Not all is shining bright in the Sunshine State
Enter the term “Florida man” into a search engine, and you’ll get an array of stories about guys behaving badly in the Sunshine State. Increasingly, any variation on “Florida housing market” may result in more unwelcome news.
According to Mansion Global, the short supply of homes in Florida is causing prices to continue rising. Listing inventory was down 13% in the second quarter, according to the source.
Sobering statistics point to the downturn. In Miami, deals for luxury residences – the top 10% of the market – were down 17.7%, according to Mansion Global, although they jumped 22.9% compared to the first three months of the year. The median price of a high-end home was nearly flat compared to the same time last year – rising just 0.5%, according to the report. On a more encouraging front, the median price rose 15.3% quarter-over-quarter to just $3 million, according to the report.
Melissa Cohn (pictured), regional vice president at William Raveis Mortgage, has witnessed the impact. Low housing inventory will remain amid mortgage rates of around 7% that provide no incentive to sell one’s home in pursuit of another, she suggested.
“I do agree that prices of good properties continue to increase as there is so little inventory,” Cohn said. “With interest rates close to 7% we are not going to see more inventory on the market until rates come below 6%. People don’t want to give up their low rates.”
Condos may play a critical role in stabilizing the market but to the detriment of their dwellers: “The only wrinkle is with condos,” Cohn said. “With insurance costs and required repairs and budget reserves, many buildings are creating large assessments that some homeowners won’t be able to pay – and those people will be forced to sell, and then maybe prices will start to soften.”
Insurer adds more bad news for homeowners
This week, another development emerged that does not bode well for the market. Earlier this month, Farmers Insurance pulled policies in Florida, according to Insurance Business. The company said the pullout was a step to derisk its exposure in the hurricane-prone state. According to the report, Farmers serves 100,000 customers in Florida. Company officials noted those customers using Farmers-owned subsidiaries, such as Foremost Signature and Bristol West, wouldn’t be impacted.
“Such policies will continue to be available to serve the insurance needs of Floridians,” Farmers Insurance spokesperson Trevor Chapman said in a prepared statement. “Affected customers will receive notifications detailing when their coverage will end and will be advised of options for replacement coverage.”
Surrounding towns not immune to downturn
Back to home prices, Global Mansion reported that in the beach towns of Miami-Dade County – Sunny Isles Beach, Bal Harbour, Bay Harbor Islands, Surfside, Miami Beach, Fisher Island and Key Biscayne – it is much the same story. Transactions for single-family homes and condos each dropped 46% annually, according to the report on the second quarter. Median single-family prices fell 31% to $2.9 million, while condos gained 2% for a median price of $538,000.
In popular Palm Beach, low inventory has slowed sales for the third consecutive quarter. According to the report, sales for single-family homes plunged 34% year-over-year, with the average price falling 11% to $17.4 million.
Even the rental market has been impacted, according to one report. Competition for affordable housing has grown intense amid an increase of up to 29% in rental rates. According to the report, the state is the most overvalued in the US. By the end of 2022, the report found, the median rent price was $1,266 and soared to today’s market rate of $1,635 – an increase of 29% from the beginning of this year.
Want to make your inbox flourish with mortgage-focused news content? Get exclusive interviews, breaking news, industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
