It will take time for South Florida to fully process the long-reaching changes resulting from the COVID-19 pandemic. One of the more immediate effects, however, has been a sharp increase in home prices—thanks in combination to federal efforts consisting of low borrowing rates, and a local lack of inventory.
Across the South Florida region, prices climbed over the course of 2020. Even now, nearly 12 months since the sweeping lockdowns that slammed the country, the trend has continued, pushing prices past previous historic highs.
This isn’t unexpected, of course. The simple laws of supply and demand coupled with the typical buying frenzy that accompanies drops in interest rates are anything but unpredictable. So too is the fear of missing out on once-in-a-lifetime leverage that has seemingly gripped many buyers.
The effects are being felt right in our own backyard. According to a survey published this week from the Federal Housing Finance Agency, the metro area consisting of West Palm Beach, Boynton Beach, and Boca Raton ranked 36th out of the 100 most active housing markets. The final quarter of 2020 saw housing prices jump 12.1% alone.
Hot on Palm Beach County’s heels came Fort Lauderdale/Pompano Beach/Sunrise at number 44, and in 72nd with a final quarter increase of 10.8% in prices were Miami and Miami Beach.
Contributing factors driving the real estate market in South Florida
The fact of the matter is fewer homes are being listed. New listings across South Florida were down 17% this past January compared to the same time in 2020. Uncertainties over the work and public health landscape are the most likely culprits of this phenomenon. Yet even with those fears beginning to subside thanks to vaccine rollouts and a rise in the remote working trend, there were other factors in play prior to the coronavirus pandemic that was contributing to lowered inventory.
For instance, owners are staying in their homes longer—close to 10 years on average, where in previous years they were moving every 7 years. Additionally, new home developers appear to have underestimated the influx of demand and are racing to catch up, though this is obviously not a quick process, especially when the COVID-19 pandemic has caused issued with manufacturing lumber and appliances.
Finally, buyers with strong finances and borrowing power under the age of 50 are less discerning of COVID fears and are willing to pay a premium for what they want. Namely, Millennials—whose average age is now 33 years old—are coming into their prime. This is a generation that is even larger than the Baby Boomers, who went on a buying spree of their own back in the mid-1970s.
This all adds up to the likelihood that prices won’t be coming back down to earth very soon. Particularly with an estimated 1 million transplants expected to move to South Florida over the next decade. Those fearful of a repeat of the most recent recession shouldn’t lose too much sleep. Though current prices are about 10-20% over their historical highs, they were more than 65% over those same figures prior to that crash.
And for those looking to buy amid the steep price increases? Our best advice is not to get caught up in the excitement. We’re near the top of the pricing cycle—so be bold when it comes to finding what you want, but don’t be afraid to walk away. Having the expertise of an experienced realtor is the best possible tool available at your disposal.
Contact an expert real estate professional to guide you
Whether you’re looking to sell or buy in Boca Raton, Delray Beach, Boynton Beach, West Palm Beach, or South Florida in general, The Pearl Antonacci Group can guide you from listing through closing. Contact us today to learn more about our market, and how we can help you navigate it.