There was a rapid increase in prices in the residential real estate market in Florida last year due to a low supply and high demand. In May, prices reached their peak, increasing by 23% on an annual basis. This trend was formed after the introduction of restrictions related to the COVID-19 pandemic. Americans who switched to a remote work format began to migrate from states with a high cost of living to more attractive places, primarily Florida. This state has become one of the most popular due to the low rental rates, real estate prices, mild climate, favourable tax system, and natural attractions. Let’s analyse how the local Florida real estate market behaved in 2022 and what to expect in 2023.
- Current state of the Florida real estate market
- 2022 data on the Florida housing market
- Forecasts for 2023
Inflation and rising interest rates remained the key problem for apartment and property buyers in Florida in 2022. Nevertheless, the demand continued to grow. In October, the local market recorded higher median prices and a larger number of offers compared to last year. Statewide, the number of closed sales of single-family apartments reached 20,837 in October. This was 24.6% less than in the same period in 2021. The number of condos and townhouses sold reached 8,356, which was 26.9% less than in October 2021.
The average cost of a single-family apartment sold in October 2022 was $401,990, which was 12% more than in the previous year. For condos and townhouses, this figure reached upwards of $310,000, which was 19.2% higher than a year ago. The supply of residential units for sale continues to grow slowly. In October, the level of supply was higher than a year ago, both in the segment of single-family apartments and in condos and townhouses.
When the value of residential real estate reaches such high rates as now, the increase in mortgage rates and property insurance can have a serious impact on the monthly expenses of homeowners and lead to a decrease in the level of affordability. Currently, Florida ranks 31st in accessibility amongst the other fifty states.
The city of Tampa became the best real estate market in the United States in 2022. In general, housing prices in Florida have made one of the sharpest jumps in the country, with Miami and Tampa leading the way in this indicator. Due to a variety of variables, including a larger number of potential buyers, a low level of supply, and an active labour market, the residential real estate segment in Tampa has outperformed other markets.
Data on the apartment and housing market in Florida for October 2022:
- the number of closed transactions where buyers paid exclusively in cash, amounted to 5,908 in October, 28.4% more than in October last year;
- most of the deals were concluded in the price segment of 400,000 to 599,999 US dollars, their number reaching 6,072 sales in total;
- the second place was taken by the price segment of 300,000 to 399,999 US dollars, with 5,617 sales being registered;
- the median cost of housing sold in October was $401,990, an increase of 12% year-on-year;
- the average cost of housing sold in October was $547,307, an increase of 13.2% year-on-year;
- the total value of all residential units sold in October amounted to 11.4 billion US dollars, 14.7% less than in October of the previous year;
- the median number of days between the listing date and the contract date was 25 days, 13 days more than last year;
- the average number of days between the listing date and the date of the contract was 70 days, 17 days more than last year;
- the number of properties purchased during the month amounted to 17,714, which is 41,2% more than in the previous year;
- the number of real properties put up for sale during the month amounted to 25,546, which is 18.1% less than in the previous year.
The number of months required for the sale of real estate properties exhibited in October is 2.7 months. This is a useful indicator of the state of the market. In a balanced market, this would be 5.5 months. Indicators above this period relate to the buyer's markets, and below – to the seller's markets. Consequently, the Florida residential real estate market is currently still a seller's market.
According to the experts, the Florida housing market, in particular, South Florida and Miami-Dade County, is predicted to grow by 3.4% in 2023. While there’ll be a slight increase in the price of properties for sale in the large urban areas, in other markets, there’ll be a balance between the average property prices across the state market. If the value of real estate starts to fall, it’ll happen in the framework of price equalisation in the fourth quarter, in the background of a smaller volume of real estate sold and a decrease in consumer demand.
Why does the cost of Florida housing continue to rise despite the current decline in prices on average across the country? The state is experiencing economic growth and high demand for housing, as many investors and buyers of real estate strive to move here. Hence, housing demand in many areas of Florida, including Port Saint, Orlando, Miami, Fort Meyers, Jacksonville, Deltona, and Tampa, has now surpassed pre-pandemic indicators.
According to experts' forecasts, the Florida real estate market may look like this in the first half of 2023:
- Jacksonville: sales will fall by 3.0%, prices will rise by 4.6%;
- Miami, Fort Lauderdale, West Palm Beach: sales will fall by 2.0%, and prices will rise by 3.4%;
- Lakeland, Winter Haven: sales will fall by 5.0%, and prices will rise by 1.6%;
- Orlando, Kissimmee, Sanford: sales will fall by 8.5%, and prices will rise by 2.9%;
- Cape Coral, Fort Myers: sales will fall by 5.9%, and prices will rise by 0.1%;
- Tampa, St. Petersburg, Clearwater: sales will fall by 15.6%, and prices will rise by 3.9%;
- Palm Bay, Melbourne, Titusville: sales will fall by 18.3%, and prices will rise by 2.8%;
- Northport, Sarasota, Bradenton: sales will fall by 28.7%, and prices will rise by 3.2%.
According to surveys, many elderly buyers will seek to purchase a one-storey house with three bedrooms and two bathrooms in Florida. This is due to easy access to the local healthcare system and a climate favourable for pensioners. These elderly investors will not be affected by the unemployment rate and rising interest rates and will be able to purchase real estate for cash.