The South Florida housing market has long represented a major opportunity for profit for savvy investors. However, the market has also undergone significant changes over the last few years, leading some to be leery of putting too much money into real estate here for fear of a crash or other disasters.
To that end, let’s take a deep dive into the South Florida housing market for 2023 by examining prices, trends, and likely evolutions.
Brief Overview of the South Florida Housing Market
The South Florida housing market saw major price increases and positive market action over the last few years. As an example, Miami’s single-family median home prices rose for 134 consecutive months for about 11 ¼ years while the rest of the country experienced a downward trend.
Why? Simply put, the South Florida housing market is defined by quality properties, ample amenities, and wonderful weather. Many people want to move to the South Florida real estate market because:
- There are plenty of business opportunities due to state laws and taxes.
- The area is wonderful, with plenty to see and do.
- The houses are well-designed and attractive in many of the highest-priced counties.
The general trend of rising prices and decreasing inventory has been the name of the game for several years at this point. However, in 2022 — in part because of increasing housing inventory and regular Americans being priced out of properties — prices for real estate finally began to fall.
This isn’t to say there isn’t money to be made in the market. In addition, the market overall is still very expensive. Still, it’s wise to keep these things in mind when projecting for 2023 housing market evolutions.
Importance of Understanding Prices and Trends in the Market
To understand the upcoming 2023 South Florida housing market, you need to understand prices and trends.
Generally, when it comes to real estate in this market, prices go up, which drives more investment and a scramble as buyers try to scoop up properties before prices increase even further. This is oftentimes supplemented by reduced housing inventory, at least in the short term. As fewer homes are available, prices for the remaining houses continue to rise.
This eventually reaches a cap or maximum level of price increase. At that point, prices decrease until housing inventory increases (i.e., demand no longer outstrips supply) or until sellers find a comfortable pricing point to attract consistent buyers.
Currently, we’re seeing something of a price correction in the South Florida real estate market. Prices are decreasing as housing inventory goes up. These trends will probably continue, though not dramatically, throughout 2023.
Economic Factors
An extensive list of economic factors currently affects the South Florida housing market and will continue to do so for the remainder of the year.
Impact of Job Market and Employment Opportunities
Job markets, employment opportunities, and business friendliness affect the real estate market. As businesses set up shop in Florida, they must also attract new candidates for available jobs, driving house purchases — Florida has more jobs than New York for the first time in history.
Fortunately, unemployment is quite low across the country, totaling 3.4%. This is one of the lowest rates of unemployment in American history. Florida is doing even better, with an unemployment rate of 2.6%. That’s great news for the housing market.
When people are employed, they have consistent income and the opportunity to save. That means they are willing to spend that money on houses and, in many cases, relocate to South Florida to pursue better job prospects or opportunities. Given these facts, the housing market should continue to stay quite competitive throughout 2023.
Influence of Interest Rates and Mortgage Rates
That said, it's also crucial to consider the importance of interest rates and mortgage rates. The Federal borrowing interest rate (which broadly sets the interest rates for fixed-rate mortgages) has recently increased in an attempt to combat inflation.
At the time of this writing, the 30-year mortgage interest rate for fixed-rate mortgages is 7.12%. This is about 16 basis points compared to the previous week. Higher interest rates should drive down inflation. At the same time, it may drop housing prices down.
Why? When interest rates are higher, borrowing money becomes more expensive. This will affect buyers purchasing power and force many home buyers to the sidelines until the market becomes more affordable.
This could be one of the factors behind the trend of available houses staying on the market for longer before closing (see more below).
Demographic Trends
Demographic trends have also played a major role in housing prices and inventory availability. Let’s take a closer look at how these can affect the market in 2023 and beyond.
Population Growth and Migration Patterns
Florida as a state is also seeing notable population growth, partially due to the booming job industry and the excellent weather. Since more corporations are moving to Florida too, that will also boost job opportunities.
According to the U.S. Census Bureau, Florida’s population increased by about 1.9% between 2021 and 2022. It has become the fastest-growing state overall.
Again, this is a good thing for housing overall. More people moving to Florida means there will be a higher demand for homes. This will increase prices in the short term, plus increase inventory in the long term. Investors who have the time to wait could consider skipping up properties and holding them until prices are right.
Note that some of this immigration is not just from Americans. Many foreign nationals and offshore investors are also looking to purchase property in Florida, moving there for a range of political or economic reasons.
Influence of Age Groups and Lifestyle Preferences
In addition, many seniors and retirees move to Florida for the warm weather and the low taxes. In the South Florida area, the common lifestyle, which can be more relaxed, attracts so-called snowbirds more often than not. Given these increased trends, the market could see a continued influx of seniors and retirees looking to purchase condominiums in the South Florida real estate market.
