Florida Real Estate Outlook Over Next Five Years: Could It Crash?

Florida’s housing market continues to face difficulty from rising mortgage interest rates and subsequent drop in closed single-family and condo/townhouse sales, yet has experienced an increase in end-of-month inventory for both categories, though still below pre-pandemic levels. In this article, we explore the Florida housing industry’s current trends.

Florida Realtors recently issued a report showing single-family home sales had declined 32.5% compared to January of the prior year compared with townhouse and condo sales which saw a nearly 41% reduction, which may not come as much of a shock given current mortgage interest rates being at record-highs, yet still led to reduced demand in January 2023.

New Listings

Single-family houses for sale have seen their listings decline by approximately five per cent annually due to rising interest rates preventing some sellers from a listing. Townhouse/condo listings, on the other hand, townhouse/condo listings had their new listings decrease by 2.4% year-on-year.

Inventory Levels

Single-family listings were more than double what was available a year earlier, rising 134% year over year; townhouse/condo inventories saw similar gains of 90% year-on-year growth, although these levels still fall short of pre-pandemic levels in many parts of Florida where inventory shortages existed even prior to the pandemic outbreak.

Median Sale Price

A shift from active buyers to sellers led to a mild slowdown, though not an outright decline, in home prices in January 2023, although not in an immediate manner. Single-family home median sales prices still increased about four per cent year over year to nearly $390,000. Meanwhile, townhouse/condo prices spiked nearly nine per cent higher to almost $305,000 per unit sold that month.

This report shows the Florida housing industry remains resilient despite rising mortgage rates, as evidenced by declining listings and sales; an uptick in end-of-month inventory offers some optimism; it will be fascinating to observe how Florida housing responds and evolves as we head into 2023.

Florida Real Estate Forecast in 5 Years

Home values in Florida are expected to surge over 80% over the coming five years, according to analysts who are closely watching Florida’s housing market to assess how rising interest rates impact mortgage payments; recent spikes are having an impactful ripple through Florida real estate that analysts are monitoring closely in order to assess any effects this might have on market performance.

Zillow’s selection of Tampa as the number one real estate market in America by 2022 should be no surprise; Florida housing prices rank among the highest nationwide, and Miami and Tampa have led this upsurge. Tampa stands out as a market that consistently outpaces other markets due to several factors, like its high buyer numbers, limited supply, strong property sales, and a highly active employment scene.

Florida’s housing market will remain strong over the next five to ten years, which will benefit sellers as property values will likely continue to appreciate and competition is low, enabling you to select attractive offers according to your schedule and timetable. Unprepared buyers, however, could experience delays due to rising mortgage rates.

Price appreciation could decline if this reduction in demand in certain Florida regions leads to fewer home sales overall, giving remaining buyers who can afford higher mortgage rates more confidence when searching for houses they can afford, ultimately leading to reduced home sales overall. By selling now rather than waiting – as mortgage rates are rising quickly while affordable properties sell quickly- it could turn out well financially! But now may not be an appropriate time to invest or purchase Florida real estate!

Housing markets will remain resilient even during a countrywide economic downturn or recession, though growth may not occur as rapidly. Real estate investors in Florida and elsewhere should capitalize on current market conditions to fully exploit market potential.

Florida Real Estate Appreciation Rates Over 10 Years

Over the past several years, Florida’s housing market experienced unprecedented increases due to low inventory availability and rising demand levels. Most attention has focused on price fluctuations and possible housing bubbles rather than an attractive climate or stunning natural scenery that attracted newcomers in the past. However, that may change if affordability issues continue unabatedly.

Florida must confront the reality that expensive housing may impede economic development or have unintended repercussions among certain segments of its population, particularly given that prices in this state have appreciated at one of the fastest rates nationwide over recent decades.

NeighborhoodScout reports that Florida real estate values have seen an annual appreciation rate of 6.14 per cent during the past decade – representing a 282,35% growth over ten years! Florida represents an excellent long-term investment option for homebuyers and real estate investors.

Florida housing markets mirror national trends with regional variations. A demand-supply imbalance has spurred rapid appreciation across Florida; between 2020 Q3 and 2022 Q3, real estate appreciation rates reached 53.28 per cent here alone! Florida continues to enjoy one of the highest home appreciation rates among states nationwide.

