Why are homes so expensive in South Florida?

If you are trying to purchase a home anywhere in South Florida (Palm Beach, Broward or Miami-Dade counties), we are sure that you are finding it extraordinarily difficult.  Asking prices have reach stratospheric levels and new listings are receiving multiple offers in the first few days.

We are constantly being asked, why is this the case?  

Simply put, it comes down to supply and demand.  During the pandemic a larger than usual number of out-of-state buyers became interested in purchasing homes within South Florida, thereby inflating the demand level.  More significantly, the amount of inventory declined as home sellers removed their properties from the marketplace.  

Housing: How High Will It Go?

With dozens of headlines in major news sources explaining how the housing market is setting new records every month, what more can be said?  In over 25 years of working in this industry, we have never experienced this level of volatility.  Just a few months ago, single-family home sales in the state of Florida were down more than 20% (year-over-year).  This past month the number of sale transactions were up by 22% and the overall dollar volume increased by 50% (year-over-year); a staggering change from earlier in the year.

Nationwide, sale transactions rose by more than 20% (year-over-year) and home prices across most markets and most price points are also up considerably, marking 103 straight months of year-over-year price gains.

We are constantly being asked, “How high will it go?”.  That’s a tough question to answer but at the current pace of sales, there is less than a three-months supply of homes on the market for sale, so unless we see additional inventory, 2021 could get even more volatile with respect to supply / demand equilibrium.

If you have clients, colleagues or friends considering selling, now may just be the perfect time to do so.

Frenchman's Reserve Aerial

The Red Hot Housing Market

Existing home sales NATIONWIDE (which include single-family homes, townhomes, condominiums and co-ops) rose 10.5% year-over-year during the month of August.  Median existing-home prices across all housing types increased by 11.4% to $310,600, marking 102 straight months of year-over-year gains.

According to Lawrence Yun who is the chief economist for the National Association of Realtors, “Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market”.  He continues “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”

National Association of Realtors – 2020 Weekly Housing Market Monitor

September 14th to September 17th

The National Association of Realtors just published the Weekly Housing Market Monitor for September 14th to September 17th.  The highly detailed report provides updated data on the housing market, mortgage forbearance programs and general economic conditions. 

According to this report, “The housing market continues to recover strongly, fueled by low mortgage rates. Contract signings during the past four weeks ended September 13 were up 23% from one year ago, a strong pace despite the slight decline from last week’s pace (26%) as we enter the Fall season.”

Real Estate – Where is it Heading?

The COVID-19 pandemic has led to significant changes in the real estate market, both for the good and for the bad.  Over the past few months we have witnessed strong demand in certain sectors like luxury residential homes (outside of dense urban cities) as well as significant weakness in the retail and hospitality sectors. 

Where things progress from here is challenging to forecast due to uncertainties with the economy and the political climate as well as the impact from the pandemic.  However, certain markets (South Florida being one of them) are starting to see signs of a recovery in most sectors.

Is the Real Estate Market Recovering?

Since the onset of the COVID-19 pandemic the commercial and residential real estate markets in Miami-Dade, Broward and Palm Beach counties have experienced significant volatility.  In the past 30 to 60 days as businesses reopened and residents went back to work, the number of real estate transactions experienced considerable improvement from their recent lows in April and May but still are far behind prior year levels. 

With the resurgence in the number of positive cases which is causing a delay in reopening, not only the real estate market but also the economy is on unstable footing.

Managing Director Chris Losquadro Appointment to the Board of Directors for the East Coast Estate Planning Council

Quantum Realty Advisors, Inc. is proud to announce that our Managing Director and Principal Broker Chris Losquadro has been appointed to the Board of Directors for the East Coast Estate Planning Council of Palm Beach County for the 2020 to 2021 Council year.

Chris has been a member of the Council for four years and is active in the estate planning community across the state of Florida.

What Does a $1 Million Home Look Like in Today’s South Florida Market?

According to the National Association of Realtors, the nationwide housing price increase for the months of April 2020 marked 98 straight month of year-over-year of existing-home price gains.

Reasons for this eight-year growth trend vary based on the individual opinion of the housing professional and have been ranged from record low mortgage interest rates to a general lack of housing inventory. For whatever the reason, what a home purchaser in South Florida could buy for $1 million today is quite different than just a few years ago. 

South Florida Property Owners Should Be Prepared to Pay More in Taxes (2020)

Despite the COVID-19 pandemic, taxable property values have risen across Palm Beach, Broward and Miami-Dade counties.  As a result it is anticipated that individual property taxes will increase unless the government officials reduce the millage rates.

According to Florida law, property appraisals are conducted in January which reflected the state of the real estate market pre-coronavirus. If the valuation occurred today, most residential property values would remain consistent but commercial properties like hotels, office buildings, retail shopping centers and free-standing restaurants would likely see a decline in their valuations due to lost revenue and tenant closures. 

2020 Countywide taxable property values based on preliminary estimates are as follows:

  • Palm Beach County: Increased 5.5% to $209.5 billion
  • Broward County: Increased 6.14% to $211.264 billion
  • Miami-Dade County: Increased 4.6% to $322.783 billion

Pending Home Sales See Record Decline in April ’20

According to the National Association of Realtors (NAR) nationwide pending home sales took a large drop in April 2020, down by 21.8% as compared to March and more than 33% year-over-year. This marks the single largest decline since NAR began tracking contract-signing activity in 2001.

Single family home pending inventory levels in Florida were even steeper with a decline of 35.1% as compared to April 2019.