The real estate market in southern Florida is experiencing a downturn, with experts noting that after several years of prosperity, the region has now become the epicenter of weakness in the U.S. housing market.
According to an analysis conducted by the real estate company Redfin on the 50 most populous metropolitan areas in the U.S., in April, the number of housing contracts in the Miami, West Palm Beach, and Fort Lauderdale areas in South Florida saw significant declines compared to the same period last year, becoming some of the markets with the largest drops nationwide. Pending sales in Miami decreased by 23%, Fort Lauderdale by nearly 19%, and West Palm Beach by about 14%. Data from Redfin also shows that homes in these three metropolitan areas are staying on the market for the longest durations.
Chen Zhao, the Economic Research Director at Redfin, stated, “Southern Florida is at the epicenter of the weakness in the U.S. housing market. The question facing other regions in the U.S. is, will this situation spread? The current situation in Florida is particularly dire.”
This represents a significant shift for the housing market in South Florida, which had been thriving alongside other real estate markets in the southern region since mid-2020. During this time, homes in South Florida were often sold above asking prices, and luxury home sellers were reaping huge profits. However, a slowdown in the migration to South Florida, coupled with high living costs including insurance and mortgage rates, has started to impact housing transaction volumes in the area.
In recent years, South Florida has emerged as the new capital of the U.S., especially since the economy began to recover post the COVID-19 pandemic. Many high-income American families have been relocating to the South Florida area from other states, driving the region’s economy, particularly the real estate market. Jon Paul Perez, the CEO of Related Group, mentioned in an interview with Fox News last month that this trend was due to Florida’s business-friendly policies and low taxes, attracting numerous high-income residents to settle in the state. He described South Florida as a more diverse economic entity now, stating that “Miami has become somewhat like the New York of the South.”
However, Redfin’s latest report indicates that the real estate boom triggered by the pandemic in South Florida is showing signs of weakening. According to the company’s data, a typical home in Miami currently stays on the market for 81 days, nearly double the time during the peak of the 2022 pandemic. The listing times in West Palm Beach and Fort Lauderdale are even longer, with typical properties taking an average of 83 days to sell, the longest in the U.S.
Home prices have also begun to feel the impact. In March of this year, the median home price in Florida decreased by 1.7% compared to the same period last year. In April, nearly 5% of transactions in West Palm Beach, Fort Lauderdale, and Miami were completed at prices below the listing price.
(Adapted from a report by Bloomberg)