Florida experienced quarterly appreciation rates between Q2 and Q3 of 2022 of 4.36 per cent; this translates to an annualized appreciation rate of 18.60%. High mortgage rates have scared away many potential buyers, creating opportunities for those that remain while slowing the overall appreciation rate in the coming 12 months.

Florida Atlantic University recently conducted a new study that shows Florida’s Tampa Bay housing market as one of the highest priced nationwide. Low mortgage rates fueled bidding wars during an outbreak that escalated during this epidemic period and drove our housing prices upward. Lakeland ranks 12th nationwide for overvalued homes, while North Port-Sarasota-Bradenton comes out No.1. Nationally.

Florida Real Estate Forecast

By February 2023, Florida home values will average $377.706, according to Zillow Home Value Index estimates. In the past year alone, their values increased 11.1% while median days until pending remain 31 days long.

The median ratio between the sales price and list price for an order sold was 0.997% for Orders totaling up to 13.5% over the list price.

Zillow estimates indicate Florida’s housing market will likely experience growth during 2023 at a slower rate compared to 2018. Florida homes saw 11.1% increases in value year over year throughout 2018, which can only become sustainable as market dynamics shift and stabilize.

Florida’s real estate market is predicted to experience growth over the coming years, led by metro areas like Miami, Tampa and Orlando. Zillow data gives us an understanding of how Florida real estate markets will perform over time; this blog will go further by reviewing this data closely while giving predictions for each metro area in Florida.

Miami, FL

According to Zillow data, Miami metropolitan area home values will experience only an incremental 0.2% gain by March 2023’s end; subsequent months should show minimal increases; by May 31st, no increase is projected, yet by February 29th 2024, home value growth should have hit 1,7%.

Tampa, FL

As of March 31st 2023, home values in the Tampa metro region should not experience an increase. But by May 31st 2023, there should be an anticipated 0.3% decrease. Home values are projected to increase by 2.3% by February 29th 2024.

Orlando, FL 

Home values in Orlando’s metro area will decline by 0.2% by March’s end and another 0.7% decline by May 2023; they will then show an uptick by February 29th 2024, with 0.6% increases predicted.

Jacksonville, FL

Home values in Jacksonville’s metro area will decrease by 0.2% by March’s end and 0.6% by May. By February 29th 2024, home values will have gone up 1.6%.

North Port, FL

Home values will decrease by 0.1% by March 2023 and then another decrease of 0.2% in May. Home values should then experience an upswing and reach their previous peak on February 29th, 2024.

Cape Coral, FL

Home values in Cape Coral’s metro area will decrease by 0.6% by March’s end and 1.5% by May 2023 – before increasing by 0.2% on February 29th 2024.

Lakeland, FL

By March 31st 2023, in Lakeland’s metropolitan area, home values will decrease by 0.2%, while by May 31st, they should drop 0.6% further – overall values may even go up 1.7% by February 29th 2024!

Florida’s housing market should remain dynamic in 2023 with steady home price gains and strong buyer interest for new properties. While growth rates could slow, creating more balance between buyers and sellers. Projections can differ depending on factors like the economy, interest rates, local market conditions, etc.

Florida Housing Market Forecast Trends

Florida remains an attractive option for homebuyers and investors. Its subtropical climate, gorgeous beaches, vibrant economy, and strong job market continue to draw new residents each year. Here we explore Florida housing markets for January 2023 using Redfin data.

Florida’s housing market in January 2023 showed steady price gains year over year; yet house sales decreased drastically year-on-year; this could signal a shift in market dynamics; more buyers than sellers currently exist, and only about 20 per cent sell below list price; suggesting strong conditions for sellers in this particular housing market segment.

The Progression Of Florida Home Prices

By January 2023, Florida will experience an estimated median home price increase of 6.1% annually. Sales decreased 35.4 compared to January 2017’s 33252 units sold, and median days on the market increased 21 days year-on-year.

Home-for-sale listings have increased significantly year over year in recent months.

There were 138.803 Florida homes listed for sale as of January 2023 – up 36.1% year over year compared with last January; 38.722 newly listed homes saw a 7.4% decrease year-on-year while average supply had increased three months to five months, thus favoring buyers at this time with more choices and decreased competition in Florida’s real estate market.

