and condo/townhomes were up in all three counties, and the trend is expected to continue throughout the year. Even though inventory is on the rise, it is not high enough yet to cause housing prices to come down. You need much more supply in the market to drive prices down.
Increasing prices coupled with increasing mortgage rates has created a serious concern amongst buyers regarding their buying power in this market. Many buyers have had to step out of the market as these changing conditions have impacted their budgets and what they can afford, especially given that not only is housing expensive, but so is everything else with inflation at a record high. However, with more buyers stepping out of the market, this will cause a lessening of demand and slow the frenzied market we have been so used to over the past 2 years. The buyers that stay in the market will feel this reprieve with fewer bidding wars, fewer instances of paying over asking, the return of contingencies, etc. Anthony explains this further here.
With this lessening of demand, sellers will have to adjust their mindset as they will no longer be able to price with an iron fist if they wish to stay competitive in this market. There are already signs of this trend nationally as price changes are on the rise across the country. Sellers should also note that their equity has grown significantly over the last few years which means selling your home can still be a lucrative endeavor even in this changed market.
In the condo space, there have been new regulations put in place regarding timing and frequency of condo inspections as well as a requirement to have a reserve fund for any major repairs needed as a result of the inspection. Earlier this year, Fannie Mae and Freddie Mac updated their lending guidelines in response to the tragedy in Surfside, and this newest change demonstrates how lawmakers are continuing to enact change to prevent a tragedy such as that from ever occurring again. However, prospective buyers of condos should stay informed of these changes and understand how their complex/association will be affected and how they are preparing to make the changes.
*Data provided by Florida Realtors® SunStats