An intense shortfall of housing has troubled South Florida first-home buyers, aiding ammunition in the current real estate market crisis. Increasing demand from local residents and out-of-state buyers have only provided further tension to a market that has been extremely underdeveloped for years.
Researchers claim that a harmonious market, where both buyers and sellers have a fair opportunity, must have an estimated five months of inventory on the market. Presently, each of the three major counties in the South Florida region are experiencing about one month’s supply of single-family homes and the area has seen supply further subside over the past two years.
According to Zillow data studying permits and population increases, South Florida’s shortage in homes has been simmering for many years.
The main driver of the rapid home price growth during the pandemic was caused by the limited number of homes available that were unable to meet the sudden surge in demand.
A deficiency of accessible buildable terrain, as well as supply chain concerns, rising expenditures and zoning regulations, make it challenging for real estate developers to construct new housing plans. Furthermore, there’s very little to no available land left on which to build, which only further combines the issue for the near future.
One of the primary players of the current housing market crisis has been the migration from out-of-state and international buyers. Forecasting shows that the South Florida population will further increase over the next ten years. Statistics show that in a 10-year span, Palm Beach County’s population will rise by about 12%, Broward County 8% and Miami-Dade County 5%.
Controversy amongst experts now say that there are chances that more inventory could be entering the market and that buyers may be pulling back. Some real estate agents believe that they’re noticing a slim rise in inventory coming to the market in South Florida, although it is not sufficient to accommodate the demand or establish a stabilized market.
Ken H. Johnson, real estate economist with Florida Atlantic University in Boca Raton, said that if population increase subsides due to home prices persisting to spike, it’s possible that property values will soften for a period. Yet, Johnson cautioned that population surges will kick in again in return to such prices, excluding unexpected circumstances.
“We have an inventory shortage but we have this wild influx of population,” Johnson said. “I believe that South Florida, and Florida in general will have this prolonged period of unaffordability.”
Although inventory is thus far unbalanced, with insufficient amount of properties available to meet buyer demand, other real estate agents believe that they have witnessed more sellers driven due to the growing interest rates.
“It’s still very much a seller’s market as the inventory gains have been modest,” Juan Gonzalez, realtor with Keller Williams said. “Properties are still being absorbed quickly, but the confidence is lower probably since interest rates are bringing more sellers to the table.”
According to a report issued by Realtor.com, the inventory of active listings decreased 34.1% versus June 2020 in the earlier months of the COVID-19 outbreak, and depleted 53.2% in comparison to June 2019. Meaning there are a little less than two-thirds the number of homes vacant than in June 2020 and less than half compared to June 2019.
Absence of inventory amid the pandemic drove expensive home values as the region experienced an invasion of buyers from across the nation and around the world. That force, in turn, produced a panic of disregard amongst locals, causing an even larger shortfall.
Promising first-home buyers in South Florida have been hopeful for indicators that show more inventory might strike the market and alleviate the relentless struggle. Though buyer demand has somewhat wedged off lately, those buyers who still continue in the market are vigilant and competitive when searching for their new home.
Nancy Ortega, 35, and her husband have been working diligently alongside a realtor for months now attempting to find a family home in Miami-Dade County.
As Ortega and her husband welcome their newborn son to the world, she fears they will be unable to raise their son in a proper home like they’ve always hoped for. Living in a one-bedroom apartment is not the place Ortega had envisioned to raise her child, but she said all she can do now is wait and pray for a miracle.
“We are trying to expand our family and build a home together, but it is making it extremely difficult to move out of our apartment due to the current housing shortage,” Ortega said. “Every property we like is gone the day it is listed and it has become a repetitive issue.”
Many local South Florida residents like Nancy and her husband are not alone as they battle in search for a place to call home. The inventory of vacant houses has reduced, which has made it challenging for buyers in the South Florida area and caused countless residents to move further north or even consider moving out-of-state.
The current real estate market in South Florida grows more and more competitive with each passing day, causing bidding wars at times for any possible house with most sellers profiting more than their listing price. Local residents can only hope for a more balanced market in the upcoming months to come.
