State of the housing market: Sales slump, interest rates high, but home prices keep rising

South Florida’s housing prices soared to new heights and rent rose as the region deals with low inventory.

However, rising interest rates are starting to have an effect on buyer demand.

Here is the latest on the South Florida real estate market.

Housing prices jump, but sales plummet

Housing prices rose more than 10% in South Florida compared to the year before, according to the latest numbers from the Broward, Palm Beach and St. Lucie Realtors.

In Palm Beach County, the median sale price soared 29% compared to last year to $601,000. Broward County hit a 20% rise to $560,000, while in Miami-Dade County, the median sale price rose to $565,000, an almost 10% increase from the year before.

Overall sales have plummeted however, suggesting that there could be a slight shift coming in the market. Closed sales, or the number of closed transactions, went down 25% in Palm Beach County when compared to last year, 15% in Broward County and 21% in Miami-Dade County.

“It’s due to both less inventory and things have gotten too expensive for buyers. There is a limit to how high this [market] is going to go,” Jeff Lichtenstein with Echo Fine Properties in Palm Beach Gardens said.

“It’s still a seller’s market, but I see it evening itself out. I see it becoming more balanced but still favoring sellers,” he added.

Rents aren’t slowing down

Rent increases haven’t slowed down, as inventory levels dwindle.

According to numbers from Zumper, the median rent for a two-bedroom apartment in Fort Lauderdale jumped 43% compared to last year, reaching $3,000.

For West Palm Beach, the median rent for a two-bedroom apartment rose to $2,350, a 42% increase from the year before.

In Miami, the increase was similar. Median rent for a two-bedroom apartment is $3,465, a massive 57% increase from the year before.

Interest rates are rising

Mortgage rates are at 5.4%, having risen over the past eight months. They hit their lowest during the pandemic around 2.75%, which helped fuel the housing market as buyers rushed to take advantage.

The current uptick in rates has made homebuying unaffordable for some.

“That is a big deal on what they can afford price wise,” added Lichtenstein. “It’s taking a buyer out of play that was also in the bidding war portion of it.”

New developments

Inventory levels remain low, though there are some projects heading to the market in the future.

• Ombelle is a sizable new proposed project consisting of dual towers and 1,100 apartments, many of which would be studios and one-bedrooms. If approved, it would be built in Fort Lauderdale’s Flagler Village.
• Siréne Villas is a collection of luxury townhomes headed to Delray Beach about one mile from Atlantic Avenue. With three stories and around 5,000 square feet, the units will be priced around $5 million and are scheduled to come to the market in 2023.
• New homes from GL Homes are headed to Arden in Palm Beach County. The collection of houses will range from 1,869 to 3,299 square feet with two to six bedrooms. Sales have already started on the homes.