An Increase In Home Sales Under List Prices Is Present

Only 11.0% (or 20.6%) of Florida homes sold below their list prices in January 2023 – down 20.6 percentage points year over year and reflective of buyers willing to pay full price or more; 30.5% had price reductions as opposed to 12.0% last January; this indicates home sellers being more realistic in pricing decisions, willing to adjust pricing according to market fluctuations and adjust accordingly.

The ratio of Sale Price to List Price

January 2023 saw an average sales-to-list price ratio of 96.6%, representing a decrease of 2.4 percentage points since last January and indicating buyers typically paid within 96% or below what their list price indicated. Although some negotiation room may exist in such instances, overall, sellers’ markets remained fairly strong.

Top Five Florida Metropolitan areas With Rapid Sales Price Growth

Coral Gables in Florida saw the highest sales growth year-to-year at an increase of 87.2%, while Winter Park experienced 56.2% and Margate saw 43.8%; Altamonte Springs and Miramar Beach each witnessed 34.6% increases, respectively. These statistics may appeal to investors looking for real estate investment opportunities in Florida.

Florida Realtors released an annual Year-End Report detailing single-family home sales data over the prior year in Florida.

Florida Single-Family Home Sales.

• 2022 saw 287.352 closed sales, an 18% decrease from last year.
• Closures that exclusively accepted cash payments fell 12% year-on-year while cash sales made up 32.0%, an increase of 7% over previous year figures.
• Cash sales provide a useful measure of investor participation in the market. Most homebuyers require loans or some form of financing when buying property; by contrast, investors can often pay cash.
• Florida home sales declined across all price points during 2022.
• Market segments $400,000-$59,999 posted the highest total number of closed sales (81,155). $300k-399k saw 43683 transactions closed; both segments witnessed year-over-year increases in transactions. Florida Single Family Home Prices also experienced growth over the last year.

Florida’s Single Family Home Pricing

• 50% of sales occurred above and 50% below the median sale price reported for 2015 (412K), marking an increase of 15.7% YoY.
• Total sales divided by total transactions = Average sale price. As measured by dollar sales divided by the number of sales in October 2015, that ratio stood at $ 562-442, an increase of 11.3% year over year (YOY). All closed sales during that month totaled $161.6 billion or an -8.7% YoY.
• Real estate agents, analysts and investors find this indicator fascinating as it provides vital data.
• In 2022 the Median Percentage of the Original List Price Received remained at 100.0% as in 2021;

Days on the Market also decreased significantly between 2021-2022.

Last month, the median days between listing and contract dates for closed sales were 14, two additional days than in 2017. There was also an increase of one day in terms of days between the listing and sale date (New Pending Sales).

In 2022, properties listed under contract numbered 290375, representing a 21.1% year-on-year decrease – representing an indicator for future potential closed sales and Florida Housing Supply’s New Listings decreasing 3.0% year over year.

At the end of 2018, 65 786 active property listings had been listed, an increase of 1168.8% year-on-year and 170% higher year-over-year compared with 2017. MSI (Months of Supply Indicator) can serve as an accurate gauge of market health.

At five months’ worth of stock, an ideal market is one in which neither buyers nor sellers are given priority. Any above-average prices indicate a buyer’s market, while anything below it indicates sellers’ markets.

When will Florida’s housing market crash? Housing demand rises with population and household numbers growth; according to supply-and-demand principles, prices will tend to increase when more buyers than homes exist – something Florida has been seeing year on year since 1940 – often surpassing national figures; during Pandemic-affected years Florida experienced population decrease, though then rebounded last year as numbers increased again.

Florida has recently emerged as the state with the fastest population growth. Census data demonstrates this by showing it has seen more than 400,000 newcomers to Florida between July 2021 and 2022, increasing by 1.9% to a total of 22244823 people, surpassing even Texas, which at 2nd largest population, ranks only behind California for growth rate.

Experts report that Florida and U.S. housing markets were less severely impacted by the Great Recession (2008) due to tighter lending regulations resulting from financial crises; credit scores reveal their superior position, while homeowners benefit from increasing home values with record equity holdings.

The situation is complicated but nothing like the 2008-2009’s market crash, which required years for resolution. Federal Reserve actions have provided support to fuel the housing boom. Withdrawing these subsidies may prove detrimental, but that won’t cause collapse as Fed remains a key player in the housing market’s future development.

