The South Florida real estate market is showing signs of change as the year came to a close. 2023 is likely to be a very interesting year for real estate investors and first-time homebuyers alike. Read on for more information about the market in our review of South Florida Q4 2022 real estate performance and what we can expect for 2023.
Interestingly, homes prices in Miami-Dade were trending upward in Q4 2022 when compared to the previous year but have declined since peaking in June of this year. The median sale price for single-family homes in Miami-Dade reached $551,000 in Q4, this represents a 10.2% increase year-over-year but a 5% decrease when compared to June 2022 when median sales price rose to $579,000.
These facts combined indicate that Miami-Dade market is experiencing a slow-down in sales activity but has some insulation to nationwide trends that has prevented home prices in Miami from dropping dramatically.
A welcomed sign for buyers: active inventory has increased significantly in Miami-Dade. There were 4,043 single-family homes available for sale in Q4 2022 compared to 2,563 homes available for sale in Q4 2021. This has doubled months’ supply of inventory for single family homes from 2-months to 4-months. Keep in mind that we are still technically in a seller’s market. A buyer’s market is described as having more than 6-months of inventory.
Despite inventory increasing, home prices in Miami-Dade are still seeing year-over-year increases. There are a few possible explanations for this:
Although inventory for housing has increased, demand for quality South Florida homes has remained high and has even increased over time. This is due to a combination of factors; more people moving to South Florida and an increase in cash buyers from Latin America flocking to South Florida to escape shifting political climates.
There’s still a lot of competition for the best South Florida single-family homes, especially in the luxury home market. Miami luxury buyers tend to be less rate sensitive and have not let high interest rates stop them from buying their dream property just yet. Therefore, even though there are many more homes available now than there were a year ago, premium assets priced right are still being swooped up.
The Miami-Dade housing market appears to still be siding with sellers due to home prices remaining strong and inventory still below the 6-month supply mark. However, we are seeing inventory steadily increase and inching closer to offering a more balanced playing field for buyers.
Additionally, sellers are no longer receiving multiple offers over asking and going to contract in less than a week like they were at the beginning of the pandemic. In fact, Q4 2022 saw median time to contract increase by 61% and median time to sale increase by 14% when compared to Q4 2021.
Nevertheless, Miami’s housing market has been proven to be somewhat of an outlier because of its significant population increase in recent years that has driven home values and new construction in order to meet this unprecedented demand.
According to official statistics from Miami Realtors, Broward County single family home market saw fewer closed sales in Q4 2022 compared to Q4 2021: 2,758 sales versus 4,285, or a decrease of 35.6%. This follows the trends noticed above with the Miami-Dade housing market.
Similar to Miami-Dade, Broward County single family home market saw year over year increase in median sale price, from $535,500 to $490,000. However, when compared to June 2022 price peaks, the median sale price has seen a decrease of 9%.
Home sales are also moving slower in Broward County when compared to last year with the median time to contract increasing from 17 days to 32 day and median time to sale going from 60 days to 70 days.
Overall it appears that both Miami-Dade and Broward county are facing similar downward trends in sales activity, but year over year price growth is still there and inventory levels are still relatively low.
Market Response to Rate Hikes
Similarly to Miami-Dade County, Broward County’s housing market is in a state of flux. Interest rate hikes towards the end of 2022 forced many homebuyers to the sidelines and had a significant impact on Q4 real estate performance nationwide.
With the Fed confirming more possible rate increases in 2023 and many Americans bracing for an economic downturn, it is likely that some South Florida submarkets may see home prices decrease, which will be more likely if inventory continues to increase as well.
The good news for Broward is that there are some cities becoming more attractive to prospective home buyers and recent transplants. The city of Fort Lauderdale has seen an increase in luxury developments, dining and entertainment that have piqued the interest of foreign nationals and out of state migrants that are seeking homes and investment opportunities that are priced more affordably than what you would find in Miami or Palm Beach.
