Housing forecast for 2017: South Florida predicted to be among slowest metros

Housing forecast for 2017: South Florida predicted to be among slowest metros

By: Brian Bandell

The Realtor.com 2017 national housing forecast placed South Florida among the slowest-growing of the Top 100 metro areas, but there was a silver lining. The market might perform better next year than it has so far in 2016.

Realtor.com, operated by News Corp (Nasdaq: NWS) subsidiary Move, Inc. under a perpetual license from the National Association of Realtors, released a 2017 forecast for the Top 100 metros in both new and existing single-family homes and condos. It ranked South Florida No. 71 with a sales volume increase of 4.17 percent and a price increase of 3.98 percent.

By comparison, Realtor.com forecast sales growth of 6.3 percent and price gains of 5.8 percent in the Top 10 markets, in order: Phoenix; Los Angeles; Boston; Sacramento, Riverside, California; Jacksonville; Orlando; Raleigh, North Carolina; Tucson, Arizona; and Portland, Oregon.

“We aren’t seeing as much evidence of the young, first-time home buyer in Miami as we are in other markets,” Smoke said.

Perhaps that’s because much of the development in Miami is focused on international investors and seasonal second homeowners. Indeed, South Florida is consistently the top market on Realtor.com’s website for searches by international buyers, Smoke said. That turned into a negative in 2016 when the U.S. dollar gained in value against most foreign currencies and international sales declined across the country, especially in South Florida.

Other parts of South Florida, such as Palm Beach County, are mostly marketed as retirement communities not for millennials.

Existing home and condo sales have declined in South Florida through October, with the biggest drops in Miami-Dade County, according to the Florida Realtors. New condo sales have also fallen, prompting some developers to delay projects or cancel sales. From that perspective, Realtor.com’s forecast of a 4.17 percent sales volume increase in 2017 looks pretty good.

Smoke said South Florida has strong economic fundamentals, including the second-highest job growth in its forecast. There’s also an under supply of new housing because development hasn’t kept pace with demand. He expects international activity to be neutral in 2017 because wild fluctuations in currency value appear to be over.

“There is more inventory on the market [in South Florida] than a year ago and prices haven’t fully recovered so it is more of a value play for buyers than other parts of the country,” Spoke said.

The big question for the entire housing market is what will happen with interest rates. Many experts expect them to increase thanks to action by the Federal Reserve and economic growth. Realtor.com forecast a 4.5 interest rate for mortgage, an increase of 50 basis points. Higher interest rates make home more expensive to finance.

Condo-heavy Miami-Dade faces an additional challenge because most of its condo buildings haven’t been approved for conventional Fannie Mae loan or FHA mortgage with low down payments.

Smoke expects the federal government to be more receptive in 2017 to programs that would ease credit for condo buyers.


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