I have spoken these past 18 months about the unprecedented country-wide migration to South Florida caused by COVID-19. Buyers from New York, California and the Midwest suddenly had the ability to work remotely from anywhere, and many reacted by snapping up single-family homes throughout sunny, tropical South Florida, seeking outdoor space, swimming pools, in-home offices, warmer weather and Florida’s tax benefits.
The influx of these “COVID buyers” dramatically shook up the local housing market, leading to bidding wars and buyer mania unlike anything we’ve seen in recent memory. This priced many locals out of the market and caused them to give up looking.
Good news for those buyers: You can start shopping for a house again.
Based on fresh data from RelatedISG Realty and ISG World’s Q3 Miami Report, I believe we are now witnessing a shift in urgency from buyers signaling the end of the COVID-19-driven mania in the single-family home market. While people are still coming to Florida in large numbers — about 900 per day, with half to South Florida — it appears to be leveling off.
The data shows that August and September have marked a decline in single-family home transactions. While these months are known for being slower in sales because of vacations ending and schools restarting, the decline between 2020 end-of-year sales and Q3 2021 is too substantial to represent that alone. There is another factor at play, and it is the slow leveling off from pandemic migration.
This means a more level playing field for local buyers who have been priced out of an extremely competitive market by “COVID buyers.” They will now have a seat at the table and more homes to choose from. They should, however, set their expectations — it is still a competitive market and single-family home prices are holding steady at levels that are becoming the new normal.
Remember what I said before about the pandemic buyer who must return to their cities such as New York for work?
These long-term visitors and home buyers came down to South Florida, spent a long period of time enjoying the lifestyle and amenities that our beautiful cities have to offer, and want to return with frequency. The Q3 data indicates that new out-of-state buyers and prior COVID-19 migrators are gravitating more now to condo living to fulfill this. They are coming from the same markets but purchasing pads along the beach or in the cities so they can have both a place to stay in the winter and an investment for their real estate portfolio. Combine that with the Latin American and Canadian buyers that will resurface in November, and we have a strong condo market on the horizon.
I want to stress that despite this stabilization and change in migration patterns, we are still in a seller’s market. Inventory is increasing, but the overall inventory of single-family homes is still incredibly low.
Buyers need to be aware that single-family and condo prices will remain elevated from what we saw in 2019. We also anticipate that rents in our major cities and near the beach will also remain in high demand until buying options increase to pre-COVID numbers from 2018-2019.
Local buyers should plan to capitalize on the availability of single-family homes as we move toward the end of 2021.
Craig Studnicky is CEO and founder of RelatedISG Realty and Principal of ISG World.