After prices for luxury residential properties in South Florida reached record level in 2022, there are some concerns that higher interest rates could cause prices to reheat but not all experts and analysts are expecting that.
Watching the current demand for luxury homes and condos as more people move to South Florida from high-tax states, values in the high- end of the market remain strong, and there are great probabilities to increase in most neighborhoods. Past history showed that people who are migrating no longer like the places where they’re living now, and many of them can afford luxury-homes in this area. Records show that more houses sold for over $2,000 per square foot in 2022, than the ones sold between $1,000 to $2,000 per square foot in 2019. Also, 85 single-family homes sold in Miami-Dade County for over $2,000 per square foot in the first 11 months of 2022, compared to 10 units before COVID-19 in all of 2019.
Condo sales of more than $2,000 per square foot increased to 192 from 30 units. Sales volume was down for both luxury single-family homes and condos, but not as steep as the decline in the broader housing market in South Florida. Data from the Florida Realtors shows a steep drop in home sales in South Florida, in recent months, mostly due to higher interest rates making mortgages more expensive. The median sales price remains higher than a year ago, although it has slipped from a high mark in June.
Records from year-over-year price comparison are more accurate because there are seasonal differences in month-by-month sales. Prices are still way up from pre-COVID 19 levels and there is no expected change. Of course, it can’t trend up like that forever, nothing can, but the increase is still tremendous! It’s going to be a tough market for home sales in 2023 in the below $1 million market. Not only are interest rates higher for buyers, many sellers are reluctant to list their homes because purchasing a new one in this market is expensive, plus they would be swapping a low-rate mortgage on their old homes, with a high-rate mortgage on their new ones.
In the luxury market, buyers are more likely to pay cash, and sellers are more likely to own other homes.
Redfin recently reported that sales of luxury homes fell 38.1% nationwide in the 3 months ending Nov. 30, the biggest decline in at least a decade dropped 53.8% in Miami, 52.3% in Ft. Lauderdale, and 43% in West Palm Beach. Still Florida is not like most states. Florida led the nation in attracting new residents earning $200,000 per year, according to the IRS, and led in overall population growth based on the latest Census estimate. People coming down from domestic jurisdictions are used to paying these higher homes’ prices. So, record prices for South Florida Luxury Residential could continue in 2023!