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Rising mortgage rates have continued to be a problem for the Florida housing market, which has led to a drop in completed sales of single-family homes and townhouses/condos. Despite these obstacles, end-of-month inventory levels for both types of properties have increased significantly, but they are still below pre-pandemic levels.

If you want to know more about the current market trends in Florida, and what the future of its real estate market looks like, you're in the right place. Let's dive in!

Florida Housing Market Trends

Florida is one of the most sought-after locations for investors and homeowners. This state continues to attract new inhabitants from all over the world thanks to its tropical environment, stunning beaches, and thriving economy.

In comparison to the previous year, the Florida housing market for January 2023 has exhibited consistent price increases. However, the volume of properties sold has drastically decreased, suggesting a potential change in market dynamics. Unfortunately for landlords, the market is now in favor of buyers, with more houses up for sale and fewer buyers.

Let's take a look at some of the most prominent trends to ensure you can make the most beneficial decisions for you and your property:

Number of Homes for Sale

As per Redfin, in Florida, there were 138,803 houses for sale in January 2023, a 36.1% increase from the previous year. 38,722 properties were newly listed, which is a 7.4% decrease from the previous year. The average supply is now 5 months, an increase of 3 months over the previous year. This shows that there are more options accessible and there is less competition, which favors buyers.

Florida Home Prices

Florida's median home price in January 2023 increased 6.1% from the previous year to $385,700, according to Redfin. With 21,512 homes sold in January 2023 compared to 33,252 homes sold in January 2022, the average number of properties sold was down 35.4% year over year. The average days on the market was 53, an increase of 21 days from the previous year.

Sale-to-list Price Ratio

The sale-to-list price ratio was 96.6% in January 2023, a 2.4-point decrease from the previous year. This indicates that, on average, buyers paid 96.6% of the asking price for the properties, which suggests that although there might be some opportunity for bargaining, the market is still favorable to sellers.

Percentage of Homes Sold Below the Listing Price

Only 11.0% of Florida homes sold for less than the asking price in January 2023, a 20.6-point decrease from the previous year. This shows that there is a great demand for properties in Florida since buyers are prepared to spend the full asking amount or perhaps more.

Furthermore, only 30.5% of homes had price reductions, up from 12.0% of homes in January of the previous year. This demonstrates that sellers are becoming increasingly willing to be flexible with their asking prices in order to accommodate changing market conditions.

Top 5 Florida Metros in Terms of Fastest-growing Sales Price

The top five metros in terms of the fastest-growing sales price include:

  1. Coral Gables, FL - 87.2%
  2. Winter Park, FL - 56.2%
  3. Margate, FL - 43.8%
  4. Altamone Springs, FL - 34.6%
  5. Miramar Beach, FL - 34.6%

Therefore, if you're looking to sell or invest in properties for speculative purposes, these cities offer attractive investment opportunities.

Factors Affecting the Florida Housing Market

Here are some of the most common factors affecting the Florida real estate business:

1.    Strong Job Market and Population Growth:

In Florida, especially in areas such as Orlando, Miami, and Tampa, there is rapid population expansion. As a result, housing demand rises, making it an ideal area for real estate investment. The diversified and expanding employment opportunities in Florida also help to draw in new inhabitants and boost the housing market.

2.    Diversified Economy:

Florida has a diverse economy, encompassing a variety of sectors such as tourism, agriculture, technology, and aerospace. Real estate investors may benefit from the state's ability to withstand economic downturns due to its diversified economy.

3.    Tourism:

One of the contributing factors to Florida's booming real estate market is tourism. With millions of tourists visiting Orlando, Miami, etc., vacation rental properties are always in high demand. This is a fantastic way to increase property value and earn rental income.

4.    Tax Benefits:

Real estate investors may benefit greatly from Florida's lack of a state income tax. This might offer greater net returns on investment and be a more alluring choice for real estate investors.

Will the Housing Market Crash in Florida?

While the Florida real estate forecast doesn't anticipate a crash anytime soon, here are some considerations to keep in mind:

Population and the Law of Supply and Demand

Housing demand increases as a result of population growth, particularly household growth. The law of supply and demand applies to real estate; when there are more buyers than there are houses available, prices increase. Florida's population has grown continuously since the 1940s, often faster than the rest of the country. However, like the rest of the country, during the first few years of the COVID-19 outbreak, growth fell to historic lows until rising again in 2022.

