By Gay Cororaton, MIAMI REALTORS Chief Economist
- Mortgage rates are likely to remain elevated at 6.8% in 2025 as the Fed adopts a cautious stance due to potential inflationary pressures.
MIAMI Realtors® expects mortgage rates to remain elevated in 2025, with the 30-year fixed mortgage rate averaging 6.8% in 2025. The forecast is based on the expectation that the Federal Reserve Board will move cautiously in cutting interest rates to assess the effects of policy changes under the Trump Administration, such as the announced tariff cuts to control the flow of illegal immigration and drugs. The forecast assumes just two 0.25% rate cuts in the last quarter of 2025, bringing down the federal funds rate to a target range of 3.75% to 4.0% by December 2025 ( vs. four 0.25% rate cuts in the September Update Outlook).
- Single-family sales will stay flat as mortgage rates remain elevated.
With mortgage rates remaining elevated, single-existing home sales are likely to remain unchanged (vs. 10% increase in the September 2024 Outlook Update). In 2023 and through 2025, MIAMI Realtors® estimates that only 17% of renter households can afford a mortgage, down from 41% in 2019.
Condominium sales are projected to fall 7% as owners face the additional headwind of higher condominium assessments in compliance with the condominium building safety regulations passed in July 2022 (Senate Bill 4-D).
- Buyers will see a modest uptick in single-family home prices with mortgage rates remaining elevated and a mild increase in inventory.
With mortgage rates remaining elevated, homebuyers will continue to see an uptick in prices but at a modest pace compared to prior years.
Single-family sales prices have remained firm with inventory expected to hover at five months’ supply in all counties, indicative of a nearly balanced market.
Condominium/townhome sales prices are likely to stay flat in 2025 (same forecast as in the September 2024 Outlook Update) due to a sharper buildup in inventory.
- Inventory of single-family homes will increase modestly, with the tightest supply in the lower price tier and the most inventory in the million-dollar market.
In the single-family market, months’ supply will hover at 5 months’ supply, but supply conditions will vary by price tier.
In the single-family market, buyers will continue to encounter a lack of supply homes in the $600,000 and below price tier because only 30% of single-family listings as of October 2024 were at this price tier. With 3 months’ supply of homes at the $400,000 to $600,000, properties continued to sell fast, typically in about a month.
At the same time, buyers will find the largest inventory of active listings in the million-dollar segment where million-dollar homes listed accounted for the largest share of active inventory as of October 2024 in Miami-Dade (42%), Broward (32%), Palm Beach (36%), and Martin (32%). This inventory will likely mostly be absorbed by out-of-state buyers who tend to have higher incomes than locals.
In the condominium/townhomes market, the average level of active inventory is projected to increase to 11 months’ supply to an average monthly level of 32,000 homes, up 21% from the 2024 level and 4% above the pre-pandemic average monthly level in 2019.
- High-income buyers and out-of-state movers will continue to drive sales.
Wealthier buyers will likely continue to drive sales. Million-dollar home buyers have taken up a higher share of single-family sales since 2019. During January-October 2024, Palm Beach County had the highest share of million-dollar home sales, at 25% (7% in 2019) followed by Miami-Dade County at 23% (8% in 2019), then Martin County at 20% (6% in 2019), and lastly Broward County at 18% (5% in 2019).
Wealthier buyers tend to be from out-of-state. MIAMI’s analysis of Internal Revenue Service migration data found that in Miami-Dade County, the average adjusted gross income of households who moved to the county was $175,600, which is 78% higher than the average income of households who left the county ($98,800) and 79% higher than the income of households who lived in the same county ($98,100).
Miami-Dade County continues to experience higher migration levels from high-cost states like New York, California, and Illinois compared to the pre-pandemic level, using driver license exchanges as an indicator. Out-of-state driver license exchanges rose in 2024 Q1-Q3 compared to the same period in 2019 among New York (+33%), California (+54%), and Illinois (+30%) driver license exchanges.
Download the 2024 Southeast Florida Housing Market Outlook (December 2024 Update ) here.
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