In recent assessments, researchers suggest that the housing market in the West Palm Beach-Fort Lauderdale-Miami area is currently overvalued by approximately 38.73%. The surge in interest rates, nearly reaching 7%, has led to a decrease in homebuyer activity, resulting in longer listing periods compared to the peak of the pandemic, when interest rates were at approximately 2%.
Typically, a South Florida home takes an average of 45 days to sell, a notable increase from a few years ago when sellers received multiple offers on the first day. Mortgage broker Kevin Crookham, with extensive experience in South Florida, emphasizes that while purchasing power has decreased, there’s now a better chance of securing a preferred property due to reduced competition.
Crookham and industry peers are promoting the strategy of “date the rate and marry the house” to encourage prospective buyers to make their purchase now and consider refinancing later.
However, the most significant challenge facing South Florida’s housing market is the scarcity of available inventory, as Crookham points out. With roughly a million homes on the market nationwide, only about 500,000 are available, and out of those, approximately 500,000 are already under contract. This scarcity is a result of a growing population of full-time residents in Florida, including both first-time homebuyers and baby boomers.
Nathaniel Crawford, a seasoned realtor, highlights a critical shortage of middle-income housing, particularly in the $200,000 to $500,000 price range. This deficit is inhibiting many potential buyers from finding suitable homes in South Florida.
As a consequence, more individuals are turning to longer commutes, especially those relocating from the northeast. Crawford observes clients commuting from places as far as Cape Coral and Orlando, a trend expected to rise with the expansion of Brightline operations.
Another emerging trend in the South Florida housing market is the move towards multi-generational housing, as Crawford notes an increase in both domestic and international buyers seeking homes suitable for extended families.
Regarding current homeowners, some are facing challenges due to the “golden handcuffs” situation, primarily individuals who have outgrown their current residences. Those with low mortgage rates acquired in recent years might hesitate to sell in the current market, where buying another property may come with significantly higher interest rates.
Despite these shifts, Crookham believes that South Florida is not in a housing bubble. He advises against waiting for a market collapse to facilitate entry into the housing market, as he anticipates interest rates will gradually decrease in the coming year.
In terms of the rental market, average rent has seen notable increases, rising by more than 6% across the state. On the Treasure Coast, rent has surged by nearly 18% in the same time frame, and Palm Beach Gardens now sees an average rent of almost $2,800.
Despite these rising rental costs, Crawford suggests that, in many cases, it may be more cost-effective to stay in one’s current rental arrangement, unless a compromise on location is feasible.
For first-time homebuyers, the Hometown Heroes program, initially open only to those in specific professions, has been expanded to include any first-time homebuyer with a credit score above 640, who works full-time for a Florida-based company and earns less than $140,000 annually. The program offers grants of up to $35,000 for down payments and closing costs, with no monthly payment and zero interest attached.
