The value of residential properties in Florida hit record highs last year, as the median price rose by 50% from January through December.
The high mortgage rates, however, caused this market to cool down considerably. Analysts from Redfin forecast that in 2023, the median house price may reduce by 4 % in the USA, which will be the first decline over the last 10 years. The sales volume may also drop by 30% compared to 2021. This reduction won’t affect all regions, though, as prices in some areas are expected to increase.
Experts assume that in areas with high climate risks, such as the hilly part of California and Florida’s oceanfront, the value of residential properties will continue to increase because of high insurance rates. According to Redfin, premiums for natural disaster insurance will increase, which will set off the potential slight reduction in prices. Last year, insurance premiums rose by 33% in Florida, and this trend is likely to continue after Hurricane Ian, which caused $113 billion worth of damages. Insurance payments to the Federal Emergency Management Agency (FEMA) increased too.
It is therefore expected that primarily wealthy people paying in cash will be buying homes in Florida over the next years. They will not take mortgages that require insurance against natural disasters.