Despite falling home sales last year, South Florida’s median prices for houses and condos increased as people competed for homes to buy. This is an aerial view of North Bay Village, near housing hotbed Miami Beach.
Home sales in Miami-Dade County plummeted in 2022 compared to the prior year, the strongest indication the frenetic homebuying spree that defined South Florida during the ongoing coronavirus pandemic finally has ended.
The county recorded 32,627 single-family house and condominium sales last year, a 20{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} drop from 39,394 sales in 2021, according to the Miami Association of Realtors housing sales report released late Friday.
The median prices in December for houses and condos provided further evidence of a slowing residential real estate market. The midpoint prices were $530,900 for houses and $374,500 for condos, only slightly higher than year-ago prices and the second-lowest monthly figures in 2022. This easing of pricing momentum as home inventory remains tight indicated the pandemic-fueled market was weakening as the year closed.
To be sure, Miami-Dade finished another year in which the monthly median prices showed sellers had the upper hand. The average midpoint price for 2022 settled at $555,013 for single-family homes and $388,586 for condos, up from $495,333 and $325,649, respectively.
Housing market trends were similar in Broward County, where there were 32,573 sales last year, down 19{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} from 40,423 in 2021. In December, median prices of houses and condos in Broward also rose moderately compared to the previous year.
Over the past 12 months, Broward’s average monthly midpoint price of $553,125 for single-family homes mirrored Miami-Dade. But the condo slice of the market was cheaper with a $254,083 average condo in 2022, compared to $217,871 in 2021.
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As the South Florida housing market slowed in the final months of last year from its breakneck speed, a disconnect developed between buyers and sellers. Looking ahead, there’s a chance by midyear that homebuyers could be on equal footing with sellers in a balanced housing market. Expert say don’t, however, expect monthly home prices to fall below the prior year, because there’s still strong demand to relocate here from the Northeast, other parts of the country and Latin America.
Buyers and sellers are on different wavelengths here and in many parts of the United States, said Mariya Letdin, a business professor at Florida State University. The high prices and annual slowdown in sales volume exemplify their disconnect.
“If a seller is patient, they will not transact at prices that fall below their expectations. If sellers see the reality doesn’t match expectations, they will wait,” Letdin said, noting that the higher median prices in South Florida are the result of “sellers refusing to list at lower prices. … They can do that for a few months, before reality sinks in.”
The Federal Reserve’s push all of last year to boost its benchmark interest rates to thwart inflation, led to higher mortgage rates, which eventually took the steam out of South Florida’s overheated housing market. As of Friday, Freddie Mac, the government-sponsored mortgage lender and secondary market buyer, reported an average 30-year mortgage rate of 6.15{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, nearly double the 3.56{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate from a year ago.
Looking back on 2022, the region enjoyed a robust housing market, but one in which the affordability gap widened more than perhaps anywhere in the nation. The continued population growth in South Florida kept home sales activity and price tags on a steady upward trajectory during the first half of last year, reaching a record median price of $579,000 for a house in Miami-Dade in June.
Many wealthy people relocated to the Miami area last year to take advantage of remote work, low taxes, loose COVID-19 restrictions and warm weather. Companies also expanded and relocated to South Florida, drawing middle- and working-class employees from elsewhere in the country.
“What we’re seeing is that the demand is still strong,” Alyssa Brody, head of New York real estate brokerage and marketing firm Development Marketing Team, said of the desire to live in Miami and South Florida overall.
The emergence of a technology sector and growing financial hub in Miami, Brody said, has brought global financial services giants like Citadel to the city. In perhaps the most high-profile relocation, the Chicago-based hedge fund operator run by billionaire Ken Griffin said last year it’s moving Citadel’s corporate home and securities trading operations to Miami. That corporate move alone will bring thousands more workers here over the next few years. Despite global cryptocurrency markets hitting headwinds that rattled Miami, area residents for the large part have more diverse job opportunities than in the past.
The well-paid newcomers bid up houses and condos in Miami-Dade in 2022, with many paying cash to get the homes they wanted. In December, just over 40{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of home sales were cash deals, sharply higher than the 28{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} national average.
“The challenge that Miami had over the years is there was no industry here to work in,” Brody said. “Now that these industries are opening up,” the labor market will continue to become diversified.
Despite Miami emphatically putting itself on the world stage in business and finance, it came with a high price and exacted a toll. The housing market and broader cost of living kept many longtime residents and natives from buying homes and made it extremely difficult to maintain apartments as rents soared.
Take Jackson Health System physician resident Dr. Onome Oboh. After being handed a 32{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} monthly rent hike — to $2,700 per month from $2,050 per month — to live in Miami’s Overtown section downtown, Oboh moved north to Broward.
“I caught a wave of overcharging,” she said. “At that time, they began charging $200 more for rent and would not let me sign a new lease six months before my rent went up.”
Last year’s torrid pace of home sales activity and overheated residential rental market forced many to flee the region, leaving small business owners floundering to find essential workers — especially in hospitality and personal services jobs.
Most area real estate experts predict a less competitive housing market in 2023, one that will enable buyers and renters to avoid nerve-wracking surprises.
“I don’t have a crystal ball with interest rates. We’ve all been surprised with how high they’ve gone up,” Florida State’s Letdin said. “I expect to see continued increases in (home) inventory, especially in less established markets.”
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Michael Butler writes about the residential and commercial real estate industry and trends in the local housing market. Just like Miami’s diverse population, Butler, a Temple University graduate, has both local roots and a Panamanian heritage.