By the end of 2022, the residential market of real estate in Florida has approached its pre-Covid-19 levels. The market showed good results on closed deals, although year-on-year it failed to surpass the extraordinary success of 2021. The main indicators of the housing market in Florida for 2022 and the forecast for 2023 will be analysed below.
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2022 figures
In 2021, the market for houses and apartments in Florida reached its peak, which has not yet been surpassed. Despite a slight decline in indicators in 2022, the results of the past year can be considered good in the traditional (pre-pandemic) housing market of 2018 and 2019.
According to statistics, in 2022, the number of sales of single-family homes across the state was 287,352 - 18% less than in 2021. At the same time, the average value of such properties in 2022 reached $402,500 - 15.7% more than in 2021.
When comparing the total sales of apartments and townhouses in 2022, 125,494 units were sold throughout the state - 21.7% less than in 2021. The average cost of properties sold reached $306,500 - 21.6% more than a year earlier.
Statewide, the median percentage of the initial price (i.e., the ratio between the initial price set by the seller and the final sale price) received by sellers in 2022 remained at approximately the same level year-on-year for both categories of real estate: 100% for single-family homes and 99.9% for apartments and townhouses.
According to the Florida Association of Realtors, in 2022, the number of offers reached a 2.7-month supply for single-family homes and a 2.8-month supply for apartments and townhouses.
"The good news is that we have a lot more offers than we had during the pandemic. The supply of single-family homes doubled in relation to the 1-month supply in 2021 to almost a 3-month supply in 2022. A slight reduction in mortgage rates, combined with other factors, may make Florida more attractive to real estate buyers," said Brad O'Connor, the Chief Economist for the Florida Association of Realtors.
December 2022
In December 2022, the number of closed sales of single-family homes across the state was 19,158 - 36.1% less than in December 2021. As for apartments and townhouses, a total of 7,677 properties were sold in the last month - 40% less than in the same period a year earlier.
When compared to last year, prices of both single-family homes and apartments and townhouses across the state in December 2022 increased. The average value of single-family homes was $395,000 - 5.6% more than the previous year. The average cost of apartments and townhouses was $310,000 - 8.8% more than a year earlier.
Q4 2022
The number of closed sales of single-family homes in Florida was 57,004 in the fourth quarter of 2022 - 33.1% less than in the fourth quarter of 2021. The average value of this type of real estate during this period reached $400,000 - 9.6% more than a year earlier.
A total of 23,117 apartments and townhouses were sold in the fourth quarter of 2022 -35.5% less than in the fourth quarter of 2021. The average cost of these properties reached $310,000 - 14% more than a year earlier. In general, in 2022, the total volume of transactions in the Florida housing market was declining and prices for residential properties were growing.
What awaits the Florida real estate market in 2023?
Presenting the market forecast for 2023, Brad O'Connor stated that mortgage rates and interest rate policy of the US Federal Reserve System would affect current market conditions (as it continues to struggle with inflation).
As explained by Brad O’Connor, "Over the next 6 months, if mortgage rates do not rise and do not return to 7%, buyers will be more active. I believe that mortgage rates will be above 6% for a while. Faced with a lot of good news on the economic front, I think we will see the reaction of the housing market. There is consumer demand. Perhaps many buyers are waiting for a decline in housing prices, an increase in supply and other factors."
Herewith follows a list comparing various organisations’ latest forecasts for the market for apartments and houses in Florida:
- The National Association of Realtors - In 2023, the number of residential property sales will fall by 7% year-on-year;
- The Mortgage Bankers Association - In 2023, the number of residential real estate sales will decrease by 13.7% year-on-year;
- Redfin - In 2023, the number of residential property sales will fall by 16% year-on-year; and
- The National Association of Home Builders - In 2023, the number of housing sales will decline by 15.7% year-on-year.
Brad O'Connor states, "I am sure that in the first half of this year, we will see house prices on average level out, and I think sales will fall below the level of 2018."
How consumers are affected by the economy, inflation and other factors, or how they relate to what is happening in the world, affects consumer confidence and the aspects based on which they make decisions about buying real estate or saving their money.
"In 2023, consumer confidence will begin to grow in most of the United States, but it will be far from what it was a year ago”, says Dr John Lear, Chief Economist of the consulting company Morning Consult. “It will take a long period of real salary growth and a stable political situation for consumers to feel more comfortable and confident about the economy and their future. Studies show that nowadays it is becoming difficult for an increasing number of consumers to make ends meet in the last days of the month, and the proportion of adults who save money monthly continues to decline."
Lear noted that higher costs undermine consumers' savings and financial stability. "Although we see in the news that inflation is slowing down, it is affecting consumers. They are experiencing financial stress and trying to reduce their expenses. The outlook for the US economy has deteriorated over the past two months. Consumers have exhausted their sources of income. We expect them to keep cutting costs as small businesses and other sectors reduce hiring, salaries and so on."
However, Lear added that housing and home ownership remain a top priority for many American consumers. "Home prices are stabilizing, but resisting the decline as buyers' interest grows," he said, "buyers interested in buying a house are waiting for the moment when their financial situation will allow them to make a good deal. We see that homeownership remains an important goal for consumers, especially for young people who want to start a family and feel safe at work."