The selected Florida markets are unlike most of the rest of the country in how quickly home prices appreciated this year. Median prices hit new record highs for single-family homes in Miami-Dade and condos in Orange County, and the other markets are near their peak levels. Florida’s housing market was always experiencing high demand, but the pandemic brought demand to a new level. Homes in Florida are still in the realm of affordable and land is still left to develop, which has led to more market participants. Although prices typically peak in May or June, 2023 is not a typical year. Prices could easily inch higher in August even if demand softens.
Typically, demand begins to decline this time of year, so the consistently low supply may become less of an issue. However, less of an issue doesn’t mean a non-issue. Quality new listings will certainly be sold quickly, while less desirable homes will sit on the market. This isn’t unusual, but it’s more apparent due to current mortgage rates. Potential homebuyers aren’t nearly as willing to pay a premium for a fixer upper as they were in 2020 and 2021.
Inventory hits new low for 2023 after a year-long downward trend
Inventory has trended lower over the past 12 months, which is far from the seasonal norm. Single-family home and condo inventory hitting new lows in July in Miami-Dade and Broward only further highlights how unusual inventory patterns are this year. Typically, inventory peaks in July or August and declines through December or January. Currently, inventory is so low relative to demand that any amount of new listings is good for the market. The unusually low number of new listings from January through July 2023 has directly impacted both inventory and sales. The number of home sales is, in part, a function of the number of active listings and new listings coming to market. Since January 2023, sales jumped 40% while new listings fell by 5%, whereas last year, for example, sales were up 8% by July, while new listings increased 22%.
As tight inventory levels continue, sellers are gaining negotiating power. In July 2023, the average seller received 2-4% more of their listed price as compared to January. Inventory will almost certainly remain historically low for the year, and the market will remain competitive in the third quarter.
Months of Supply Inventory for single-family homes and condos indicate a sellers’ market
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around four to five months in Florida, which indicates a balanced market. An MSI lower than four indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while an MSI higher than five indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI dropped significantly this year, indicating a market shift in favor of sellers. MSI for single-family homes and condos suggests a sellers’ market in all the selected markets with the exception of Miami-Dade condos, which is in a buyers’ market.The sharp drop in MSI occurred due to the higher proportion of sales relative to active listings and less time on the market.
Local Lowdown Data