South Florida Real Estate Market Trends
Your <b>South Florida Real Estate market trends 2018</b> edition. What is coming for south florida real estate market trends 2018 Even for those accustomed to dramatic and fast-paced change, 2017 brought a significant amount of political, economic, and natural-disaster-linked occurrences and the majority of these occurrences resulted in some type of effect on the housing industry in South Florida. Some of the most significant happenings to affect South Florida residential real estate in 2017 include continued for-sale inventory shortages, an increased level of new home construction, median price increases in many portions of the market, Hurricane Irma, and tax reform. Despite the hurdles, South Florida’s strong economy and continued employment growth have sustained, home prices have continued to climb in most areas, there is a high level of housing demand throughout the area, and builders have their sights set on filling some of the inventory shortage gaps in the months ahead. Whether from the viewpoint of a potential first time buyer or from the perspective of a seasoned property investor, the big question is with regard to the state of the South Florida housing market and whether now is the right time to buy. The South Florida housing market has shown its resilience, stability and continued growth despite the challenges it has faced, and experts say now is a great time to buy a home in South Florida.
A narrow supply of available homes has slowed sales across South Florida and this shortage has helped to push prices higher as buyers are presented with little choice but to pay more for what they want. Sales of existing, single-family homes declined for 2017 in comparison to the prior year, according to data released by local REALTOR® organizations for Palm Beach, Broward and Miami-Dade counties. Across the three counties, buyers have been finding fewer single-family home listings in the more moderate price ranges. The answer for some homebuyers has been to purchase a townhome or condominium home in a more moderate price range.
The Florida Residential Market Sales Activity Report for December 2017, prepared and released by Florida REALTORS®, shows the number of closed single-family home sales for Broward, Miami-Dade and Palm Beach counties was 3,743, indicating a 4 percent decrease year-over-year. The median sales price was $340,000, indicating a 7.9 percent increase year-over-year. The number of townhome and condominium home sales for the tri-county area closed at 3,567 for December, indicating a 3.4 percent increase year-over-year, and the median price was $188,950 (showing an 11.1 percent increase year-over-year).
“What’s ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it’s putting on prices in several parts of the country,” said Lawrence Yun, Chief Economist for the National Association of REALTORS® (NAR) in a statement. “Sales have been unable to break out because there are simply not enough homes for sale,” added Yun. Reports indicate prices have been on the rise in the tri-county region since 2012. A forecasted increase in new home construction is expected to improve inventory levels and alleviate the rising prices. That is an insight we can use for the South Florida real estate market trends.
For a comparison of the South Florida housing market to the market conditions statewide, according to the latest housing market data released by Florida REALTORS®, there were an increased number of closed sales and higher median prices statewide in December. Sales of single-family homes across the Sunshine State totaled 22,903 last month, an increase of 2.6 percent compared to December 2016. The median sale price statewide for December 2017 was $244,185, an increase of 8 percent in comparison to December 2016. For townhomes and condominium homes, there were a total of 9,193 sales last month, an increase of 6 percent compared to December 2016, and the median sale price was $180,000 (an increase of 7.8 percent year-over-year).
According to the most recent data available from the National Association of REALTORS® (NAR), the national median sales price for existing single-family homes in November 2017 was $248,800; 5.4 percent higher than the same month in the prior year. The national median existing condominium home price was $242,500.
It is important to note that though the trend of limited inventory resulting in a lesser number of sales and an increase in median prices is relevant in most of the South Florida market, there are areas such as Southwest Florida’s Collier County, that are experiencing a leveling out of home prices and a slight increase in sales. Collier County, which includes Naples, Immokalee and Marco Island, had 388 single-family home sales for December (a 1.3 percent increase year-over-year) and a reported $449,500 median sale price (0.1 percent decrease). Townhome and condominium home sales closed at 399 in Collier County for December 2017 (a 1 percent increase year-over-year) and the median sale price for townhomes and condominium homes was $251,250 (an 11.8 percent decrease year-over-year). Southwest Florida was significantly impacted by Hurricane Irma, but recovered quickly as homeowners were extremely proactive in having repairs completed and putting homes that had been damaged back on the market as swiftly as possible. Seems like hurricanes are heavily weighted when it comes to predicting South Florida real estate market trends.
In discussions related to whether homebuilders will pick up the pace to fill for-sale inventory shortage gaps, Realtor.com offered some economic insights for the home building community by releasing a special edition of its 2018 Housing Forecast at The National Association of Home Builders (NAHB) International Builders’ Show earlier this month. Key points for builders included:
- Entry-level home construction offers a significant opportunity, as entry-level homes will continue to see price gains due to the larger number of buyers who can afford them and the more limited number of homes available for sale in this price category.
Millennials will gain market share as the largest number of this age group is expected to turn 30 during 2020 and their housing priorities will shift.
- Robust economies and healthy building levels will help the Southern housing markets lead sales growth across the nation.
- The federal tax reform bill could be mostly positive for South Florida, as many people in high-tax states such as New York and California would find relocating to Florida appealing. The new tax law would curtail unlimited deductions of state income, sales and property taxes from their federal taxes. The new deduction limit is $10,000 for these taxes combined, which could very well accelerate migration from the Northeast to South Florida, especially for those who earn high salaries.
Many South Florida residential real estate market experts are expecting a strong market with a substantial amount of construction for 2018. It is anticipated that new home construction will alleviate the issue of limited inventory and help to bring median prices down, making it easier for potential buyers to move forward with home purchases, whether as a novice or seasoned home buyer.
“The latest housing data shows that market activity in the final month of 2017 was remarkably normal. On a statewide basis, most of December’s housing metrics experienced similar year-over-year changes to those we saw the prior month,” said Florida REALTORS® Chief Economist Dr. Brad O’Connor. “The only major exception to this is that Florida homes selling in December largely spent less time on the market compared to those which sold in December of 2016, most likely due to Hurricane Irma effectively shortening the calendar year,” added O’Connor. The median number of days to contract for single-family homes selling in December 2017 was 41 days, in comparison to 45 days in December 2016 (decrease of 9 percent) and the median number of days to contract for condominium homes and townhomes decreased by 10 percent from 52 days in December 2016 to 47 days in December 2017.
High rents in many metro areas throughout South Florida and nationwide are also presenting an increased incentive for homeownership, as it now costs nearly as much to rent an apartment as it does to buy a reasonably sized condominium, townhome or detached property.
Mortgage rates remain relatively low, encouraging potential buyers to act. According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.95 percent in December 2017, showing a decrease from the 4.20 percent average during the same month in 2016.
So what are the South Florida real estate market trends for 2018? Despite numerous challenges throughout 2017, the Southwest Florida housing market has persevered, showing stability, growth and that the area is malleable in the face of change. The outlook for the coming year is a positive one as housing industry experts look to a strong local and national economy, continued job growth slowly pushing up wages, a greater number of homes on the market, increased number of sales, and an increased number of homeowners with equity.