There’s an unprecedented increase of buyers in the South Florida luxury real estate market. Also, the pandemic accelerated demand across the state, meaning more and more buyers are interested in looking for new properties.
Furthermore, home values are up more than 45% year-over-year from 2020 to 2021, and home rents in Miami alone increased more than 25% in the time frame.
If you are interested in purchasing a house in South Florida, from Palm Beaches to Coral Gables, then you need to be patient, even more so if the house is an ultra-luxury property located on one of the region’s coveted private islands.
Luckily, we are going to give you all the details you need to know about the increasing percentage of buyers that are focusing on South Florida.
The increase of buyers in the most important real estate markets
The supply of luxury homes and condos in South Florida it’s fluctuating a lot these days. Thanks to Jonathan Miller, CEO of Miller Samuel, an appraisal and consulting firm that has the job to track 14 real estate markets in South Florida, we can tell that there is a collapse in the area.
According to the numbers, in the first quarter of the year, South Florida inventory stood at a record of 7,906 units, according to Miller’s information. That is a clear decrease of 27,000 units from both 2017 and 2019.
Miller doesn’t see the marketing getting back to normal anytime soon. “Even if listing inventory increased or even tripled, supply would still be considered low in most markets” he shared.
However, sales remain red hot. Despite that low number of available houses, the first quarter saw more than $11.5 billion in total sales, topping the previous quarter by more than $ 1.8 billion.
Some of the luxury markets were able to achieve record highs, according to data shared by Miller.
The area’s top five luxury real estate markets delivered more than 45% of all sales volume for this region, and even almost $5.4 billion, according to data compiled by Miller for Douglas Elliman’s Report, which was published earlier this year.
Next up we are going to talk to you about the top five luxury markets in South Florida listed by average sales, as well as a closer look at how headwinds such as inventory and rising mortgage rates could affect future sales.
Palm Beach has been able to maintain its place for the fourth consecutive quarter. It has become the highest average luxury home sale price. The town accounted for over half a billion dollars in total sales volume.
The average price of a luxury-single family property in the beach town topped $21 million, and according to the Elliman Report, luxury is defined as the upper 10% of sales in a real estate market.
Furthermore, the average price per square foot was $3.659, down 2.7% from the record price in previous years, but the number of sales closed in the first quarter totals 15, up almost 67% over quarter 4.
Additionally, Palm Beach had the biggest first quarter sale in South Florida. The beachfront home at 854 S Country Rd. was sold for $53 million, and the information was reported by public records.
The 10,171 square-foot property sits on 2 acres across the famous Intracoastal Waterway, and it has 220 feet of water frontage. The price per square foot was a total of $5.210.
Listing Agent Gary Pohrer of Douglas Elliman shared to CNBC the size of the property as well as the water frontage, and he said that both characteristics made the property stand out from the rest of the options.
When he was asked about the outlook on the South Florida luxury real estate market, he shared that he will remain “cautiously optimistic” and that his biggest worry has to do with a severe inventory issue.
Besides this, if buyers take a look at the history of active listings, they’ll notice that South Florida is at an all-time record low supply, and that is not going to change overnight.
Millers also said the inventory crisis is having a significant impact on the upcoming quarters, so the problem isn’t solved yet. In his opinion, it will restrain sales below their potential.
Miami Beach is found at the second spot as one of the most expensive luxury-single family property markets in the report, with up to 17 closings and an average cost of almost $17.8 million.
When it comes to the average price per square, the cost was $2.766, a noticeable drop from the record of $2.835 set in the previous quarter. Total sales volume at all price levels in the market reached almost $2.9 billion, falling behind the Miami Mainland market, which was able to reach up to $3.9 billion in sales.
Thanks to Miller’s data, Miami’s Fisher Island became the market’s largest first-quarter transaction, with a $30 million deal for a penthouse condominium located in Palazzo Della Luna, a 10-story ultra-luxury condominium found at 6800 Fisher Island Dr.
This listing was handled by an agent with the name of Dora Puig, and she told CNBC that the property known as Penthouse 3 spans has almost 6.800 square feet, with a total of four bedrooms, 4.5 baths and a rooftop terrace that surpasses 7,500 square-feet.
Looking ahead at potential headwinds, Puig also said that she is not too concerned about mortgage rates rising, and she stated that her main concern was the amount of wealthy buyers in the high-end market using cash to pay.
Essentially, the luxury buyer’s reliance on cash blocks the effects of rising rates, but it’s not strong enough to eliminate it. Miller told CNBC they could create a small increase in listing inventory as well as a slight reduction from the current crazy environment.
Puig is concerned about the Federal Reserve raising rates too high and at an accelerated speed, meaning this could send the economy into a deep recession.
If this happens, people in all sectors of the South Florida luxury real estate market will be affected, and no one is immune to the economic effects that will take place if this occurs.
Coral Gables is located southwest of downtown Miami, and it was the third most expensive luxury home market with a total of 15 closings and an average sale cost of about $10.5 million, a huge record for this particular area. Due to this, the South Florida luxury real estate market in this area has obtained a lot of popularity among buyers from all over the country.
The average price per square foot also hit a record of $1.609, rising up to 33.7% over the previous quarter.
Fort Lauderdale can be found in fourth place. This market delivered 57 luxury property sales at an average price of almost $6.9 million and an average price per square foot of $1.167, and this was a record for Fort Lauderdale.
Boca Raton and Highland Beach
Both Boca Raton and Highland Beach were listed as the fifth most expensive luxury home market with up to 60 sales at an average sale cost of $5.5 million. In addition, the average price per square foot was a total of $670, and this also set a record for the market.
This market achieved the fourth-highest home sale in all of South Florida, and a record-breaking cost for the town of Highland Beach when a mansion at 2455 S Ocean Blvd was sold for $40 million.
The sale of the 17.600-square foot property was the highest price ever for both Boca Raton and Highland Beach. The house’s listing agent, Beverly Aluise Knight of Ocean Estate Properties, shared with CNBC that the mansion’s move-in-ready status was the selling point.
Besides this, the house was fully designed and furnished, and the buyer wrote a check and moved in immediately. A house like this is not easy to find nowadays, and the buyer paid an additional $5 million for furnishings, making the sale reach a record of $45 million.
When Knight was asked about how rising rates and low inventory could impact real estate sales in South Florida, Knight stated that it depends on the market.
She believes when unforeseen events have negative impacts on the market; the luxury home listings are safer than the rest of the real estate markets that exist alongside the ones in South Florida.
The future of South Florida luxury real estate market
Domestic buyers are primarily snapping up listings, and many buyers are coming from California, drawn by the fair tropical weather. Moreover, the favorable tax status has helped demand increase, and this is forcing luxury home buyers to be creative and more flexible than ever.
In the past, buyers had more choices and options. Now they have to be open to other geographic areas, and South Florida has always been known as one of the most luxurious real estate markets in the U.S.
As the real estate market continues to evolve, buyers will likely choose South Florida as the perfect place to purchase a luxury home, and thanks to today’s article about the South Florida luxury real estate market, you can determine which market is the most suitable for you.