South Florida condominium prices kept falling last month while the supply of units looking for buyers remained relatively steady.
Median prices for condos sold in Broward and Palm Beach counties fell to multiyear lows in August. In Broward County, the median price dropped below $250,000. It fell below $300,000 in Palm Beach County. In contrast, the median condo price in Miami-Dade rose slightly in August compared to a month earlier, to $410,000.
The pace of closed condo sales has been under pressure for two years after experiencing significant demand and price hikes during the COVID-19 pandemic. The condo market also has had to absorb much higher mortgage rates for borrowers and a series of state-mandated reforms for older condo buildings approved in the wake of the Champlain Towers South condo building collapse in Surfside in 2021 that killed 98 people.
The number of closed sales of condos in Miami-Dade was down 13% in August compared to a year earlier. Sales have fallen by a double-digit rate for five consecutive months.
“The decline is due to elevated mortgage rates, lack of inventory at key price points and lack of FHA loans,” the Miami Realtors Association wrote in a statement. “The regulations will give Miami the strongest, most resilient inventory in the nation,” the statement said.
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One continued bright spot are luxury-priced condos — those more than $1 million. Sales of those condos jumped by double digits in Miami-Dade and Broward. These units tend to be newer and not subject to many of the new rules put in place after the Surfside condo collapse. The buyers of these higher-priced condos also may not be as vulnerable to changes in mortgage rates when they pay for their units in cash.
Only a handful of condo buildings in South Florida are eligible for Federal Housing Administration-backed loans. Buildings must meet a set of criteria to qualify for buyers to use FHA loans. Just 16 buildings across the three major counties in the region have been approved.
Single family home prices have held up despite a slowdown in the pace of sales. The median price in Miami-Dade has hovered between $630,000 and $670,000 since the beginning of last year. Broward and Palm Beach County home prices have averaged a bit over $600,000. One consequence of the tight range of prices is a much slower annual growth rate. While home prices shot up for a couple of years during the pandemic, the rate of increase has slowed considerably.
Prices also have been helped by a tight supply of homes looking for buyers. Owners with mortgages who refinanced five years ago may be reluctant to give up historically low mortgage rates.
The Federal Reserve cut its target short-term interest rate this month for the first time this year. Mortgage rates subsequently fell with the average 30-year mortgage at 6.26% last week, according to data from Freddie Mac.
“The Miami market area’s housing outlook is only poised to turn even brighter as mortgage rates continue to head to 6% by year-end in the wake of the Fed’s latest rate cut,” Miami Realtors Association Chief Economist Gay Cororaton said.
