In Florida, home-buying frenzy starts to cool as more inventory heads to the market

More inventory is coming back to the housing market and closed sales are plummeting as the buyer frenzy of the past year starts to taper.

Here is the latest on the South Florida housing market in terms of sale prices, inventory levels and rents:

Sales are plummeting as inventory comes back

Closed sales in South Florida dropped in June over 30% in Palm Beach County, 20% in Broward County and 26.1% in Miami-Dade County according to the latest data from the Broward, Palm Beaches and St. Lucie Realtors.

At the same time, inventory levels skyrocketed compared to the year before for the second month in a row. Active listings shot up 50% in Palm Beach County, while in Broward County they rose 22.5% and in Miami-Dade County they jumped 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 cannot handle these high prices and high rates … they’re not making offers,” said Patty Da Silva, real estate broker with Green Realty Properties in Cooper City. “And for sellers, I think a big portion of them wanted to take advantage of the market and they were holding for the top, and when it turned a little bit, they put it on the market.”

Buyer frenzy lessens, price reductions

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

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

Sellers haven’t necessarily caught up to this change and some have priced their homes too aggressively, believing that the market is still the same as it was a year ago.

More and more South Florida sellers have had to adjust their prices down, 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, up from 11% the same time last year. In Miami, 13.7% of homes had a price reduction, an increase from 8% last year.

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

Median sale prices creep up, rents sky-rocket

The median sale prices in the tri-county area are still rising.

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

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

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

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

New inventory headed to the market

Low inventory levels have helped fuel South Florida’s real estate market over the past two years. While not enough to address the severe shortage, here are new units making their way to the market:

•The Pierce, an 8-story apartment complex, is projected to come to Boynton Beach sometime next year. Featuring 236 units, half of those units will be workforce housing. The development will also have 16,800 sq. feet for restaurant and commercial space.

•Luxury apartments are coming to downtown West Palm Beach in two towers connected by a glass sky-bridge. It will have a total of 264 units, ranging from studios to two-bedrooms on Dixie Highway.

•The 48 luxury condos of Royal Palm Residences are expected to be finished by next summer in Boca Raton. Units will range from 2,450 to 3,700 sq. feet and will be priced between $3.5 million to $4.5 million.