What happened in the Miami Real Estate Market in 2023?
Is the market crashing or in a correction?
Sales are down in the Miami Real Estate Market in 2023.
The 4th Quarter got off to a slow start as interest rates jumped to above 8% while spending the summer in the 6-7% range. This jump to 8% spooked the market and everything just "paused". It wasn't until November 1st when the Federal Reserve came out and said they were not going to increase rates for the 2nd meeting in a row while also signaling to the market that they were done raising rates as inflation pressures were decreasing that rates started to go back down.
Here we look at Single Family Homes and Condos in some of the more popular areas of Miami, areas we know well and do business in. We look at 4th Quarter #'s and also 2023 vs. 2022. We have a lot to cover so let's jump right in...
For single family homes in Coconut Grove, Coral Gables, Pinecrest and Miami Beach, specifically South Beach. The % Change on bottom row is from 3rd to 4th Quarter, and except Coconut Grove which increased 31% all areas saw the # of Sales decrease dramatically while prices held or increased slightly.
Year End totals for 2022 vs 2023, and across the board the # of Sales is down, 19%, 17%, 11% and 25%. Prices held steady or increased even though Interest rates increased dramatically year over year which just goes against all economic theories.
For Condos we cover South of 5th, Downtown Miami, Brickell and Coconut Grove which are some of the most popular areas in the Miami Real Estate market for Condos. Lets go straight to the bottom line which shows # of sales down for all with only Coconut Grove showing a slight increase of 5%. We want to point out that Coconut Grove was also the only area of single family homes that saw the # of sales increase from 3rd to 4th Quarter. Now we look at pricing... once again Prices increased or held steady.
Year end totals for 2022 vs 2023. And across the board the # of Sales is down, 37%, 37%, 43% and 27% That is almost double the decrease versus single family homes. And we see the same theme, # of sales down while prices holding steady or increasing.
In summary, we saw the market in homes and condos, from 2022 to 2023 the # of Sales is down across the board while prices have increased or held steady. We feel the # of sales is down due to a few factors:
1) Interest Rates - When rates jumped to 8% the market paused. Even though rates are now in the 6.5-7%, we know that even at these rates a lot of Buyers are priced out of their ideal price range and some Sellers cannot list their homes as they bought their home when rates were at all time lows in the 2.5-3% which once they list and sell they become Buyers and therefore may be priced out of the market as well.
2) Demand - Yes, people are still moving to Florida and Miami but that pace has slowed down from the 2 crazy years where it felt like everyone was moving to Miami. It is going back to normal.
3) Higher Insurance Premiums and Maintenance Fees.
Along with higher interest rates when you add up all these higher costs it reduces the purchasing power of Buyers. Let's touch on this briefly...
The # of sales in the condo market dropped off by double vs the single family homes. We feel this has to do with the huge increase in Maintenance Fees in the last couple of years and the passing of Special Assessments to cover necessary and required repairs as well as new reserve requirements. This is the result of the collapse of the tower in Surfside in the summer of 2021 which has brought on new rules and regulations for condo buildings.
Right now there are fewer companies writing insurance policies in the State of Florida especially Miami and the cost of insurance has sky rocketed while some older homes if they haven't been updated may not even be able to get insurance. We have also started to see some condo buildings especially the older ones not being able to get insurance. Mortgage companies and banks will not give you a loan if you cannot insure the property so you will have to pay CASH or look for another property. THIS IS A VERY IMPORTANT part of the HOME SELLING and BUYING process which we feel doesn't get enough attention so we are going to do a separate video on what to look for and look out for when selling and buying. Stay tuned for that video.
It is going to be an interesting year in the Miami Real Estate Market. As sales have decreased in 2023, we feel that if 2024 is going to be a stronger year we need to see interest rates decrease as we are not only facing some headwinds in the market which we just mentioned but that doesn't take into consideration that this is an election year which from our experience having been in the market for over 18 years can slow things down especially as we get closer to the Elections. So we really need to see a strong first half of this year if things plan on getting better. We will keep our fingers on the pulse of the market and report back to you soon. Thank you for watching. See you soon! :)