High priced homes and condos are keeping the South Florida housing market afloat.
Seven-figure deals underpin the regional residential real estate market, as it grapples with condominium reforms weighing on older condos and the price of single family homes moderating after years of pandemic-fueled hikes.
The number of condos selling for at least $1 million in Broward County increased 5.6% in February compared to a year earlier. Those selling for $600,000 to $1 million jumped 14.5% year-over-year, according to monthly data from the Miami Association of Realtors. The sale of million dollar-plus homes was up 14.5% in Palm Beach County and up 3.6% in Miami-Dade.
The pace of these higher priced transactions were bright spots last month as median prices held steady while the total pace of transactions continued falling.
South Florida’s home market has been transitioning from the fast price hikes during the COVID-19 years to an era of higher mortgage rates and new rules for most condos put in place after the 2021 collapse of the Champlain Towers South condo building in Surfside which killed 98 people.
“The luxury demand is not gonna stop,” said Jorge Guerra, Jr., president-elect of the Florida Realtors Association. “My high-end condos are doing really well.”
Yet, Guerra sees a much tougher market for lower-priced condos, and the data shows just how tough the market has become for some condo sellers. The number of Miami-Dade County condos sold for between $150,000 - $200,000 fell by 48% in February versus a year earlier. The drop-off in sales activity for similarly priced condos stretches across the region.
READ MORE: Old condos crowd the market for sellers in South Florida as post-Surfside reforms loom
These lower priced units tend to be in older buildings that are required to have undergone a visual structural inspection before the end of last year. Condo associations also have to start this year budgeting for regular maintenance items. The result of both changes is that many associations have issued special assessments or raised monthly fees, or both.
The additional costs and uncertainties associated with the condo reforms have come as more condos crowd the market looking for buyers, and while buyers face higher borrowing costs compared to a few years ago. The inventory of condos for sale in Broward and Miami-Dade counties is up more than 40% over the past year. It has grown by 33% in Palm Beach County. The supply of lower priced condos is growing even faster.
Despite having more choices, it is taking longer to close on a condo sale. It took just over two months to finish a deal for condos sold in February. The median time to close on some lower-priced condos stretched three months. That could be the result of more negotiating after inspections or difficulty in securing financing.
The number of single family homes and condos for sale in South Florida has been growing almost each month since August 2023. Still, the Miami Realtors association notes the number of active condo listings has yet to return to pre-pandemic levels in the region.
Newly built homes and condos are not captured by the monthly sales data of existing units.
Cash remains prominent for buyers. Between a quarter to half of all sales are done with no mortgage. This helps insulate the housing market from changes in mortgage rates, but it's not immune to what’s happening in the economy. Borrowing rates moderated in March, with the average 30-year mortgage coming with a 6.6% interest rate, according to data from Freddie Mac.
The twin drops in consumer confidence and the stock market in March may influence the beginning of the spring season. However, Guerra, who began his brokerage, Real Estate Sales Force, in 2005, thinks the housing market is turning. “We're at the tail end of [a slowdown] from a national perspective. Florida is just about to survive it with very little damage.” Guerra also acknowledged realtors are an optimistic group.