Palm Beach County – January 2023 Analysis
Palm Beach County’s Q4 2022 performance has followed the same suit as Miami-Dade and Broward with a decrease in closed sales but stable home prices.
For example, single family home closed sales in Palm Beach County saw a year over year decrease of 35% when compared to Q4 2021. However, year over year median sales price for single family homes increased by 10%, from $509,000 to $560,000.
But the Q4 sales price is down 9% when compared to record high June median sales price of $620,000.
Sales in Palm Beach County real estate market are moving at a similar slower pace as Miami-Dade and Broward County. Median time to contract has increased from 14 to 33 days and median time to sale has increased from 59 to 76 days when compared to Q4 2021.
Additionally, Palm Beach is right in the middle between Miami-Dade and Broward county when it comes to single family home supply growth, but saw the biggest year over year increase of almost 200% (from 1.1 months’ supply of inventory to 3.2 months).
For reference, Miami-Dade single family home supply increased 100% (from 2 to 4 months’ supply) and Broward county saw a 172% increase (from 1.1 to 3.0 months’ supply).
Impacts on Luxury Market
Palm Beach is know for its luxury real estate market, including prominent beachfront estate neighborhood known as “Billionaire’s Row”. That said, Palm Beach County luxury market has not been impacted by interest rate hikes as much as homes priced under $1 million have been.
Buyers in the $1,000,000 and below price range tend to be more rate sensitive whereas buyers in the $1,00,000 and above price range are more likely to be cash buyers and don't require financing to proceed with their home purchase.
For example, closed sales in Palm Beach County for homes priced between $300,000 - $399,000 fell almost 50% in Q4 2022 when mortgage rates peaked to 7%. Meanwhile, closed sales from homes priced above $1 million only fell 25%.
When it comes to new inventory, it’s likely that we will see fewer new listings for homes priced under $1,000,000. That is because more homeowners in that price range won’t want to give up their lower interest rate and face buying a new house in a higher rate environment once they sell.
However, many buyers in the luxury market own multiple properties and may be able to sell their existing property without having to worry about buying a new property immediately. For this reason, we may see less restriction on new listings for homes priced above $1 million.
According to Miami Association of Realtors Palm Beach Division, new listings for homes ranging between $300,000 to $399,000 decreased 36.3%. Meanwhile, new listings for homes priced above $1 million saw an increase of 32.2%.
How Will the South Florida Market Evolve in 2023?
It’s tricky to determine how the South Florida market will evolve in 2023 with any true certainty.
However, a few things are more likely than not:
More people will be moving to Florida. This will continue to fuel demand in the tri-county area as more and more people are seeking the Florida lifestyle to retire early, switch jobs, or escape political shifts in Latin America.
More of the workforce is returning to the office. This could move more people back into the city centers to avoid long commutes, potentially offering a decrease in rents for suburban areas.
The median sales price for South Florida real estate will probably decrease, though not by as much as prospective homebuyers hope. We still have foreign buyers and cash buyers scooping up properties during a time where sellers are more willing to negotiate than they were last year to ensure a speedy transaction.
There is no way of knowing for sure how 2023 will pan out, but keep an eye out on both local and statewide trends to get a better sense of how it impacts your real estate goals and strategy. Make sure to subscribe to Vaster Market Insights to be the first to receive our latest report that covers Q1 2023 performance and what to expect for the rest of the year.
Ultimately, sales activity in Q4 was a little sluggish, due to recent interest rate hikes making it harder for most people to qualify for a mortgage.
For prospective homebuyers and investors: The key to making the most of 2023, is to ensure you are prepared to make your next move in the event of a rate decrease or you find a property that is priced just right.
At Vaster, we’re helping South Florida home buyers and investors find their perfect mortgage match so they can start building wealth through real estate in 2023. Learn more about our loan programs or connect with a Vaster loan specialist today to start goal setting with experts that understand your local market.