Dear Neighbors,
Some people have wondered whether the higher interest rates we are seeing will result in a decline in home prices. As we examine the housing market, we see more homes now on the market, as compared to last year at this time. Indeed, SunStats – the data tool provided by the Florida Realtor Association – shows that the December (2023) inventory of townhouses and condominiums had increased 76% over the previous year. And in the 33308-zip code, there is now a 6.3-month inventory of townhouses and condominiums, as compared to 2.9 months the previous year. Similarly, the inventory of single-family homes has grown to 7.1 months, up from 4.2 months the year before. Because “months of inventory” is a measure of supply and demand in the real estate industry, the data translates to buyers having more options and, conversely, sellers having more competition.
Although increased inventory tends to relieve some of the upward pressure on sales prices, the data shows that median single-family home prices in the 33308-zip code still increased 16% over the previous year; median townhouse and condominium prices, however, decreased 1.8% over the previous year. Going forward, home sales in South Florida are forecast to increase more than 7% by the end of 2024, whereas home prices are forecast to rise about 5%. Several factors underlie the belief that the South Florida real estate market will remain strong:
Climate – South Florida’s warm tropical climate attracts many snowbirds and northern retirees who are seeking a place to escape the cold weather, particularly during the winter months. This demand tends to drive up housing prices.
Tourism – South Florida is a popular tourist destination. The steady flow of tourists not only boosts the local economy but drives a demand for short-term and long-term rental properties.
Job Market – South Florida’s economy is diverse, driven not only by tourism but by such industries as finance, health care, and real estate.
Demographics – South Florida’s population – retirees and others – is growing and is projected to continue to do so, further driving housing demand.
International Buyers – International buyers, not only from Canada, but also from Latin America and Europe, look favorably to South Florida, helping to power the housing market.
Conclusion – Although some economic factors, such as higher interest rates, may be tempering the rise in housing prices, we are not seeing – nor do we expect to see – any material decline in home prices.
Your neighbors,
Nancy and Justin