A Tale of Two Kinds of Markets
Posted on: Wednesday, 26th, February, 2020.
This week we decided to take a look at what’s happening with real estate trends in South Florida. Two very different pictures emerged.
Over the past couple of years, there has been a lot of national media attention around the hot housing markets in Dade and Broward counties (Miami and Fort Lauderdale, respectively), both markets which have benefited substantially from buyers seeking investment and vacation properties.
Zindex trends in those two counties illustrate why this attention is deserved. Both counties have experienced appreciation in the mid-20% range over the past year and both show only slight signs of slowing price appreciation in the past month.
The annualized appreciation rate over the past month is just about one percentage point lower than over the past year in Dade County and about six percentage points lower in Broward County, but both counties still have annualized appreciation rates based on data in the past month at or above 20%.
(Housing appreciation rates in the six South Florida counties over
the past month. Yellow represents the lowest appreciation rates and
red the greatest.)
While prices in both Dade and Broward appear to still be increasing, however, sales volumes are declining and housing inventory is increasing which could put more downward pressure on home prices in the future.
According to the Realtor Association of Greater Fort Lauderdale, single-family home sales in May were down 25% from a year ago and the number of homes on the market was up 300% from a year ago. Housing prices in both Miami and Fort Lauderdale are estimated by National City Corporation and Global Insight (House Prices in America) to be 64.4% and 57.3% overvalued (even more overvalued than Phoenix).
Moreover, the PMI Group scores both cities very low on their Affordability Index and estimates that Miami home prices have a 35.9% probability of declining in the next two years and Fort Lauderdale home prices have a 44.1% probability of declining over this period. Again, contrast these probabilities with Phoenix which has a 17.5% probability of declining over the next two years.