The year 2021 set new records for South Florida real estate but over the last eight months of 2022, the market slowed down, as evidenced by the smaller number of closed sales. Buyers are facing the growing interest rates and not competing with each other as much as they used to, while closing the deal takes longer. The question is, how serious the decline is. Experts are positive that this does not herald a forthcoming crash of the local market.
Roni Sterin from Keyes Company in Weston says that people are often confused when they are talking about a slowdown. They automatically think the market is going to collapse, which is not true. She believes the market has changed because it was necessary.
Comparing the 2022 performance with the 2019 indicators from before the COVID-19 pandemic can put the current events into a useful perspective, as the year 2021 was exceptional nationwide. The recent performance compared to last year’s indicators seems to show a very significant shift, says Bonnie Heatzig, Executive Director of Luxury Sales at Douglas Elliman in Boca Raton. Now, she adds, the pendulum will start swinging towards a more normal market.
The month-on-month prices of homes in South Florida now look to be at the initial stage of stabilization. For instance, the average house price in Palm Beach was $600,000 in July, while in August, it reduced to $565,000. It rose slightly to $580,000 in September and dropped again to $570,000 in October.
Although selling a house takes longer now, deals are still closed faster than three years ago. An important indicator of the 2021 housing boom was how quickly properties went off the market, as buyers were in a hurry to sign a purchase & sale contract and afraid to miss out on lower mortgage rates. Now, they are taking more time to weigh the purchasing decision. One of the reasons is that they have more options to choose from due to the growing supply. Moreover, the higher mortgage rates made housing unaffordable for some.
In 2022, the average time of closing a purchase & sale deal on single-family houses increased to 28 days in Palm Beach, to 27 days in Broward, and to 30 days in Miami-Dade County. But it was even greater in 2019, when it took 54 days to make a purchase in Palm Beach, 46 days in Broward, and 50 days in Miami-Dade.
Over the past few months, more buyers entered the market, as sellers were in a hurry to list their properties before the interest rates cooled the market. The supply has now almost doubled compared to last year. And although the supply growth was considerable, it is still much lower than in 2019.
Many experts believe that despite the rebalancing, the housing market in South Florida is still strong and will hardly collapse. Tim Costello, Chair and CEO at Builder Homesite Inc., points out that failures occur when there is a significant imbalance between supply and demand. This problem is now being solved. It would take a drastic change to move from the current situation to a market on the verge of collapse, he is convinced.