Florida Real Estate Market
The spring housing market in Florida is already sizzling and we’re one day in. The latest data just released shows it is a sellers market, with ultra low housing supply low and prices rising rapidly.
“Record-low inventory is continuing to put pressure on home prices to rise and creates challenges for buyers. However, new pending sales rose 10.9% for single-family existing homes last month compared to February 2020, while new pending sales for condo-townhouse units increased 35.4% year-over-year.” says 2021 Florida Realtors President Cheryl Lambert.
And will growing sales in other housing markets free up more buyers with cash wanting to relocate in sunny, warm Florida?
Florida has one of the hottest US housing market forecasts for 2021 and bets are that bidding wars will be common. Buyers from New York, Boston, Philadelphia, Chicago, Atlanta, and Toronto are eager to own a home in paradise.
See the Tampa St Petes and Miami reports. As detailed in this epic report on Florida’s real estate scene, home prices will always rise against a lack of supply. Add on the hope of the economic recovery in May or June, and the stage is set for rocketing home prices across the Sunshine state.
As Florida Realtor’s Brad O’Connor said in last November’s Florida Realtors report, “the strong and persistent level of demand seen throughout the state, coupled with worsening inventory shortages, continued to drive up home values.”
The question of whether demand is driven by speculators, first-time buying millennials, or rental property investors is uncertain.
Again, here’s Florida Realtor’s Florida Realtors Chief Economist Dr. Brad O’Connor reviewing the February 2021 home sales stats.
Indeed, Florida house prices rose to a median price of $305,000 which is 15.1% higher than 12 months ago. And condo prices are up too. The statewide median price for condo-townhouses rose 15.9% to $221,000.
Single detached home sales totaled 23,947 units in February, up 15.7% year-over-year. Median sales price for single-family existing homes rose 16.6% to $314,900 from February 2020, and the median price for condo-townhouse units rose 16.6% to $233,240, up 16.6% from last year.
This year, as Covid 19 vaccine distribution accelerates and Federal stimulus begins to pour onto cities and states, there will be few breaks on buyers wanting to realize their dream of owning a home in Florida. Few states offer the housing opportunities Florida possesses and with foreign buyers searching online, there is huge potential for homeowners to receive record breaking prices.
Florida Realtors believes rising interest rates will moderate demand and prices, but I think it’s unlikely. The Fed has promised continuous low rates and said inflation is not an issue. There is pent up demand, low construction numbers and rising savings and wages.
It all points to almost bubble like conditions, but hopefully no Florida housing crash. The lack of supply is the major factor now and with housing development regulations in the way, prices will keep soaring.
The beautiful climate, ambiance, recreation and leisure opportunities along with a reawakening economy makes it a prized location. First-time buyer activity is beginning to pick up and with jobs more secure, mortgage lenders might ease up on their hesitancy to lend.
Tourism and agriculture will slowly lift the Florida economy thus avoiding a tidal wave of new money entering the system. Look for foreign buyers to show interest as the US dollar sinks in value.
Real Estate Sales Stats February 2021
Let’s take a look at last month’s Florida housing statistics for Florida Realtors.
Median Time to Contract
Median time to contract remained the same last month, however it is still down 57% from last February’s time.
Pending House Sales
Pending house sales slowed last month to rise only 1490 units, versus about 4700 units more in January. Sales are slowing due to low supply, high prices, and lingering Covid 19. Prices have jumped $10,000 in just one month. This could be a sign that things are going to heat up soon.
New House Listings
Always an important indicator of market trends, new listings rose slight in February. This is still down 5% from last year. There were 374 more homes listed during the month.
Housing inventory Keeps Sinking
This inauspicious chart reveals the quick decline of housing supply in the state. The MSI is balanced at 5.5 months, but Florida’s volume has slumped to 1.6 months.
Florida Home Sales by Price
Home sales in the affordable range slumped while homes priced above $300,000 to a million dollars or more have risen dramatically year over year. Sales of houses priced below $300,000 dropped 32.2% from December 2020.
Affordability is becoming a more serious issue for those hoping to buy a house in Florida.
Current Listings by Price
Those hunting for houses at an affordable price will be dismayed with the steep reductions in inventory. Inventories are down at every price point.
What is driving Florida Home Sales?
Brad O’Connor believes the type of home being purchased is a factor, but most of the demand is for single family starter home sales. Mortgage rates are much lower than last year, down to record lows in the 3.2% area currently. Starter home sales suggest more millennials who are getting older, have some cash (savings during the pandemic) and are eager to buy. Homes will increasingly be priced out of their reach. This should lower sales.
The pandemic is no doubt a factor too, as new work at home workers and independent business owners seek to leave inner cities in the North (Manhattan, Boston, Washington, Chicago, Cleveland, Indianapolis, Minnesota, etc) to find single detached homes anywhere. They’re looking for safety from Covid 19 and more room and nice weather to work in.
It makes sense that the stress of indoor confinement would drive so many to seek more spacious accommodations. This trend should drive Airbnb and condo rentals in Florida as well. The pandemic will drive more sales right into the spring, where the economic recovery will take over.
Record Home Prices
Is it a Florida Home Price Bubble?
