In January of this year, home prices in South Florida were 16.5 percent higher than prices had been for the same month last year. S&P/Case-Shiller Home Price Indices measure the change in value of residential real estate in 10 metropolitan areas of the United States. Miami’s year-over-year price gain edged out the 10-city composite that showed a 13.5 percent increase in home prices. In addition, Miami was one of only six cities that showed positive gains for the end of 2013. Many cities likely witnessed decreases because of the particularly harsh winter. According to the index, the current home prices in South Florida are at their highest level since August 2008. However, at the national level home prices are at the same level as spring of 2004.
Even though the increase in home prices is good news for Miami property owners, there is a bit of uncertainty over whether we will continue to see such positive gains. Because home prices have increased, along with mortgage rates, the affordability for many middle class folks has declined. As a result, this decline is likely to soften demand and perhaps stall home prices. However, as long as prices remain at current levels, or at least increase slightly, the Miami real estate market should remain healthy and sustainable.