Buyer’s frenzy begins to cool down as more inventory is expected

More inventory is returning to the real estate market and closed sales are plummeting as last year’s buying frenzy begins to wane.

Here’s the latest on the South Florida real estate market in terms of sales prices, inventory levels, and rents:

Closed sales in South Florida fell more than 30% in June in Palm Beach County, 20% in Broward County and 26.1% in Miami-Dade County, according to the most recent data from Broward, Palm Beaches. and St. Lucie Realtors.

At the same time, inventory levels soared from a year ago for the second month in a row. Active listings soared 50% in Palm Beach County, while Broward County was up 22.5% and Miami-Dade County was up 19%.

It’s a sign of a growing shift in the market: As some buyers back off due to rising interest rates and high prices causing unaffordability, sellers are now trying to take advantage of the real estate market by listing their properties.

“Buyers can’t handle these high prices and high rates … they’re not making offers,” said Patty Da Silva, a real estate broker with Green Realty Properties in Cooper City. “And for the sellers, I think a large part of them wanted to take advantage of the market and were waiting for the top, and when it changed a little bit, they put it on the market.”

Buyer behavior has taken on a less frantic tone, real estate agents said.

“I’ve seen fewer bidding wars,” said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton. “We have demand, we have low inventory and the same conditions exist, but it’s not as hectic as we saw six months ago.”

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Sellers have not necessarily taken notice of this change and some have priced their homes too aggressively, believing the market is still the same as it was a year ago.

More and more sellers in South Florida have had to adjust their prices lower, according to data from Redfin. For West Palm Beach, 20% of homes for sale had a price reduction, up from 12% last year. In Fort Lauderdale, 15% of homes had a price reduction, compared to 11% in the same period last year. In Miami, 13.7% of homes had a price reduction, an increase of 8% from last year.

“There is no sense of urgency on the part of the buyer. The rates are higher and the prices are still too high and there is much more inventory,” Da Silva said. “We are still getting a lot of submissions, but not as many offers. The buyers are there, but they are more demanding both in terms of price and quality”.

Median sales prices in the tri-county area continue to rise.

In Palm Beach County, the median sales price was up 24% from a year earlier to $620,000. For Broward County, the median sales price soared 18% to $590,000. It was similar in Miami-Dade County, where the median sales price was 15% higher than last year at $579,000.

“What I see is these new pandemic highs, I see them holding steady and almost becoming the new normal. I don’t see our market going back to that pre-pandemic level,” Heatzig said.

Rents also increased in South Florida compared to last year. For West Palm Beach, the median rent for a two-bedroom apartment increased 28% from last year to $2,264. The median rent for a two-bedroom apartment in Fort Lauderdale soared 34.10% to $2,870.

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In Miami, the median rent for a two-bedroom apartment is $3,290, an increase of 26%.

Low inventory levels have helped drive the South Florida real estate market for the past two years. While it’s not enough to address the dire shortage, here are some new units making their way onto the market:

  • The Pierce, an 8-story apartment complex, is projected to come to Boynton Beach sometime next year. With 236 units, half of those units will be workforce housing. The development will also have 16,800 square feet of restaurant and retail space.
  • Luxury apartments are coming to downtown West Palm Beach in two towers connected by a glass skybridge. It will have a total of 264 units, ranging from studios to two-bedroom apartments on Dixie Highway.
  • The 48 Royal Palm Residences luxury condominiums are expected to be completed next summer in Boca Raton. The units will range from 2,450 to 3,700 square feet and will be priced between $3.5 and $4.5 million.

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