South Florida real estate forecast: weathering the storm
It’s no secret that South Florida’s breathtaking beaches, perfect weather, diverse food and culture, and great shopping are what draw people from near and far who wish to make their home there. Although 2017 slowed South Florida’s real estate market slightly due to Hurricane Irma, since then the market has already picked up again. Indeed, with over 30,000 people moving to Florida each month, it’s hard to imagine that 2018 won’t maintain this momentum. According to the Realtors Association of the Palm Beaches, home prices have continued their upward trend in spite of the slow-down.
Downward pressure on home prices
Luxury Broker Jessica Rosato points to the median price for single-family homes in Palm Beach Country increasing 8% since last year, to $345,000. In the Miami-Dade, Broward and Palm Beach markets combined, the average sale price of a house was $513,922 in January, and the average condo sale price was $288,302.
According to the Allied Realty Group, over the next several months, residential properties will experience longer periods on the market due to a general refusal to adapt to new pricing demands—before agents reluctantly lower prices or cancel and relist properties so they appear new to the market. Transaction volume will start to decline month-over-month, and closing prices will decline. South Florida had the sharpest drop in home sales statewide in 2017, and condo sales were also down.
Real estate forecast for South Florida: perfect time to buy luxury
According to Ryan Shear, principal for Property Markets Group in South Florida, now is the time to in invest in Florida real estate: “I literally don’t think there will be a better time to invest in the Florida property market than right now.”
Jay Parker of Douglas Elliman’s Florida brokerage calls the conditions currently at play in South Florida’s real estate market “a perfect storm.” Due to at least slightly deflated post-disaster prices; developers and sellers willing to offer reductions of 10% to 20%; a lack of new construction which means the current luxury oversupply will be absorbed; the tax reform bill that could mean huge savings for people moving to the income tax-free state; and a retirement-age population interested in luxury homes and pleasant weather, South Florida is seeing increased sales and a longer-term commitment from buyers—a shift from the investment-driven buyer of several years ago.
Indeed, this “perfect storm” benefits Miami and Fort Lauderdale buyers in particular. After a slower year than normal post Irma, the real estate forecast for the South Florida property market—ruled for so long by an oversupply of luxury inventory along with the withdrawal of foreign buyers from Latin America—2018 is offering ample opportunities for interested buyers to take advantage of the rare mix of circumstances and finally acquire that luxury condo in Miami or Fort Lauderdale. Total luxury $1-million-and-up sales jumped 29.3% in January, from 99 to 128, and Miami condo luxury sales jumped 58.1%, from 43 to 68.
According to Craig Studnicky, principal at RelatedISG International Realty, “The future pipeline for luxury projects in South Florida is almost zilch right now, and that lack of new supply is going to hit everyone,” he says, adding that buyers who want a new home need to act right away and purchase in a project that’s either recently closed or scheduled to close soon.
Well-priced inventory still low
According to Studnicky, there were very few new construction starts in 2016 and 2017, and almost none projected for 2018. Meanwhile, there continues to be a low supply of quality, well-priced inventory in the current South Florida real estate market, and forecasts predict more of the same. Just as inventory across the entire country is currently pretty tight, the same is true for Palm Beach County. While there is not enough new construction, rentals are in very high demand.
Long-term investment opportunities: Fort Lauderdale and Boca Raton
While it’s clear to see why oceanfront properties in Miami Beach and Sunny Isles Beach are considered a prime location where buyers may currently find good prices, many US buyers are extending their searches 25 miles north to Fort Lauderdale and further to Boca Raton for luxury properties, where prices are even better. PricewaterhouseCoopers ranked Fort Lauderdale 6th among US cities in its Emerging Trends in Real Estate report. According to Studnicky, Buyers can now expect to pay 200% less on a price-per-square-foot basis than they would in Miami for a similar property. This price differential has always been between 25% and 30% historically, he says.