It was a cold summer for residential real estate in Florida. The market may be warming as the weather cools.
The pace of condominium and single family home sales increased last month in South Florida for the first time in more than two years. Statewide sales figures also showed signs of stabilization in September.
" It's still a little early to definitively declare a shift in the overall trend to one of longer term positive sales growth, but at the very least, we can be more confident we're moving in that direction than we were a month ago," said Florida Realtors Chief Economist Brad O'Connor.
Condo sales activity increased in Miami-Dade, Broward and Palm Beach counties compared to a year earlier. The number of closed condo sales jumped 17.4% in Palm Beach County and a more modest 2.4% in Miami-Dade. September was the first month in a year and a half that more condos were sold in Broward County versus a year earlier. Median condo prices rose in all three counties, according to data from the Miami Association of Realtors.
"We should see this momentum strengthening in the last quarter and though next year as mortgage rates continue to decline towards 6%, as the condo market continues to stabilize, and with demand getting a boost from continued migration of highly skilled workers and retiring Baby Boomers," wrote Miami Realtors Chief Economist Gay Cororaton in a report.
Falling mortgage rates seemed to be a spark for many buyers last month. After hovering around 6.8% for a 30 year mortgage, the average borrowing rate fell to 6.35% in September, according to Freddie Mac.
" But look at what's happened since then," said O'Connor with the statewide realtors group. "Rates have fallen even further, which has made it possible for even more buyers to be able to participate in the housing market." Mortgage rates hit 6.2% in the third week of October.
The Federal Reserve's short-term interest rate setting committee meets this week and will announce any chances to its target rate Wednesday. It is widely expected to cut its rate by one quarter of one percent. That could help further reduce mortgage lending rates.
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There were signs of pent up buyer demand in August, as pending home sales jumped. It was an indication of buyer interest as they anticipated falling lending rates. And an appetite to pay close to what sellers were asking, especially for single family homes. Statewide and in South Florida, homes sold for about 95% of list price. That's only down 1% from a year ago, indicating firmness in prices. Median prices of single family homes sold in September were up less than 2% from last year, a major slowdown in price growth coming out of the COVID-19 pandemic.
"It's taken a while, but the Florida housing market is finally showing some signs of reaching a bottom in terms of sales," O'Connor said.
The supply of condos on the market continued falling in September as the drop in prices and lower mortgage rates encouraged buyers. The state's condo market has been in turmoil for months as reforms put in place after the 2021 collapse of the Champlain Towers South condo in Surfside took effect. Building inspections and condo owner association financial disclosures have likely contributed to a more lengthy sales period for condos. It takes an average of at least three months from the time a Florida condo is listed on the market before a sale closes.
September's market buoys hope among realtors demand will continue growing. Pending condo sales were up 6.6% statewide and across South Florida. And potential buyers in October are finding fewer choices as pending inventories fell last month.
" If we manage to consistently stay where we're at now for a longer time period, or even better, if we see further downward movement in rates, this market will turn around," O'Connor said.
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