According to a newly released forecast from realtor.com on how the housing market will fare in 2022, home prices are expected to rise almost 6% in South Florida over the next year. This comes after a year and a half of already record growth.
There is some good news in the forecast for South Florida home buyers, as it may indicate that the housing market is returning to a more healthy growth rate, after over a year of frenzied demand.
“It’s what I would consider a healthy market,” said George Ratiu, manager of economic research at realtor.com.
Normal appreciation usually ranges from 2-5%, while a healthy housing market growth usually sits between 5-8%. Anything over, experts say, can become unsustainable. The high appreciation rates can be beneficial for homeowners, as their property values increases, but detrimental for buyers, especially first-timers, as they could be priced out of neighborhoods they might have been able to afford previously, explained Carlos Gobel with the Gre Group in Miami, a real estate appraisal company.
The median sale price for single family homes in the entire South Florida area is currently $475,000, data from realtor.com shows.
The median sale price for a single family home rose 19% from the year before in Palm Beach County to $500,000 in October. For Broward County, the median sale price of a home was $489,000 in October, a 17.8% annual increase. In Miami Dade County, the numbers shot up 12.6% to $490,000 for October.
According to the forecast, South Florida is expected to grow at a higher rate than the national level, which experts predict will be about 2.9% over the next year. Other areas may see higher rates. Salt Lake City, Utah is expected to see 8.5% price growth, Boise, Idaho should see 7.9% price growth and Jacksonville, Florida should see a little under 7% price growth.
It’s already increasingly difficult for home buyers to land a home in this market, as many offers that are contingent upon financing are overlooked, said Amy Snook, a real estate agent with Lang Realty in Delray Beach.
Overall affordability may only get worse for first-time homebuyers, as the forecast predicts that mortgage rates will increase to 3.6% by next December, adding about $160 to a monthly mortgage payment.
“It’s certainly going to be challenging for first time homebuyers,” Ratiu said.
Competition will still be fierce over existing South Florida properties in the next year, experts warn, as demand remains strong. Sales are also expected to increase by 3.6% over the next year in South Florida as more inventory heads to the market.
The majority of people looking to buy a home in South Florida already live in the tri-county area, said Ratiu, based on an analysis of searches on realtor.com. About 26% are coming from the northeast, while 8% are coming from other areas in Florida and 5% are coming from other parts of the world.
“What I’ve been seeing is a lot of people who have been waiting out this past year are now selling their homes to capitalize on the low inventory market and they are renting now,” Snook added.
What does 6% growth mean to the larger market dynamics? A correction is coming and could likely happen in the next two to three years, said Gobel.
“The five percent growth means it’s not going to be as hot as we’ve seen in the past few quarters, but we won’t lose half of our property values like we did in the housing bust. It’s likely going to be between 8 to12%, and [will] tied to external factors like increased interest rates.”