mortgage rates in the US have put the brakes on house price rises generally.
However, there are still pockets in the country where property values continue to
rise well ahead of national averages. Locations in southern Florida are a case
in point, prompting analysts to suggest that the popularity of Florida
real estate is here to stay.
Height of house-price growth not over everywhere
While nationwide statistics paint a general picture of the US property market, they may give a misleading idea of performance at a local level. This mismatch is particularly obvious in highly sought-after metro areas such as Miami and Tampa Bay in Florida, where house prices continue to soar. In contrast, values in other metros, such as San Francisco, have fallen sharply.
In general terms, the house-price difference in US metros reached its height in the summer of last year. In August 2022, the gap between the most expensive and the cheapest metro reached 23%, the highest in over 30 years.
While the rate has slowed over the last nine months, recent research shows it remains high. For example, a Redfin report found that the annual price difference between homes in Miami and San Francisco now stands at 21%, not far from last August’s record high.
South Florida real estate still rising in price
According to Redfin, property in Miami has experienced a 10.9% price hike over the last year. On the other hand, homes in San Francisco have dropped in value by 10.1% in the same period.
Redfin analysts attribute the gap to “a long-term, pandemic-fueled shift in where people choose to live”. Redfin Deputy Chief Economist Taylor Matt believes the pandemic “has given many Americans much more freedom on where they choose to live”.
As a result, the high prices in the San Francisco market are no longer as attractive while the lower ones in Florida continue to appeal. In February, a home in San Francisco cost 2.9 times more than a similar property in Miami.
“The fact that Miami prices are holding up well despite the national pullback in homebuying suggests the relative popularity of Florida is here to stay,” said Matt.
Tampa property also popular
The report also compared other eastern locations with those in the west, with the former offering better value properties for buyers. As well as Miami, the Tampa metro area showed high demand for property, with rising prices compared to metros on the west coast.
For instance, homes in Tampa have risen in value by 7.7% over the last year. This increase translates to a 17.8% gap between San Francisco. The situation is broadly similar in Seattle, where house prices have dropped by 9.4% in 12 months.
Redfin highlighted the contrast between “expensive West Coast tech hubs” and “relatively affordable Sun Belt locales”.
(Source: Florida Realtors)