January 2022 South Florida Housing Report

Anthony predicted that the 2022 South Florida market would look like 2021 but happen at an even larger scale – meaning more sales and more price appreciation. Based upon the January housing data, his predictions thus far have been spot on, particularly in the condo/townhouse category. Important to note that, in the beginning of the year, the Omicron variant slowed the market in an unanticipated way. Listings in, not only South Florida but across the country felt the effects of this variant and in turn were lower than predicted. Now, moving forward, pending sales and closed sales will most likely be lowered for the next few months to recover from the market effect of the variant. Generally, COVID-19 ignited the South Florida real estate market as it saw an influx of home buyers into the market in 2021. As travel restrictions lessened international buyers returned to the market and returning snowbirds resumed their migration back to the sunshine state. Several companies and employees relocated to states like Florida for both tax reasons as well as the more ‘relaxed’ Covid restrictions compared to Northern states. Regardless of the reason, Sun Belt states have been reaping the benefit of this buyer influx. However, this influx shrank supply, specifically of single family homes, consequently sky-rocketing demand and competition. We have seen a resurgence of bidding wars, cash offers, waiving contingencies, etc. to combat this increased and intense competition.

With the demand so high, prices have not stopped increasing as a result. But this should not deter buyers from entering the market as mortgage rates are predicted to exceed 4% in 2022 for the first time in over two years as the Fed begins reversing policies enacted as a result of the pandemic. This increasing rate reduces buying power which means that it’s better to secure financing as soon as possible to keep home buying costs from increasing, especially given that the cost of renting is also increasing. Particularly important for the South Florida market, securing financing for a 2^nd home will be more expensive as we head further into 2022, as the Federal Housing Finance Agency (FHFA) will be changing lending practices as a result of the pandemic and the Surfside Tower collapse.

Despite the recent regulatory and financial changes to the condo space, there has still been tremendous growth month over month. Very little available inventory is forecasted to be added to the market in the coming years as new construction and development is down year over year. The lack of single-family inventory has made condo living a popular alternative for buyers who are unwilling to sacrifice conditions like location, non-communal living, or square footage. It is predicted that the demand for condo living will only continue to grow in 2022, and prices of condos are expected to rise along with it. Important to note that the inventory levels for condos are just slightly higher than single-family homes currently, so this increased demand for condos will deplete inventory, eventually intensifying competition even more.