There’s a great quote from the Ernest Hemingway book “The Sun Also Rises” Q “How did you go bankrupt?” A “Two ways, gradually, then suddenly.” The last housing bubble caused a great deal of pain and how quickly people forget. It was just a matter of time before we would see some mean reversion in the crazy real estate market. Yes, this is a massive bubble, but we aren’t sure if it will be a gradual deceleration or another (sudden) crash. By looking at the chart above, the average sale prices in the single-family home and condo markets are starting to roll over across South Florida. The average sale price of a single-family home peaked at $943,299 during the month of April and has declined 13% to $816,625 in July. Condo prices peaked at $488,283 in May and have dropped 14% to $422,210 in July. Remember that the average sale prices tend to be more volatile and were driven higher due to the ultra-luxury sales during the pandemic. That mania appears to have subsided and reality will start to set in across the tri-county area. Anyone that bought property in this market better love it. There’s a good chance you will be stuck with it for a very long time unless you want to take a loss.
This chart sure isn’t pretty. It reflects the current sentiment in the real estate markets across the Miami, Fort Lauderdale and Palm Beach markets. Condo sales volume declined 14% from June to July. Single-family home sales declined 12% for the same period. There are still some serious supply constraints in the single-family home market. For several months that inventory shortage was driving buyers to the condo market, but that seems to have fizzled.
Mortgage rates are still at historically low levels. They were gradually lowered even prior to the pandemic, then suddenly dropped once COVID-19 hit. This has just added fuel to the fire. Can you image the damage to the real estate markets if rates ever normalized?
Annual sales activity looks pretty good compared to prior years.
This market outlook covers real estate activity in Miami-Dade, Broward and Palm Beach County, Florida. Here are just a few of the cities in each of these three markets:
- Miami-Dade – Aventura, Coral Gables, Miami Beach, Hialeah, Sunny Isles Beach, North Miami, Homestead, Doral, Miami Lakes, Downtown Miami, Brickell and Key Biscayne.
- Broward – Fort Lauderdale, Pompano Beach, Deerfield Beach, Hollywood, Hallandale, Weston, Parkland, Wilton Manors, Oakland Park, Plantation, Cooper City, Davie, Coral Springs and Lighthouse Point.
- Palm Beach – Delray Beach, Highland Beach, Jupiter, Palm Beach Island, Boynton Beach, Boca Raton, Highland Beach, Palm Beach Gardens, West Palm Beach, Wellington and Lake Worth.