By Gay Cororaton, MIAMI REALTORS Chief Economist
With mortgage rates on the decline and its strong economic fundamentals, Southeast Florida’s housing market is poised for a rebound in sales and sustained price appreciation in 2024. Here are the major 5 trends we see in 2024:
- Mortgage rates will continue to trend downwards in 2024 and could hit 5.25% by year-end.
With inflation slowing, mortgage rates are likely to keep trending down as inflation slows and with the Federal Open Market Committee’s latest assessment of a 0.75% cumulate rate cut in 2024. The 30-year fixed mortgage rate could hit 5.25% by 2024 Q4, with a full-year average of 6%, from 6.8% in 2023.
- Existing home sales will rebound, with projected growth of 7%.
The decline in mortgage rates will lead to a turnaround in the housing market, with Southeast Florida’s existing home sales projected to expand by 6.7%. Single-family home sales are projected to expand at a stronger pace of 8% while condominium sales are projected to increase 5%, a continuation of the trend in 2023 where single-family home sales proved more resilient, given the rising preference for single-family homes since the pandemic that could be associated with the rise of hybrid work that has increased the attractiveness of living in the suburbs.
- Home prices will continue to rise, albeit at a modest pace of 5% following cumulative price gains of over 50% since 2019.
With higher demand from lower mortgage rates, the overall median existing home sales price in the Southeast Florida counties of Miami-Dade, Broward, Palm Beach, Martin, and St. Lucie is projected to rise at a modest pace of 5%, following the robust cumulative appreciation since 2019 of over 50%.
Tighter supply conditions in the single-family home market will support a stronger price growth of 6% while the buildup in the inventory of condominiums for sale will moderate the price growth to 4%. As of October 2023, the inventory of single-family homes on the market was at 3 to 4 months of sales, and in the condominium market, the inventory was at 4 to 6 months’ supply.
- Supply will remain tight at below 6 months’, with tighter market conditions for single-family homes than condominiums.
Single-family home months’ supply was at 4 months or lower: Miami-Dade (4.0), Broward (3.4), Palm Beach (3.6), Martin (3.3), and St. Lucie (3.3). The single-family homes market will remain a seller’s market in 2024 with 3 to 4 months’ supply as lower mortgage rates bolster demand while supply does not adjust as fast.
Inventory is likely to tighten in 2024 through mid-2025 with fewer new single-homes in the pipeline. Based on single-family home units authorized during January-October 2023, there will likely be an overall decrease of 959 single-family home permits in 2023 compared to the units authorized in 2022: Miami-Dade (-942), Broward (-247), Palm Beach (-317), Martin (+132) and St. Lucie (+417).
- Competition will further intensify for homes below $400,000, an affordable price for households earning $100,000. Demand will remain robust for $1M + market with sustained demand from high-income and high net worth buyers.
Competition will further intensify at the lower end of the market, especially for homes priced at below $400,000 , an affordable price for households earning $100,000 or below.
For homes priced at $1 million or more, supply has built up, with months’ supply at 18 to 24 months, at par with the pre-pandemic levels. Demand is likely to remain robust, with sustained demand from high income and high net worth buyers.
- Out-of-state and international migration will likely remain elevated above pre-pandemic levels due to the area’s strong economy, low business taxes and no state income tax, and the continuing recovery of domestic and international tourism and travel.
Southeast Florida’s housing market is underpinned by a resilient and dynamic economy.
Florida’s low tax environment is a major factor drawing businesses to the area. The reduction of the sales tax rate levied on Florida businesses renting or leasing commercial property, also known as the business rent tax (BRT), from 5.5% to 4.5% on December 1, 2023, further improves the climate for doing business in Florida.
Amid challenging economic conditions, $4.7 billion commercial sales transactions closed in Miami-Dade County in the first quarter of 2023, according to MIAMI’s analysis of county deed records.
Florida remains as the top destination of foreign buyers across the United States, accounting for 23% of foreign buyer transactions. Within Florida, the Miami-Ft. Lauderdale-West Palm Beach metro area is the largest foreign buyer market, attracting 47% of Florida’s foreign buyers during August 2022— July 2023. Foreign buyers accounted for 18% of MIAMI member’s dollar sales, compared to 6% in the state of Florida and 2% nationally.
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