Home » Market Outlook » Market Insight » New Year, New Market

New Year, New Market

The reality of real estate is that prices cannot go up forever. At some point, we have to get back to normalization. After an unprecedented. Of well over a decade with interest rates artificially suppressed, prices had nowhere to go but up. The bottom line is that the party is over. Although we may not see an immediate crash in real estate prices across the South Florida market, we will eventually see inventory rise, prices drop, and a return to normal.  Speaking of inventory, here is a snapshot of houses and condos across South Florida.  It’s hard not to notice the steady climb in condo inventory.  With skyrocketing insurance costs and the need for HOA to fully-fund their reserves, owning a condo property in Florida appears to be losing it’s luster.

New year, new inventory across South Florida

This path to normalization may take several years. The bottom line is that housing is no longer affordable for anyone. It’s not just mortgage rates, but take a look at the rising cost of insurance in South Florida that will continue to be a burden on prices for some time to come. There’s a good chance that this issue is never resolved and you will basically have to own your property in cash and self insure because nobody wants to take the risk anymore. Maybe South Florida just becomes a place for the rich / cash buyers to settle because at some point they’re the only ones that will be able to afford property down here.  Take a look at the average sale prices through the end of 2023.

Sales prices decline in Miami, Fort Lauderdale and Palm Beach

Did your real estate agent tell you in the past few years that prices will only go up? Hopefully they let you know that if you were buying in the last few years, you could experience a decline in value, well below what you paid. Who is the next buyer? Who can even afford to buy at this point? The answer is not many people can afford to buy, so something has to give. Either mortgage rates gradually come down as we move into a recession and prices become more affordable, or another option is that prices start to come down on their own. Either way this won’t happen overnight and may be different than the last cycle where prices collapsed during the 2008 financial crisis. Over the past few years people seem to have forgotten all about that and the damage that it caused.  Maybe that’s because prices were never allowed to fully correct. Instead, the government and courts put a moratorium on foreclosures they worked to resolve any lending defaults, and kept interest rates at such a low level they basically created the bubble that we’re in today. Nothing was fixed.

New Year, higher mortgage rates

This real estate 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, Sea Ranch Lakes, Lauderdale by the Sea 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.