‘Really dire situation’: Record South Florida home prices stymie many aspiring buyers

South Florida existing home prices rose to another monthly record in April, as housing options remained limited for many families struggling to make ends meet with brutal consumer inflation and the ongoing home-affordability crisis.

The median sales price for single-family homes in Miami-Dade County reached $565,000 last month, even as the number of closed home sales decreased in April to 1,246 from 1,584 a year ago — a clear indicator the tight supply of homes crimped sales, according to the monthly housing market report released Thursday by the Miami Association of Realtors. The median price jumped from $515,000 in April 2021.

In Broward County, it was a similar situation with the median price paid for single-family homes vaulting to $560,000 in April, up from $464,000 a year ago.

The condominium market retreated slightly in Miami-Dade, with the median sales price declining $10,000 from March to $390,000 in April. However, that mark still exceeded the $325,000 median a year ago. And condos in Broward were less expensive at a $245,000 median last month, compared to $220,000 in April 2021.

Existing-home sales activity and prices normally drop six months after the first uptick in interest rates, which occurred in March. That’s when the Federal Reserve finally raised its benchmark interest rate for the first time since December 2018. Lenders in turn boosted rates on 30-year mortgages. The central bank followed earlier this month with another rate hike, boosting rates by one-half of 1%, the single biggest push in 22 years. The fed is expected to keep pushing rates higher through the year.

So far, this market has defied traditional behaviors largely because of the prolonged intense demand from locals, newcomers and an array of domestic and foreign real estate investors to buy houses here.

“I have seen a rush of homebuyers,” said Denise Chambers Palmer, a broker associate in Coral Springs with The Keyes Company.

In the past few months, more local residents facing rent hikes, or their landlords listing properties for sale, opted to buy a home. However, they continue to have plenty of buying competition from out of state — think New York and New Jersey residents, as well as investors, relocating here — and often those transplants pay cash to snag houses from the locals.

“If you have a cash offer that is favorable to the seller, they don’t have to worry about the appraisal or people getting qualified for a loan,” Chambers said.

In April, nearly 30% of home sales transactions in Miami-Dade and Broward were cash deals.

Chambers saw a turning point last month as more locals threw in the towel, after months of “putting in multiple offers and losing.”

She and other real estate experts say sometime next year a combination of factors — namely much higher mortgage rates, limited inventory of existing homes on the market and many of them overpriced — finally will cool this overheated regional housing market.

Already the effect of the limited housing supply was evident last month — only 1.9 months of homes for sale in Miami-Dade and 1.2 months of inventory in Broward — and cut the total number of closed home sales transactions over the past 12 months ending in April by 338.

For people determined to keep trying to buy a home, there are buyer-assistance programs, especially for first-time homebuyers. One is the Miami-Dade Economic Advocacy Trust Homeownership Assistance Program, or HAP, which allows buyers to make between a 1% and 3% down payment on certain homes, as opposed to the typical 20%, on a house or condo capped at a $318,000 price tag. (And Miami-Dade Mayor Daniella Levine Cava on Friday will announce a $70 million Building Blocks Fund for affordable housing. The money — $15 million from the county and $55 million from for-profit and nonprofit area firms — will be used to build affordable or workforce housing developments countywide.)

“The down payment assistance goes a long way to help first-time homebuyers,” Chambers said.

Hialeah native Karina Jiron, 32, and her partner Khristian Vargas, 39, recently got pre-approved for a mortgage through the Neighborhood Assistance Corporation of America after renting for 11 years.

“When it came to renewing our lease recently, rent spikes by $300 monthly (were a) red flag for us to secure a home with a more stable mortgage payment,” Jiron said.

Bank of America, a financial partner of the Neighborhood Assistance entity since Bruce Marks founded it in 1988, plans to provide $15 billion in mortgages by 2027 through the partnership to help people secure low-cost home loans. Potential homebuyers pay no down payment or closing costs, and get a below-market interest rate on a mortgage approved without a credit check.

Last week, Marks’ company held a four-day event in Miami. Aspiring homebuyers like Jiron and Vargas participated in a workshop to learn more about homeownership, got financial counseling, then submitted financial documents to get pre-approved for home loans.

“We saw more than 15,000 people over four days in Miami,” Marks said. “People are scared and angry about the massive increases in rents. That’s a major issue that you’re seeing not just in the greater Miami area, but across the country.”

Florida International University economist Ned Murray said the runaway home prices make it difficult for Miami-Dade residents to take advantage of resources such as the county’s homeownership assistance program.

“The problem is finding a (home) that a potential buyer in this income category could locate,” he said. “With the single-family home median prices above half a million, that prices out 92% of households in Miami-Dade County, which would include everybody with 120% of the area median income.”

Murray doesn’t expect state or federal legislation that would allow adjustments to these home financial assistance programs to help people dealing with the county’s pricey housing market.

“I don’t see any changes coming in the law, because the laws were put in place to serve these programs,” he said. “At this point, we’re looking at various rental assistance programs to keep people in their homes, or not be displaced or evicted. That’s the best we can do right now under these market conditions. It’s a really dire situation.”