State of the market: Higher mortgage rates make some sellers reluctant to list

Fewer homes are headed to the market in South Florida as buyers and sellers are hit with high mortgage rates.

Not only are buyers faced with high mortgage rates, but also high home prices as the housing market enters a transitional period.

“The market is trying to get back to normal,” said Valentina Riquezes with Related ISG Realty. “There are outside factors influencing the market right now.”

Here is where the housing market stands in terms of prices, inventory and rents:

Prices rise in the tri-county area

For the most part, prices are still steadily growing in South Florida, according to the latest numbers from the Broward Palm Beaches and St. Lucie Realtors.

The median sale price of a single-family home in Broward County rose 2.7% in April to $575,000, while the median sale price in Miami-Dade County soared to $600,000, a 6.2% increase from the year before.

Palm Beach County’s median sale price dropped to $585,000, a 2.7% decrease from the year before.

“Our home prices are starting to normalize,” said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton. “I don’t expect them to come down notably. Our prices do hold. We may have a blip in price fluctuation here and there, but when you look long term at our real estate, it has only increased over time.”

And the decrease in Palm Beach County doesn’t necessarily translate to a more affordable option. The current median sale price is still significantly higher than it was in April of 2021, when the sale price was $466,000.

“Palm Beach County has more space to grow in terms of land and more inventory,” Riquezes said.

Fewer homes are heading to the market

Fewer new listings are appearing on the market, limiting some choices for buyers.

New listings in Palm Beach County decreased by 27% when compared to the year before. In Broward County, new listings dropped by 26%. And in Miami- Dade County, new listings dropped by 30%.

Many sellers are reluctant to leave their current residences and put them on the market, due to the record-low mortgage rates they were able to lock in.

“Even if they want to upsize or downsize, it’s hard for them when they already have a low interest rate. Many people were able to refinance when they hit record lows, so now it’s a deterrent to actually move properties,” Heatzig said.

It also accounts for the drop in sales in the market. In Palm Beach County, closed sales decreased by 15%. In Broward County, closed sales dropped by 28%. In Miami-Dade County, closed sales decreased by 19%.

“The decrease in new listings has to do with the mortgage rates. Fewer new listings leaves us with less to sell,” Heatzig said. “It has a chilling effect on people who want to make a move, but their money buys less.”

The month’s supply of homes has increased, though not enough to balance the market or have a large effect on price. In Palm Beach County, the months’ supply of homes increased 121% to 3.1 months. In Broward County, it increased 108% to 2.5 months. In Miami-Dade County, it increased 73% to 3.3 months.

Rents still on the rise as residents hit by unaffordability

If it wasn’t hard enough to purchase a home in today’s market, renting is still proving difficult for most residents in South Florida.

The median rent price for a two-bedroom apartment in Miami saw a 4.5% increase year over year to $3,710.

“Real estate developments popping up across the region range from affordable micro-units to “super luxury,” but Miami’s new renters are disproportionately interested in luxury amenities. Resort-style perks like concierge services, on-site restaurants and free fitness classes are increasingly common in Miami apartment communities,” a report from Zumper, a rental platform, noted.

While rents in Fort Lauderdale decreased by about 6%, the median rent for a two bedroom was at $2,800, according to data from Zumper. And in West Palm Beach, median rent for a two bedroom rose to $2,400, a 2% increase from the year before.