7 real estate trends set to Shape South Florida in 2023

Real estate markets across the United States have been significantly impacted by the COVID-19 pandemic, and South Florida is no exception. The region has experienced a growing number of people and businesses moving in, but there are also signs that the market is slowing down. In the first half of 2022, investors and developers who wanted to take advantage of the South Florida market enjoyed a "perfect storm" that resulted in increasing housing prices. However, the market started to slow down in the second half of the year, and this trend is likely to continue.

According to a forecast released by Realtor.com in early December, South Florida housing prices are expected to increase by 3.4% in 2023, but the volume of sales is expected to drop by 2%. These predictions are consistent with nationwide indicators showing that while prices may increase in the coming year, the number of sales may decline. As of mid-December, the interest rate for a 30-year fixed loan was 6.6%, while the interest rate for a 15-year fixed loan was 6%. These rates are about double the rates seen in January of 2022, and it is expected that the mortgage rates will average 7.4% in 2023.

Rapidly rising interest rates are likely to put pressure on real estate pricing across all sectors and impact development plans and underwriting. The increased interest rates will make it less attractive and less affordable for many buyers to purchase a home, and they will likely see more homes on the market in the new year. Accelerated interstate migration is another trend having a strong impact on the local real estate market. More Americans than ever are looking to relocate to a new metro area, and Miami is one of the most popular migration destinations among major U.S. metros.

New Yorkers make up the largest share of people moving to Miami, with people from California, New Jersey, New England, and other high-tax areas also looking to move here. Year-round warm weather, potential tax savings, and the relative affordability of homes and condos have contributed to many decisions to relocate to South Florida. Buyers from New York, New Jersey, Massachusetts, and other northern states are especially attracted to larger homes or high-end condominiums offering a plethora of amenities. Their wish list often includes dedicated office space, a spacious gourmet kitchen, a home gym, and/or a private pool. Developers are revising their projects to take these factors into consideration.

The median sales price for a single-family home across the tri-county area was $568,000 in September 2022, up 17.1% from September 2021, according to Miami Realtors. However, single-family home sales in the region had a decrease of 26.5% compared to September 2021. This trend can also be seen in the condo market, with sales dropping 26% and median sales price up 19.7%. Realtor.com forecasted existing home for-sale inventory to increase by 22.8% in 2023, more than five times their 4% increase prediction for 2022. Additionally, they predict a 5.4% increase in existing home median price, which is about half of the 10.2% increase they predicted for 2022. They expect existing home sales to decline by 14.1%, slightly more than the 13.8% decrease they predicted for 2022.

As the cost of homeownership increases, renters will be faced with similar roadblocks. Rent is predicted to go up 6.3% year over year nationally, which could make it more difficult for would-be buyers to set aside savings for a down payment on a home.

Courtesy:?MARC FEIGELSON, CPA,?AND?GEOFFREY ADAMS, CPA?

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