2023 South Florida Mid-Year Report

This Lamacchia Mid-Year Housing Report presents overall home sale statistics as of the first six months of 2023 compared to the same period last year, January 1st to June 30th, 2022. Highlighted in this report are the average sale prices for single-family and condo/townhomes in South Florida (Miami – Fort Lauderdale – West Palm Beach MSA) along with the number of homes listed for sale and newly pending.

The Number of Sales Decrease by 25.5%

  • Sales declined for both categories; single families are down 19.1% bringing sales to 19,212 from 23,734. Condo/townhome sales are down 30.5%; there were 30,830 in the first half of last year and 21,414 the first half of this year.
  • You can’t buy what isn’t for sale. Sales aren’t down due to lack of demand but due to a lack of supply (listings) for both condo/townhomes as well as single families. Listings are the lowest they have been in recorded history, click here to read our recent report (or see below in our Listings section).
  • Inventory, although up over last year is struggling to keep up also because although it’s become a bit more complex buying in Florida, other reasons like lower taxes are still bringing people in droves. Saying that inventory is up over last year isn’t saying much as it was lower by roughly 10,500 units for all property types in the beginning of the year compared to the beginning of this year.
  • This is the second year in a row that sales declined in both categories. This is partially because last year’s decline was due to the inability of keeping up with the Covid-era frenzy, and this year is largely due to the increased rates, but also extreme weather has been a deterrent not only for buyers but also for insurance companies, making the purchase process more difficult.
  • Demand in sunny Florida has been negatively impacted by the changed rules for second homes, as well as a lack of affordability.
  • HOA’s have had to their fees due to more strict regulations to ensure structural safety due to the Surfside collapse which has made owning condos less of a financial alternative to the more expensive single family.
  • The chart below depicts how sales in 2023 so far are lower than 2022, but the gap from year to year is closing. It was a tough winter for sales in South Florida, but the tides may be turning.
  • The number of sales is now lower than pre-pandemic levels.

Prices Up 0.1% in South Florida

Average sale prices in South Florida stayed basically level, up by a tenth of a percent, now at $711,839 over $711,327 in 2022. for Miami – Fort Lauderdale – West Palm Beach MSA.

  • Single family prices are down by 1.6% now at $927,001 from $941,670. Condo/townhome prices decreased as well by 2.7% now at $524,506 from $538,876.
  • It was predicted in last year’s midyear report that prices wouldn’t continue to rise at the rate they were and that certainly came to fruition. Inventory in South Florida rose over the second half of last year, which accounts for the slight price drop in singles and condos as prices typically rise when inventory is diminished by demand.
  • Inventory has however been declining since January indicating that demand is consuming supply. If that continues to be the case, prices will hold steady and may rise again in the near future.
  • In the chart below, you can see that prices were up year over year in 2 out of the 4 months in 2023. Previous years depicted significant increases and this is the first year where a slowdown is apparent.

Homes Listed for Sale

Listings overall decreased by 19.1% in the first half of 2023 over the first half of 2022 now at 57,160 from 70,629. New single-family listings are down by 22.5% and are down by 16.1% for condos/townhomes.

  • We recently published a report that covers the first half of 2023 which exhibited the least number of homes listed over a 6-month period (two consecutive quarters) since records have been kept (red line). This sure explains why every Realtor feels like business is so slow and why 2023 kicked off with very tight inventory.
  • Recently, sellers have been reluctant to list their properties because it’s likely their current mortgage rate is significantly lower than the current rates for purchasing a new property.
  • While a market adjustment might create some hesitation among buyers and sellers, real estate remains a need-based market. People will continue to engage in buying and selling properties as life changes necessitate relocations, upsizing, or downsizing.
  • As the number of listings decreases, we can expect a decline in pending sales since new listings serve as an indication of future accepted offers.

Pending Home Sales

Pending home sales in South Florida decreased by 20% over this timeframe in 2022. There were 48,537 pending sales in 2023 compared to 60,678 in 2021. Single family pending sales decreased by 13.6% and condo/townhome pending sales decreased by 25%

  • The increase in mortgage rates has reduced buyer affordability, causing a great deal of sticker shock when compared to historically low pandemic-era rates. Some buyers have bailed on buying and have opted to rent for the time being.
  • Some buyers who required mortgages might have submitted offers when rates were much lower. However, by the time their offer was accepted, the higher rates could have disqualified them from affording the purchase price, leading to unattainable transactions and a decrease in pending sales.

Predictions for the Rest of the Year:

Graph showing South Florida Inventory of homes for sale on a monthly basis
S. FL monthly inventory

Many sellers are hesitant to list their properties due to the attractive low interest rates they secured during the Covid era, making it challenging for them to accept the current rates, which are around 7%.  We expect that rates will stay in this range for at least a few more months and inventory will continually be squeezed.

Lack of home sellers will absolutely continue, and we do expect that we will finish 2023 with the least amount of homes listed since data has been recorded. Only when faced with necessity or significant life changes do sellers feel compelled to put their homes on the market. Events such as divorces, expanding families, relocations, and downsizing have driven market activity, but even these factors have not been sufficient to meet the demand with an adequate number of homes. Many who originally planned on working from home forever had to make their way back into the office causing some buyers to pull out of the market.

Buyers who are actively searching for homes are determined to find the perfect match that fits their requirements and budget. However, due to increasing rates and some complex insurance and condo requirement circumstances, their affordability is now lower than last year. This underscores the importance of monitoring rates and maintaining up-to-date pre-approvals. If a drop in rates occurs, buyers are strongly encouraged to promptly update their pre-approvals to be ready to strike.

Given the current low inventory and stable prices, a housing price crash is not anticipated at all. Although interest rates have increased compared to the pandemic period, historically, their level is still relatively moderate. Many experts believe that rates around 5-6% will become the norm in the long run. In light of this perspective, sellers should not delay selling and moving into a new home, as waiting for significantly lower rates might lead to missed opportunities for finding the perfect home. On the other hand, if rates do decrease while prices remain steady, refinancing could be an excellent opportunity for homeowners to secure a lower interest rate if possible.

Data provided by SunStats then compared to the prior year.