First-time buyers have had a tough go of it in the housing market in recent years, thanks to spiraling prices and rising interest rates across the country. But the trends are especially pronounced in South Florida, where an ever-growing share of single-family homes cost $1 million or more, pricing out many but the wealthiest who would like to call Miami home.
Five years ago, a $1.1 million home in Miami-Dade county put buyers in the top 5% of the market. Today, that lowest-priced homes in that category begin at $3.3 million, according to the Miami Association of Realtors. And across South Florida, more and more homes cost at least seven figures: In Palm Beach County, 24% of single-family homes sold for at least $1 million in 2024, while 23% of those in Miami-Dade did. While overall sales fell 1.7% in 2024, million-dollar sales in the area rose 12.6%.
Wealthy buyers snapping up properties in all-cash deals is adding to first-time buyers’ problems. Young buyers typically are rarely liquid enough to purchase a home in all cash, and must instead rely on mortgages. Wealthier buyers, meanwhile, are more attractive to sellers who want a quick exit—are there are a lot of them in Florida: West Palm Beach, where almost 50% of all purchases were in cash, ranked first in the U.S. for the most all-cash sales in 2024, according to Redfin. Fort Lauderdale and Miami were ranked fourth and fifth, with 38.9% of sales and 38.1% or sales, respectively, made without a mortgage.
The recent wave of wealthy transplants who started moving to Florida during the pandemic for work and lifestyle are part of the reason for the surge in pricing. And because they can buy in cash, rising mortgage interest rates aren’t a deterrent.
To make it work, young buyers need to increasingly rely on help from parents or other family members, says Nancy Batchelor, a realtor for Compass in South Florida. Of course, those without wealthy parents are all too often left out.
“In many cases, parents are putting a down payment or buying the property outright so their children can remain close rather than be priced out of the city,” says Batchelor.
Other buyers are moving further out from the city or compromising on once-desired aspects of their homes, like having a pool, she says. Others are looking at condos—which have also seen a 119.6% price increase over the past decade in Miami—when they really wanted a single-family home.
“They want to move here. They want to work here. They love the city, everything,” she says. “But then often we’ll have to just say, Well, maybe you can’t buy what you were thinking.”
Batchelor has seen many buyers’ excitement to finally own a home quickly tempered by what’s available in their price range. She is worried that could be causing young people who grew up in the area and don’t have family help to be leaving for northwestern Florida or even out of state.
Even homes that cost millions of dollars might need significant construction work, or are missing basic features—enough closets, a bathtub, an updated kitchen—that buyers want, Batchelor says. It leaves many wondering why they would pay a $3 million price tag.
“You show them what is available in those areas, and it’s not at all filling their expectations,” she says. “They’re not at all what they were dreaming of.”
This story was originally featured on Fortune.com
Original Source Link
