Home Prices in This Market Are Surging
Home prices have stopped falling after several months of a downturn. According to S&P Case Shiller, the prices bumped up slightly in February. It is nothing like the run of increases that ran for almost two years, until late in 2022 when mortgage rates began to rise. However, it is at least a sign of hope. Across the 20 metros Case-Shiller measures with a base price from 2000, many markets have had extremely sharp increases in price. In a much smaller number, they have barely risen at all. (People are leaving these 11 states in droves.)
U.S. home prices increased 0.2% month over month in February. Craig J. Lazzara, managing director at S&P DJI, commented “The National Composite, which had declined for seven consecutive months, rose a modest 0.2% in February, and now stands 4.9% below its June 2022 peak.”
Despite the national slowdown, the prices in several cities continue to rise rapidly. Each is in the Sunbelt. In February, home prices rose 2% from last year nationally. In Miami, they rose 10.2%. In nearby Tampa, they were up 7.7%. There is no single reason for the sharp increases.
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During the pandemic, Americans became more mobile than they had been in decades. Many people did not have to work close to offices because they could work from home. Large cities along the Northeast and West Coasts had become very expensive. Miami had good weather most of the year, for people who wanted a warm environment. The metro covered a large area from Miami north to Palm Beach. It also had several thriving industries and infrastructure that included several large airports.
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City leaders in Miami and Tampa do have to worry about the strain the new people put on infrastructure. They have not been able to handle a rise in population that happened so quickly. Real estate development and rebuilding of roads have happened relatively fast but have been unable to keep pace with the population. In real estate, demand has run well ahead of supply.
Given all the reasons people have to locate in Miami, real estate price increases are unlikely to moderate.
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