South Florida condo sales keep falling. Home price growth cools

The hot housing market for single family homes is cooling off as the summer heats up in South Florida. The regional condominium market remains chilled as the market deals with reforms and higher interest rates.

The pace of residential real estate sales fell in May, according to new data from the Miami Association of Realtors. Condo sales fell by double digits across the region compared to a year earlier. So did the number of single family home sales, except for in Palm Beach County, where home sales slipped 7.3% from a year ago.

The Florida condo market has been hit by reforms passed in the wake of the 2021 collapse of the Champlain Towers South condo building in Surfside. Ninety-eight people were killed when a portion of the 12-story building fell down in the middle of the night. A series of new rules were approved by state lawmakers including requiring older condo buildings to undergo structural inspections. Condo associations also have been required to set aside money to pay for regular maintenance. The reforms led to special assessments and higher monthly fees for many older condo buildings.

This week, Gov. Ron DeSantis signed into law changes to the condo reforms in hopes of easing the crisis. The law takes effect July 1. It will give condo owners more time to pay for necessary repairs and to build up their financial reserves. Structure inspections now have to be conducted by the end of this year. The previous deadline was the end of last year. It also allows associations to pause contributions to their financial reserve fund for two years in order to direct money toward any repairs that need immediate attention.

It remains to be seen whether delays will be enough to attract buyers for older condos for sale. The median price of a condo sold in May in Miami-Dade and Broward counties fell compared to a year ago. The median sale price for a Palm Beach County condo increased $10,000.

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The drop in sales and prices may be discouraging sellers. After months of climbing, the number of condo units looking for buyers fell slightly across the region.

The number of condo sales each month has now been falling for 12 consecutive months in Miami-Dade and Broward counties, and for 11 of the past 12 months in Palm Beach County. In addition to the post-Surfside reforms, mortgage rates have remained elevated and most South Florida condo buildings do not qualify for Federal Housing Administration financing, which allow buyers to get mortgages with lower down payments and lower credit scores by offering government-backed insurance. Only 21 condo buildings in South Florida are approved to allow buyers to use FHA loans. There are more than 2,300 eligible buildings, according to the Miami Realtors Association.

“Sales have remained weak with mortgage rates hovering at near 7%,” Gay Cororaton, chief economist of the realtors group, said in a statement. “The good news is that affordability conditions are on course to improve with the Fed expected to resume its rate cuts in the second half of the year.”

Federal Reserve Chairman Jay Powell testified Tuesday that the central bank is watching for potential higher inflation due to tariffs. He was non-committal to whether the agency would cut its target borrowing rate. “If it turns out that inflation pressures do remain contained, we will get to a place where we cut rates sooner rather than later, but I wouldn’t want to point to a particular meeting,” he told House lawmakers.

The condo market is barbelled, with the lowest price range picking up and $1 million-plus units moving well. The sale of condos prices between $100,000 and $150,000 was up 38% last month in Miami-Dade. Condo sales of over $1 million were up 11% in Palm Beach County. However, sales in a more affordable range for most residents – between $200,000 to $400,000 – plunged by at least 20%.

Single family homes

Tight inventory and worries about condos have helped keep prices growing for single family homes, but those price increases are slowing. The pace of home sales fell in May across the region as median sales prices were flat in Broward and Palm Beach counties, and up a modest 3.7% in Miami-Dade. A year ago median home prices were growing by about 5% in South Florida.

The proportion of home sales in cash fell in May, though it remains well above the national average. Cash sales provide some insulation to the regional housing market from rising mortgage rates and regional wages because buyers do not need to qualify for financing.

Home sellers appear to be more willing to negotiate, too. Homes sold in May closed for about 95% of asking price, which is down from a year ago. The number of homes for sale indicates a balanced market between buyers and sellers. The supply of condos for sale remains below what it was before the COVID-19 pandemic. However, with a slower pace of sales, there is more than a year's worth of inventory actively on the market.