Is now the right time to sell your investment in South Florida?
South Florida has been experiencing a significant influx of domestic and international wealth migration. Specifically, we're seeing an influx of buyers hailing from high-tax, high-density states. They are seeking out and acquiring properties in the luxury bracket, those valued at $1 million and up1. For instance, individuals from states like New York and California, where tax burdens can be high, are seeking a haven in South Florida's more tax-friendly environment.
The character of this region's real estate market is defined by a noteworthy number of cash transactions and a high rate of migration. In fact, about 67.1% of Miami-Dade luxury buyers pay in cash1. Coupled with a consistent rise in median prices for over 11 years straight, this trend suggests a robust market that may be favorable for sellers.
However, there are factors instigating shifts in the market. For instance, the inventory of homes available for sale has been increasing gradually. This increase is easing some of the constraints that have been felt due to limited inventory. While an increased inventory might imply more competition for sellers, it also suggests a healthier, more balanced market. To put it in perspective, in 2022, statewide inventory increased by 116.8% for existing single-family homes and 65.0% for condo-townhouse units in Florida1.
As we look to the future, the strength of the South Florida housing market is predicted to carry on through 2023, albeit with a more modest growth rate than previous years1. The region ranks among the top 10 in the U.S. in terms of growth in median homebuyer income. Cities like Miami and West Palm Beach, for example, are showing substantial increases in median homebuyer income, reflecting a strong demand for properties.
The market is currently in a transitionary state. Some indicators suggest it's a prime time to sell, while others recommend caution. For example, the recent decrease in sales is primarily due to a historic high in February 2022. Currently, the market is characterized by lower inventory at specific price points and higher rates. If you have been considering selling, this could be an opportune time, especially if you've been waiting for the right moment to act1.
However, there's a persistent issue that should be taken into account: the disparity between incomes and housing prices. Despite the recent spike in rents, the fundamental gap between incomes and housing prices has been a long-standing issue. This suggests that affordability may become a significant issue for potential buyers in the future, possibly affecting demand and sales prices1.
In conclusion, while we anticipate the South Florida market will remain robust in 2023, waiting until there's even more inventory and loan rates are significantly higher could prolong the sales process1. If you're considering selling, now may be an opportune moment to start the preparations.