Home prices and mortgage rates are high, especially in places like Miami. Many people who want to buy a home are looking for ways to save money. They are doing this because buying a home is usually the most expensive thing they will ever purchase. Across the country, home prices increased by 0.3% in February compared to last year. The median price of a home now is $415,500, according to Realtor.com. However, there are some areas where home prices are going down.
Miami Homes in an Affordable Range
Danielle Hale, the Chief Economist at Realtor.com, made a statement. She said, “A lot of the homes being listed for sale now are in a more affordable price range.” “When there are more affordable homes on the market, it tends to lower the overall prices.”
The number of homes for sale has increased in every area except two. Miami is one of these two areas. The more homes there are for buyers to choose from, the more houses become affordable. To get these results, the economics team at Realtor.com looked at the average prices of homes in each city in February 2024. They compared them with those from February 2023.
Present Prices of Homes in Miami
The pandemic and lockdown are significant reasons for reduced prices in Miami. Miami was a major COVID-19 hotspot and has seen the most significant drop in home prices. In February, the median home list price decreased by 8.2% from the previous year, bringing the average price down to $550,000. At the same time, the number of homes for sale in the area increased by 37.4% compared to February of the previous year.
This decline in prices is a stark contrast to recent years. Previously, Miami’s home prices had been rising rapidly as more people from other parts of the country moved to the city.
Reasons for Plunging House Prices in Miami
There was a massive surge of interest in states like Miami and Florida during the COVID-19 pandemic. Sam DeBianchi, a realtor at DeBianchi Real Estate in Fort Lauderdale, FL, who also works in nearby Miami, made a statement about this. He said, “A lot of people have moved to these places from New York and California.”
This influx of new residents caused housing prices in the area to skyrocket. By June, the average home price in the metro area reached $625,000, a 56% increase in just two years. However, such rapid increases are often followed by a decline.
More Reasons for Plunging House Prices in Miami: Insurance Costs
In the past few years, sellers were asking for very high prices and getting them,” says DeBianchi. “But now, reality has set in, and prices are dropping. There’s no need to worry, though. Most sellers are still making a profit, just not as much as before.”
Rising insurance costs are also causing home prices to fall in coastal Miami. The condo market is struggling because natural disasters make home insurance more expensive. HOA fees have also increased since the Surfside condo collapse in 2021,” says luxury real estate agent Jenny Lenz. Lenz is the managing director of Dolly Lenz Real Estate. “There are many new condo listings because sellers want to sell their properties.”
The Effect of Buyer’s Choices
Last month, home prices in Miami fell by more than 11%. Realtor.com explains this happened because fewer people are interested in buying single-family homes, and more condos are available.
In May, condos made up about two-thirds of all homes for sale. The number of condos for sale has been increasing for over a year. This increase in condo availability has affected the overall prices of homes in the Miami area. Hannah Jones, a senior economic analyst at Realtor.com, made this statement.
Dropping Prices
Condos in Miami are generally much cheaper than single-family homes. As more condos are listed for sale, the average price of homes decreases. Over the past year, the prices of condos have dropped more sharply than those of single-family homes.
In May, condo prices fell by almost 13% compared to the previous year, while single-family home prices decreased by 4.5%. Overall, the median home price in Miami fell by 11.2 percent to $439,000, according to Realtor.com.
More Condos than Single-Family Homes
There are a lot more condos available. Because condos are generally cheaper, it lowers the median listing price. However, people looking to buy single-family homes might still see the same or even higher prices,” Jones said. The housing market in Florida is facing challenges similar to those in the rest of the U.S. Due to high mortgage rates, it is getting harder to afford homes.
Additionally, Florida’s housing market has its own issues stemming from the pandemic. During COVID-19, many people moved to Florida from other states, increasing the demand for homes and increasing prices.
Plunging House Prices: A Buyer’s Impact
Interest in buying homes has decreased recently, causing a surplus of homes waiting to be sold. This surplus affects prices because there aren’t as many buyers as before. In addition, Florida is facing high insurance costs due to more frequent extreme weather events linked to climate change.
According to Jones, Florida experienced a surge in demand, very low housing supplies, and rapid price increases. As a result, home prices in Florida remain pretty high. As affordability declines, potential buyers question whether it’s still worth buying a home there at current prices.
To Invest or Not To Invest
Buyers are questioning whether investing in Florida makes sense, given all these factors, including high insurance expenses. According to Jones, the current situation feels urgent, especially in summer, due to the unpredictability of climate and weather. It is also concerning how expensive insurance will be.
Additionally, people are debating whether it is wise to invest in property in a place prone to severe heat, strong winds, hurricanes, and similar risks.