2021 was a record year for real estate in South Florida, but the market slowed in the final eight months of 2022. The question remains how bad the market’s decline is and whether it’s headed for a crash.
There’s no doubt the market has slowed over the past six to eight months: Completed sales have declined as buyers grapple with rising interest rates, a home takes longer to sell and bidding wars are less so usual as before.
That doesn’t necessarily mean the South Florida market is collapsing.
“There is a lot of confusion when people talk about the slowdown. You automatically think the market is going to crash, but it’s not,” said Roni Sterin of the Keyes Company in Weston. “The market corrected itself because it had to.”
Comparing 2022 to the pre-pandemic housing market of 2019 can add additional context to what is happening now that 2021 was so extraordinary.
“It was such a national phenomenon that comparing our data to last year in isolation makes the shift seem very severe,” said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton. “Now the pendulum is starting to swing towards a more normal market.”
To assess where the South Florida housing market is, the South Florida Sun Sentinel examined data from 2019, the most recent “non-pandemic” housing market, and compared it to 2022. We’ve considered trends in average prices, inventory levels, growth and how long it takes to sell a home.
As of October, the latest figures from the Broward, Palm Beaches and St. Lucie real estate agents show that the median selling prices of single-family homes in the Tri-County area are still rising at double-digit rates year-on-month, and month-to-month prices have either begun to decline or weaken .
It doesn’t suggest a real estate crash or decline, but suggests that median selling prices for single-family homes in South Florida are on the path to eventual stabilization.
“For example, when people look at houses online, they see prices going down and they think the market is going down,” Sterin said. “What they don’t see is the same home that sold in 2020, 2021, or even 2019 is still above market.”
On a monthly basis, South Florida real estate prices currently look like they are in the early stages of stabilization. In Palm Beach County, for example, the median home selling price was $600,000 in July before falling to $565,000 in August. It reached $580,000 in September before retreating to $570,000 in October.
In contrast, prices in Palm Beach County were relatively stable month-on-month in 2019. In July, August and September, the median home selling price was about $355,000. In October 2019, it rose to around $359,000.
And prices, while in flux, are significantly higher now than they were in 2019.
In Broward County, the average selling price of a home is 49% higher than it was three years ago. It’s about 58% higher in Palm Beach County and about 57% higher in Miami-Dade County.
A big hallmark of the 2021 housing boom was how quickly homes flew off the market as buyers rushed to place offers on a home for fear of missing out on lower mortgage rates.
Now buyers have become more hesitant, in part because increased stock levels mean they have more choice. Also, higher mortgage rates have marginalized some buyers and cooled the frenzy.
That’s why it takes a little longer to get a home signed, according to the latest numbers from Broward, Palm Beaches, and St. Lucie real estate agents.
In 2022, the median lease term for a single-family home increased to 28 days in Palm Beach County, 27 days in Broward, and about 30 days in Miami-Dade.
However, houses are still selling faster than 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. It’s more like the properties might be on the market for another week or two,” Sterin said.
Buyers have started to see more homes coming onto 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 was marked by record low inventories, with most Tri-County areas having a little over a month’s supply of homes on the market at any given time.
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Today there are almost twice as many apartments as there were a year ago. There is currently approximately three months of housing supply in the Tri-County area.
While the jump was significant, it’s still well below the supply of homes on the market in 2019.
Buyers have more options now than they did a year ago, but it’s far from a balanced market, which experts say has been around for about six months. And increasing supply isn’t enough to crash the market.
“The inventory is not bloated,” Heatzig said. “If the hustle and bustle stops and stocks pile up, then we have a crisis. We don’t have that now.”
For the most part, experts say that despite the rebalancing, the South Florida real estate market is still strong and unlikely to collapse.
The current housing market has been driven in large part by low inventories due to years of underdevelopment, intense 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 occur when there is an extreme imbalance between supply and demand. Currently we have the opposite. It would take extreme market movement to move from where we are today to a market on the brink of a crash,” said Tim Costello, Chairman and CEO of Builder Homesite Inc.