South Florida home prices fall, but key problem remains

By MICHAEL BUTLER and REBECCA SAN JUAN, Miami Herald

MIAMI (AP) — Home prices fell again last month in Miami-Dade County and fell for the first time in months in neighboring Broward County, an uplifting sign for aspiring home buyers.

Miami-Dade’s median sale price fell to $551,250 for a single-family home in August, from $570,000 the previous month, according to the monthly sales report released Wednesday by the Miami Association of Realtors. Condominium prices also fell to a midpoint of $375,000 from $380,000 in July.

Price declines in Miami-Dade mark the second month in a row, after rising steadily from September to June and hitting all-time highs of $579,000 for a home and $410,000 for a condo.

“Prices never go up forever,” said Ana Bozovic, founder and real estate market analyst at Analytics Miami. “The steady ramp-up we had until mid-2022 was neither normal nor sustainable.”

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In August, Broward showed the first signs of a slowdown in the residential real estate market. Although condo prices held steady at a median of $265,000, the median sale price of a home fell to $562,500 from $600,000 in July.

The South Florida housing market has overheated during the two-year pandemic due to a tight supply of available homes and an influx of out-of-state buyers who have decided to call the region their new home. This drove up demand and prices as many of these newcomers outbid local residents and paid cash for homes and condos.

The pandemic-induced dramatic shift in the white-collar workplace from office buildings to homes allowing tech, finance, legal professionals and others to work remotely from anywhere during the pandemic has greatly worsened a housing affordability crisis in South Florida that began long before the coronavirus emerged in March 2020.

Natives and longtime residents of Miami-Dade and Broward waited on the sidelines, betting that runaway real estate prices would eventually subside.

For now, South Florida still has few choices for people determined to buy a home. Miami-Dade has available inventory of 3.3 months of homes and 3.4 months of condos. Broward has 2.5 months of homes and 2.1 months of condos. It’s far from a balanced market, which typically has five to seven months of supply of homes to buy.

The total number of home sales transactions increased from July to August across the region. Miami-Dade had 2,505 sales, down from 2,375, while Broward had 2,700 transactions, up from July’s 2,575. In line with a longer-term trend, nearly half of buyers last month paid cash for homes — likely to avoid rising mortgage interest rates, experts say — in Miami-Dade and Miami. Broward.

Ken H. Johnson, a finance professor at Florida Atlantic University and an expert on the real estate market, said interest rates will continue to rise for the rest of the year.

On Wednesday, the Federal Reserve announced its fifth increase to its benchmark interest rate in 2022, the third increase by three-quarters of 1% – aggressive moves to try to rein in persistent consumer price inflation. Fed rate hikes pushed conventional 30-year mortgages to an average of 6%, double the mark from a year ago and the highest level since 2008.

Johnson thinks part of the Fed’s inflation-fighting strategy to keep raising interest rates is to limit consumers’ purchasing power. Part of the Fed’s thinking, he said, is that as mortgage rates rise, fewer people will borrow against their home equity through home equity lines of credit.

“The Fed is aware that the availability of credit is determined by the size of stocks in our country and the Fed is concerned about building larger lines of credit,” Johnson said. “Many of us are concerned that this will create another form of money supply over which the Fed has no control.”

Meanwhile, Joey Francilus, a North Miami native and digital strategist, has bought a home but is reassessing the schedule due to interest rate jumps and prolonged consumer price increases. The 32-year-old wants to buy a three-bedroom, two-bathroom home in North Miami by the end of 2023, similar to the house he grew up in. His mother, Marie Severe Jean-François, emigrated from Haiti to New York in 1979 and soon after moved to Miami. She bought her house in 1998 for $88,000. Today it is valued at $400,000.

Francilus fears that newcomers to South Florida with deep pockets will continue to evict longtime residents like himself.

“We can have growth,” he said, of the housing market. “But if we value the very people who make this city what it is, then what is the cost? We lose our essence if the people who make this city can’t afford to live here.

Professor Vanessa Perry of the George Washington University School of Business studies the homeownership gap and thinks aspiring first-time homebuyers like Francilus are more hampered than others by higher mortgage rates.

“That’s a particular constraint we’re facing now, because house prices are so high and we’re seeing such huge rates of house price appreciation during the pandemic,” Perry said. “It makes it even harder for the first-time home buyer to get into the market, because they need a mortgage to buy a house and it’s even harder to qualify for that mortgage than it is. one year ago.”

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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