December 2021 South Florida Housing Report

Buyers in South Florida were awarded a break from the extreme competition in the market for a moment in the Fall, but as we continue through the Winter months, sellers have regained the upper hand in the market. Single family homes have become one of the most sought-after products in the country due to the COVID-19 pandemic, especially in states such as Florida where COVID-19 restrictions have been less stringent than Northern states. Homebuyers are also flocking to Sun Belt states like Florida and Texas for job security and company relocation or lower taxes. Additionally, many buyers are still working from home even after shutdowns were lifted and now have the flexibility to move. Unfortunately, inventory levels in South Florida will not be able to keep up with this influx of new buyers as levels are already at record low levels. This shrinking supply has sky-rocketed demand and competition, putting buyers back into the arena of cash offers, waiving contingencies, etc. to combat this increased and intense competition.

The tight inventory of single-family homes has made condos a popular alternative for buyers who are unwilling to sacrifice conditions like location, non-communal living, or square footage. This increased demand has inherently increased prices of condos and this steep uptick is predicted to continue through 2022. Although inventory levels for condos are just slightly higher than single-family homes currently, the demand for condos is only predicted to continue to grow in 2022 and we will see inventory levels deplete with this increase. Additionally, very little available inventory is forecasted to be added to the market in the coming years as new construction and development is down year over year.

This overall increase in demand is most evident in average home prices. Prices have rarely wavered in their upward ascent month over month, but we did begin to see a slight slowing in late summer and fall. This can be attributed to the increase in mortgage rates, but the intensifying demand caused by inventory shrinkage is now pushing prices back up at their previous quickened rate. Mortgage rates are still on the rise, climbing to just over 3%, and are expected to continue increasing well into 2022. This increasing rate is still lower than pre-pandemic rates, which means that it’s better to secure financing as soon as possible to keep home buying costs from increasing, especially given that rates.

In addition to the influx of domestic buyers, lowered travel restrictions also gives way to an increase in the number of international buyers added to the already competitive South Florida market. Specifically, international buyers from South America and Canada have historically been two very popular transplant locations for those relocating full time or those looking to snowbird in the warm weather. Local buyers are also competing with seasoned snowbirds who are returning to the area in full force after having to brave the winter last year due to pandemic-related travel restrictions. With inventory levels squeezed, any current buyers considering making an offer would be well advised to move fast as the market is already starting to see the resurgence of aggressive competition, bidding wars, and all-cash offers from this new influx of buyers.