There is a reality check coming to the real estate market. After over a decade of easy money and wild speculation, mortgage rates have finally moved noticeably higher. This will put the real estate market under pressure. Let’s take a look at some charts.
Mortgage rate reality check
This chart only goes back to 2013, but you will see that we hit a new high in rates for this cycle in the last few weeks. In fact, mortgage rates have basically doubled since early 2022. As if housing affordability hasn’t been a big enough problem, things are getting even more challenging for homebuyers on a budget. The good news is that this massive bubble in real estate prices is set to correct. if you want to monitor rates and mortgage news, here is a great resource for all things related to lending.
The number of houses and condos listed for sale has finally found a bottom and appears to be on the upswing. There was a 21% rise in the number of houses on the market in South Florida from April to May. In April there were 6,286 houses available for sale and that number climbed to 7,636 in May. Condo inventory rose 10% from 8,738 in April to 9,574 in May. The lack of available real estate inventory has been a large factor limiting transaction volume. After a few years of declining inventory, it finally looks like things will begin to normalize.
Real estate transaction volume
The number of residential transactions declined during the month of May. There were 4,151 houses sold, down from 4,239 in April. As for condos, 5,225 units sold, down from 5,651 in April. The chart at the top of the page shows the monthly activity, below is one for the annual totals since 2012.
A reality check will eventually hit prices
Last but not least, here is a snapshot of selling prices for the area. May is most likely the last month of price increases for awhile. This craziness is just not sustainable in a higher interest rate environment. In May the average sale price of a house reached a whopping $967,571 and condo average sale prices hit $563,545. It’s probably safe to time stamp this as the top for this cycle.
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.