Florida Housing Market Gets ‘Worrying Sign’ – Newsweek

3 minutes, 29 seconds Read

Florida’s rising home prices are a “worrying sign” for the housing market, experts revealed in a recent study on the Miami metro area.

Florida Atlantic University and Florida International University said in their report that the soaring housing premiums in the Miami market are “a potential worrying sign for the housing market,” even as rents slow down and interest rates remain high.


Buy/sell, rent/lease residential &
commercials real estate properties.

The study found the average home in south Florida is 34.7 percent overvalued relative to its long-term pricing costs. That’s an increase of 15 points from a month earlier.

“This trend does concern me as prices are still going up in the Miami metropolitan area, but not in the rest of the measured areas in Florida,” FAU real estate economist Ken Johnson said in a statement. “Price growth should be tepid considering the slowdown in rents and rising interest rates, but South Florida prices continue to rise despite these market forces.”

Miami house
A for sale sign outside a mansion at Miami Beach. Miami’s housing market has remained unaffordable as premiums keep high, a new report found.
A for sale sign outside a mansion at Miami Beach. Miami’s housing market has remained unaffordable as premiums keep high, a new report found.
Jeffrey Greenberg/Universal Images Group via Getty Images

Johnson said the rise in south Florida’s premiums may reflect a supply issue in the local market that is not yet addressed.

“We want property prices for an area to closely track the area’s long-term property pricing trend,” Johnson said. “This allows purchases today to be worth more soon without worrying about home prices violently swinging above and below the trend. This is a key factor in ensuring the American dream of homeownership. Unfortunately, this has not happened for the last two cycles in South Florida.”

Read more: What Is a Mortgage? Types & How They Work

Other areas in Florida are not experiencing the negative housing reality. Tampa saw a four-point decrease in housing premiums, while other cities like Cape Coral saw as much as 63-point declines.

Nick Giulioni, the CEO of real estate solution platform OffLeashConstruction.com, said buyers are currently re-entering the market with renewed interest.

“After a quieter 2023 with rising interest rates dampening demand, the stable rates of 2024, along with indications from the Fed that rates will remain elevated for an extended period, have spurred buyers to act despite higher costs,” Giulioni told Newsweek.

Still, on the supply side, many sellers who got mortgages with interest rates of 4 percent or below are not in a hurry to sell and will instead wait until their asking prices are met.

“This reluctance to sell is tightening the supply in key markets, contributing to the rising prices, especially in regions like Miami, Tampa, and Orlando, where demographic shifts are also at play,” Giulioni said. “An influx of residents from states with higher taxes continues to drive demand, exacerbating the price hikes.”

Due to this, some markets that were historically more affordable will continue to see pricing pressure, which could change community demographics over time, Giulioni said.

Experts say because Miami is still experiencing high growth, the increasing cost of real estate will force average earners outside of the market.

“Florida is typically the country’s second largest real estate market, so it is no surprise to see that housing prices are still growing strong due to limited inventory,” Alan Chang, the founder and president of Vested Title & Escrow, told Newsweek. “Housing is a classic supply and demand price model. When demand exceeds the current available supply, the cost of that supply grows, regardless of other factors.”

Read more: Compare Top Mortgage Lenders

Nationally, existing home sales declined by 4.3 percent last month, down 3.7 percent compared to a year before, the National Association of Realtors found in a recent report.

The low housing affordability is also seen in median existing home sales prices, which climbed by 4.8 percent to $393,500 year over year in March.

The Federal Home Loan Mortgage Corporation (Freddie Mac) previously predicted home prices would only grow by 0.5 percent in 2024 and 2025.

Uncommon Knowledge

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

This post was originally published on 3rd party site mentioned on the title of this site

Similar Posts

X
0
    0
    Your Interest
    Your Interest List is emptyReturn to Buying
    ×