If you’re considering buying a Florida house or condo, you will be paying considerably more. Is it a price bubble? More people are saying yes, with the pandemic pushing more buyers into the Florida real estate market where they can buy a roomy home for a great price.
The forecast for the next 3 months is stronger than normal, leading into a 6 month growth period of unusual intensity. The 5 year real estate market outlook for Florida looks promising. This should encourage buyers to pay more and sellers to demand more for hard to find houses.
Florida Population Growth Outlook
A study/prediction by http://edr.state.fl.us/ suggests Florida’s population will grow by 60,000 over the next 3 years ( a compound growth rate of 1.53%).
The edr.state study also shows further that population growth may begin to decline, death rate to climb, and household size begin to shrink after 2023. Overall, net migration is predicted to remain high which supports long term house prices.
House Prices by City
Wondering which cities might offer the best value in 2021? House prices have increased the most in Destin/Fort Walton, Homosassa Springs, Naples, Sarasota Bradenton, Pensacola, Punta Gorda, Melbourne, Miami Fort Lauderdale, and Cape Coral.
Condo Sales Stats for January 2021
The condo market in Florida is surprisingly alive and well. And as the pandemic health fears subside, we wonder high demand for Florida condos will be from buyers who are priced out of the single detached market.
House Prices by City
Condo Prices by City
Condo prices increased the most in Cape Coral, Daytona Beach, Naples, Sarasota, St Petes/Tampa, Homosassa Springs, Panama City, Melbourne, Miami/Fort Lauderdale, and Lakeland/Winter Haven.
Florida New Construction Starts
According to Dodge Analytics, housing starts are growing, but may not be able to match demand from home buyers.
They report total construction starts for Miami-Dade, Broward and Palm Beach counties totaled $904.1 million in August, which is 46% higher month over month and 8% higher than August 2019.
Fewer listings is typical of the national housing market, or housing markets in Boston, Tampa, Miami, New York, California, Dallas , Denver, or San Diego. Homeowners are very reluctant to sell in this economic climate. More stats on Florida homes for sale below.
“Florida’s housing market continues to gain momentum and provide support for the state’s economy, even as we all remain vigilant in protecting our health, safeguarding our communities and trying to keep businesses going during the ongoing pandemic,” said 2020 Florida Realtors President Barry Grooms
Why the demand for Florida real estate?
Here’s a few good reasons why the brisk search for Florida homes for sale:
- low mortgage rates
- low Florida taxes
- people getting in before the boom and rocketing Florida prices
- greater square footage living
- economic concerns and debt in Northeastern states
- more houses in the south vs apartments in the north
- Covid 19 outbreaks are easing
- cold winter and Covid depression is making buyers seek warmth, sunshine, beaches and water, and year-round activity; no -40 or shoveling snow in Florida
- economic diversity in the Sunshine state
- coming boom of recreation and travel
- pent up consumer demand returns in a wave
- falling USD value
- the reduction of work shutdowns
These and more might be the key factors driving the relentless growth of the Florida housing market. It should keep Florida Realtors busy and happier.
The Much Desired Florida Real Estate Market
Florida has a lot going for it. Lower-income and property taxes, warm weather, no estate taxes, and incredible recreation and beaches make this state the most desirable place (i.e, for New Yorkers and Manhattanites) to buy a home. While California cities are in freefall from evaders, Florida cities including Boca Raton, Miami and Tampa, are often among the best cities to buy real estate. Compare to home prices in Texas, Georgia, Colorado, or California.
The key stats below might be active listings and initial listing prices. They show a severe downward trend in homes for sale available, particularly at cheaper prices, and that listings are still growing in the upper price tiers.
Given the devastation of the Corona Virus pandemic shutdown, Realtors did a good job keeping the market thriving. From Boca Raton, to Miami to Tampa, as in all US housing markets, the forecast is a full return by summer of 2021.
Luxury Homes in South Florida
According to Mansion Global, South Florida’s luxury real estate market is hot. In Miami, luxury single-family home sales rocketed 76.7% YoY to 159 sales in September. And luxury condo sales jumped 34.9% YoY to 85 units. In Miami, homes are selling 44% quicker than last year.
In Broward, high-end single-family home sales in Broward County surged 204.3% year-over-year to 143 sales in September, as existing luxury condo sales remained flat at 13. In Palm Beach, single-family house sales jumped 72.1% compared to September 2019, and condo sales lept to 179 sales while high-end condo sales increased 110.7% to 59 transactions.
Tampa Bay Home Sales
In Tampa and Hillsborough County, active listings were down more than 40% in all four counties. Median prices hit $294,900, a rise of 15% from last year.
Businesses and real estate offices continue to open, and more business is being done online. Search data for real estate shows buyers are doing a lot of searches online for houses for sale.
Economic Challenges ahead for the Sunshine State
Slowing Tourism: What will happen with prices in 2021 if there is a vaccine and travel to Florida returns full tilt?
Disney World closing, Cruise lines docked, NHL hockey and NBA basketball cut short, MLB baseball training canceled, spring break vacation canceled, and restaurants closing. Florida’s $40 billion tourist industry is primed to return.
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Florida Housing Market Forecast – copyright Gord Collins
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