As South Florida’s housing market booms, signs of a slowdown have agents worried about a bursting bubble
The housing market in South Florida has been booming for much of 2020 — sparked by low interest rates, high demand and low inventory — but real estate experts say they consider the trend a bubble that probably won’t last.
Single-family homes have been spinning on and off the market at a fast pace, with many sellers getting offers above asking price from buyers who are taking advantage of historically low interest rates, real estate agents say.
In Broward County, single-family home sales in September were 24.9 percent higher than September 2019, and the median sale price rose 15.6 percent to $425,000, according to the Broward, Palm Beaches & St. Lucie Association of Realtors.
Outside of Broward County, the story is much the same. A study by researchers at Florida Atlantic University and Florida International University found that eight out of 10 key metro markets in Florida — including Miami, St. Lucie, Orlando and Tampa — are overpriced relative to their long-term trends with some approaching their historical peaks.
That has some in the industry feeling a sense of deja vu.
“We’re in a huge bubble type thing right now,” said Teri Arbogast of Keller Williams Partners Pembroke Pines. “I already put a house on the market, and I already got a full price offer and I haven’t even shown it yet. The last time I saw this happen was in 2004, 2005.”
Dawn Williams Bobo with Prag Realtors in Tamarac said she also sees buyers leveraging the low interest rates to make overpriced offers.
“It’s enabled a lot of buyers to be in a position to purchase more than what they were typically approved for due to the adjustment in the interest rate,” Williams Bobo said.
When buyers are spending as much as $15,000 over the asking price of a home, Arbogast said, they risk ending up under water — owing more than their homes are worth if the market declines.
During the peak of the housing collapse 12 years ago, close to half of all homes with mortgages in South Florida were under water.
And the boom of 2020 is starting to show signs of slowing down. According to a weekly report from Zillow released Friday, the rapid sales of single-family homes over the past several months has led to a lack of inventory, and a normal seasonal slow down is on the horizon. Inventory in the Miami-Fort Lauderdale market is down 1.4% over the past month and 15.4% year-over-year, pointing to a looming slow down, the Zillow report said.
In Broward County, some neighborhoods are especially popular right now as buyers seek more space for home offices, back yards and good schools.
“What I’ve seen is that everybody looking to buy a house was upgrading, and more importantly, the fact that you could have this space if you were quarantining, so you wouldn’t feel stuck or get cabin fever,” said Gianpierre Giusti of the Meza Group in Fort Lauderdale.
With the current trends, Arbogast said that while now is a good time to sell a home, she is advising clients to hold off on purchasing a new home. Instead, she says rent a home for the time being to see if the market moderates.
The condo market in Broward is favoring buyers for the moment, with sellers willing to make more concessions. The condo market has only increased slightly year over year — about 6 percent — which agents say is probably due to pandemic-related concerns over shared amenities such as elevators and gyms.
“It’s pretty shocking to see houses fly off the shelve and condos just kind of stay stagnant,” Giusti said. “It’s a market where people will over pay for houses and under pay for condos.”
But going for a condo or a rental does come with advantages for a buyer. Data from Yardi Matrix, which provides analysis and services for the multi-family real estate industry, shows that at least 20 percent of rental units have offered credits and price discounts for buyers looking to do renovations.
Rental markets in Oakland Park and Deerfield Beach are especially hot and areas such as Tamarac and East Fort Lauderdale are popular for people are renting by necessity.