At the moment, Florida is America's fastest-growing state and saw an increase of almost 400,000 residents between July 2021 and July 2022. In fact, the 1.9% growth rate brought the total population to 22,244,823.

The Economy's Health

Experts claim that neither the national housing market nor the Florida market is even close to the disaster that took place during the Great Recession of 2008. The financial crisis-related stricter lending regulations are partially the reason for this. The borrowers are in much better health as seen by their raised credit scores. Additionally, homeowners now have a record amount of equity as a result of growing home values.

Although the current scenario is a rather intricate web, it is nothing compared to the market crisis of 2008‚Äď2009, which took years to resolve. The housing boom was spurred by the Fed's pandemic measures. It could be terrible news for housing as it tries to withdraw that assistance, but will it cause a crash?

The Federal Reserve's Role

The Fed will continue to be extremely important to the housing market's future.

Furthermore, the Federal Reserve possessed $1.4 trillion in mortgage-backed securities in February 2020, but that amount was fast declining. As the virus spread, the central bank began a fresh round of bond purchases (known as "quantitative easing"), raising the total to $2.7 trillion.

To counteract inflation, the Fed aims to tighten monetary policy. It is quite unlikely that the Fed will be able to unwind its balance sheet, despite the fact that it intends to reduce that portfolio. If the Fed accepts the fact that it will have a larger balance sheet than it would like and plays a disproportionate role in the real estate market, property owners, investors, or landlords should be worried about a housing market crash in the next 18 to 24 months.

Florida Housing Market Statistics

Are you interested in Florida's housing market statistics? Here's what you need to know:

  • Home sales: According to information obtained in March 2023, home sales have reached a low of 19.7% year-on-year (YoY). In March 2022, 46,784 houses were sold; however, in March 2023, there were only 37,552 houses sold.
  • Pending sales: In February, for the third consecutive month, pending home sales increased by 0.8%.
  • Average home prices: Florida's $400 000 median home price is a 3.2% YoY¬†increase. The median sale price growth is expected to decline by about 4% in 2023, the first annual decline since 2012. As of March 2023, the sale-to-list price ratio was 97.1%, down 3.0 points YoY.
  • Average rent prices: On average, landlords charge $1,635 as rent. Florida takes the top spot in the US when it comes to average rental cost increases, with a 29% increase in 2022.
  • Median days on the market: There was an increase of 24 days relating to the median days on the market for homes, which is now 49 days.

Florida Housing Market Predictions

The health of the economy has a significant impact on the property market. Additionally, as the economy weakens, the supply of money reduces. As financing becomes more challenging, fewer people purchase homes in Florida. Florida's house market will nevertheless continue to exhibit an upward trend even during sluggish months because of the state's high inflow rate.

Moreover, Florida's job market is also stable. At 2.6%, the unemployment rate has remained unchanged from January 2023 levels. The annual rate of job growth in the private sector was 4.6%.

Experts predict the following for the Florida real estate market in 2023:

  • Fewer home sales: According to Realtor.com's analysis, there will be much fewer house sales in the months to come in 2023. In Q2, home sales will decline by 18.8% in comparison to last year.
  • Mortgage rates stabilizing between 6% and 6.5%: The 30-year fixed-rate mortgage averaged 6.27%, down from 6.42% the week before April 13. These rates, nevertheless, are still below the peak of 7.08% from the previous year.
  • Stable housing affordability: When it comes to current homes, rates are expected to remain stable, according to the chief economist at NAR. It is also anticipated that 4.78 existing properties will be sold.
  • Low home prices: The prices of homes are expected to drop by 2.5% in most markets. These prices are quite low compared to 2022 prices.

The Bottom Line

Florida homeowners need to be aware of all these considerations when making decisions that impact them and their properties. According to a recent report from Florida Realtors, single-family home sales and condo-townhouse sales have been declining, while prices have been increasing. This is a ripple effect of high mortgage rates, which has also resulted in lower buyer demand. However, many experts still don't expect a market crash in the near future.

FAQs

Is the Housing Market in Florida Going to Crash?

No, the Florida real estate market is not expected to crash. This can be justified by fewer foreclosures, low months supply, strict lending standards, new buyers entering the market, and the low newly constructed Florida housing supply.

Are Florida Home Prices Dropping?

In March 2023, based on YoY changes in home prices, home prices increased by 3.2%.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!

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