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How big will the housing bubble get this time?

Sales activity in South Florida real estate

There’s no telling how long the latest surge in house prices will last.  Will lack of inventory slow sales?  As prices continue to get extended into “frothy” territory, will banks tighten lending criteria?  Have they already forgotten the damage done in the last housing crash?  Let’s look at a few charts of the Miami, Fort Lauderdale and Palm Beach real estate markets.  We will look at the following:

  • Average sale prices of single-family homes
  • Average sale prices of condo properties
  • Transaction volume in the single-family home market
  • Transaction volume in the condo market
  • Inventory of houses for sale
  • Inventory of condos for sale

South Florida house prices

House prices in Miami, Fort Lauderdale and palm beach

Have real estate prices in Miami peaked yet?  Obviously the hyperactivity in the ultra luxury market dragged the average sale prices higher.  Here is a look at the average selling prices for single-family homes in the three counties during the month of October:

  • Miami – $745,297, down from $757,638 in September
  • Broward / Fort Lauderdale – $551,565, down from $568,978 in September
  • Palm Beach – $701,353, up from $656,309 in September

It would be nice if we could determine that prices are peaking, but it will take a few months longer to see if we establish at top and start to trend downward.

South Florida condo prices

Condo prices in Miami, Fort Lauderdale and Palm Beach

With the supply of houses reaching new lows across South Florida, will buyers shift to the condo market?  They haven’t experienced the same surge in prices during the pandemic, but buyers may not have a choice if they want to live down here.  Here are the latest numbers for condo properties during the month of October:

  • Miami – $389,706, down from $439,210 in September
  • Broward / Fort Lauderdale – $243,063,up from $233,110 in September
  • Palm Beach – $311,449, down from $332,192 in September

Transaction volume for houses in South Florida

Home sales in Miami, Fort Lauderdale and Palm Beach

Where are we going from here?  How much will the lack of existing inventory across South Florida impact the pace of sales?  Here are the numbers for October:

  • Miami – 1,326 sales, up from 1,288 in September
  • Broward / Fort Lauderdale – 1,656 sales, up from 1,535 in September
  • Palm Beach – 1,818 sales, up from 1,744 in September

Transaction volume for condos in South Florida

Condo sales in Miami, Fort lauderdale and Palm beach

Maybe the lack of available of single-family homes is dragging buyers into the condo market.  This chart shows a pretty solid uptrend if it lasts.  Here are the numbers for condo sales during the month of October:

  • Miami – 1,411, up from 1,233 in September
  • Broward / Fort Lauderdale – 1,585 sales, up from 1,449 in September
  • Palm Beach – 1,415 sales, up from 1,257 in September

Inventory of houses on the market

Homes for sale in South Florida

As long as supply remains limited, prices will continue to climb.  This is just basic economics.  There are just not many single-family homes for sale across Miami, Fort Lauderdale and Palm Beach.  Here are the inventory numbers for houses in October:

  • Miami – 3,941, down from 4,039 in September
  • Broward / Fort Lauderdale – 3,278, up from 3,234 in September
  • Palm Beach – 4,131, down from 4,141 in September

Inventory of condos on the market

Condos for sale in Miami, Fort Lauderdale and Palm beach

The supply of condos hasn’t changed much over the past few years.  This chart is actually pretty boring compared the the chart of houses.  here are the inventory numbers:

  • Miami – 14,004, down from 14,148 in September
  • Broward / Fort Lauderdale – 7,720, down from 7,784 in September
  • Palm Beach – 5,388, up from 5,348 in September

There is no doubt that the COVID-19 pandemic has changed the housing market, but questions still remain about the lasting impact on real estate and the overall economy.  As we finish out 2020 and move into 2021, here are a few questions worth asking:

  • If mortgage rates climb from historic lows, will the pace of real estate sales slow and prices drop?
  • How will the eviction crisis impact the residential real estate market?
  • What happens when the moratorium on foreclosures expires?
  • What happens when the sugar high from government stimulus wears off?
  • Will the job market bounce back enough to keep prices elevated?
  • If housing prices remain too high, will that force more people to rent?
  • How will the rise in insurance costs impact South Florida real estate prices?