However, Florida isn’t only for snowbirds and retired individuals. A youthful talent pool of tech and finance professionals is heading to Florida, drawn by the many companies springing up or moving to the Sunshine State because of favorable tax laws. This could drive up prices and reduce inventory in the short term.
Key Markets in South Florida
The South Florida real estate market is often dominated by three key markets, which are centered around the three most important and largest counties in the area.
Miami-Dade
Miami-Dade County is a hugely important county in Florida overall and the most populous in Florida. Miami-Dade is, of course, home to Miami, so housing prices are typically high, and it attracts a variety of traditional homeowners, investors, and retirees.
Overview of Miami-Dade’s Housing Market Trends
Miami-Dade County’s housing market trends have been positive and oriented toward growth, though it is less dramatic compared to 2021 to 2022. Here are some relevant statistics to consider:
- Average sale price for single-family homes: $948,068 compared to $999,513 in 2022.
- Median time to sale for single-family homes: 87 days compared to 71 days in 2022.
- Months supply of inventory for single-family homes: 3.5 months of inventory compared to 1.7 months in 2022.
Prices and Miami-Dade County remain high, though they are trending downward. Furthermore, the supply of housing in the area is increasing gradually and steadily. It’s still more of a seller’s market than a buyer’s market, but that could change in the latter half of 2023.
Palm Beach County
Palm Beach County is the largest in terms of square footage, and it makes up the Miami Metro area with Miami-Dade County and Broward County. It has recently experienced an influx in population, and it is the wealthiest county in Florida overall, with per capita income clocking in at $44,518.
Analysis of the Palm Beach County’s Housing Market Trends
Palm Beach County’s housing market trends are similar to those of Miami-Dade in a few key ways:
- Average sale price for single-family homes: $951,075 compared to $942,252 in 2022.
- Median time to sale for single-family homes: 81 days compared to 55 days in 2022.
- Months supply of inventory for single-family homes: 3.2 months compared to 1.2 months in 2022.
In a nutshell, Palm Beach County's prices for homes are going up, but those homes take longer to sell. Furthermore, in keeping with the above Miami-Dade County trend, inventory is gradually increasing, which could result in more of a buyer's market over time.
Broward County
Broward County is the county in the South Florida real estate market and the second most populous overall. It's also the home of Fort Lauderdale.
Analysis of the Broward County’s Housing Market Trends
Now let’s take a look at Broward County’s housing market trends overall:
- Average sale price for single-family homes: $754,454 compared to $766,814 in 2022.
- Median time to sale for single-family homes: 79 days compared to 56 days in 2022.
- Months supply of inventory for single-family homes: 2.7 months compared to 1.1 months in 2022.
This data indicates that the housing market in Broward County shows some signs of growth. But if housing inventory continues to increase steadily, a buyer’s market could be on the horizon.
Reasons To Buy a House in South Florida
Right now, given the above statistics and trends, there are several solid reasons to buy a house in South Florida, whether you are an investor or an average American.
For example, there's no state income tax. This attracts lots of Americans in the primes of their careers, in addition to retirees. If you are looking for job opportunities, South Florida is an emerging tech hub with plenty of work-from-home or hybrid opportunities among startups and tech companies.
Once you buy a property, you'll be able to build equity in it. Hopefully, it will retain value for a long time to come. As an investor, you can rent the property for passive income. And as an average American, you might enjoy the food scene and local culture of South Florida, which is diverse and vibrant.
Conclusion
In the end, it could be the perfect opportunity to invest in the South Florida housing market, provided you have the right financing opportunities lined up. If you don’t, the knowledgeable loan officers at Vaster can help you get the resources you need with our team’s decades of experience in real estate lending, sales, and development.
Since 2017, we’ve been Florida’s premier private lender for residential and commercial properties. Since then, we've expanded our loan offerings to cater to more South Florida buyers through our expansive local lender network.
From first time home buyers to foreign national investors, Vaster has the capabilities to cater to the needs of any buyer. Get started on pre-approval today to make the most of the booming South Florida market.
Sources:
The Employment Situation - April 2023 | BLS
Latest Statistics | FloridaJobs.org
Compare Today's 30-Year Mortgage Rates | Bankrate
Florida Fastest-Growing State for First Time Since 1957 | Census.gov
Miami-Dade County Single-Family Homes 2023 Q1 Detail | Miami Realtors
Broward County Single-Family Homes 2023 Q1 Detail | Miami Realtors
Palm Beach County Single-Family Homes 2023 Q1 Detail | Miami Realtors
Miami-Dade Pending Home Sales and Showing Appointments Rise | Miami Realtors
Mortgage interest rates expected to drop in 2023—here's by how much | CNBC
Florida Has More Jobs Than New York for the First Time | Bloomberg
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