As of February 2020, the Fed held roughly $1.4 trillion of mortgage-backed securities before quickly decreasing. To boost that figure to $2.7 billion, it embarked upon another round of bond buying known as quantitative easing to bring its total holdings up.

To combat inflation, the Federal Reserve wants to tighten monetary policy by tightening monetary policy and shrinking portfolio sits. While they would ideally like this outcome to occur, this goal is unlikely to be accomplished. If that occurs, prepare yourself for collapse rather than just minor corrections in housing markets.

Moody’s Analytics, a financial service company, determined that most Florida metro areas were overpriced by more than 20%. Their parameters apply to two dozen major metropolitan areas across Florida and nationwide; Florida led with seventy major metropolitan areas being priced more expensively based on parameters – coastal regions were surprisingly top of this list at ranking highest overall with Homosassa Springs Metropolitan Service Area being priced 57% more expensive in Citrus County being 4th overall nationally for this ranking!

Top Ten Florida Housing Markets with Expensive Prices By Percentage

• Homosassa Springs MSA (57%)
• Palm Bay-Melbourne-Titusville MSA (48%)
• Punta Gorda MSA (45%)
• Vero Beach-Sebastian MSA (42%)
• Port St. Lucie MSA (40%)
• Crestview Fort Walton Beach Destin MSA (39%)
• Cape Coral-Fort Myers MSA (39%)
• Naples Immokalee Marco Island MSA (38%)
• Miami Miami Beach Metropolitan Division (39%)

Floridians are concerned by Florida’s recent price surges for many reasons, though industry experts remain hopeful the market will eventually find stability again. When that occurs, and home prices decrease again, Florida residents could lose out.

Zandi noted that Florida homeowners were wealthier than they realized due to increased property values across Florida, yet not as wealthy as many believe. Homeowners will find it increasingly challenging to upgrade or use equity from their properties to pay expenses; first-time homebuyers and middle and low-income individuals were priced out due to rising mortgage rates, homeowners insurance premiums and sales prices that have put many first-time home buyers out of this market.

Ten Florida markets are overvalued, according to a rental trends study. New research shows Florida’s rental market to have both high prices and rapid rental inflation rates; rents have skyrocketed following the expiration of the moratorium due to high demand, in particular, Florida; this will remain high until more units come online – potentially alienating many middle-class renters who previously needed renting due to being unable to purchase the property themselves.

Research published in June on 107 U.S. Rental Areas revealed that Florida hosted 10 of America’s overpriced rental markets based on April data, including Miami-Dade and Broward counties, where renters pay an unnecessarily high “premium”.

Investigation revealed a 22.07% overpricing of South Florida rent, increasing from $2,331 to $2,846, even though historical data suggested otherwise. Rental expenses have dramatically risen, most prominently in Fort Myers – up 32.38 per cent year-on-year on average since last year to an estimated average rent of $2,073. Furthermore, nine other Florida areas included in this research experienced 20 per cent or greater increases year after year and are all within the top fifteen among 107 places analyzed herein for such criteria alone!

Ken H. Johnson is an economist and co-author of this study at Florida Atlantic University College of Business.

Florida Housing Market Forecasts for 2023

Florida is one of the nation’s hottest real estate markets. Housing sales reflect economic health in a direct relationship to one another – house prices rise or fall directly with economic activity. At the same time, the money supply becomes limited, and housing becomes less active when economies slow.

Florida, known as “The Sunshine State” and offering year-round sunshine (hence its nickname) and world-class amusement parks, is an extremely popular tourist destination. Florida also hosts several corporate headquarters worldwide and boasts vibrant economies – 18 companies headquartered here made Fortune magazine’s list of America’s 500 enterprises with the highest revenues during fiscal year 2020!

Florida Economy Continues To Thrive

In December 2022, Florida had an unemployment rate of 2.5 per cent, representing a decrease from November and 1.0 from one year earlier. Out of 10,761,000 Floridian workers, 271,000 were unemployed at that point.

In December, the unemployment rate in the U.S. stood at 3.5%; Florida added 440,000 new jobs- an increase of 4.8%- throughout 2017. Total employment levels also increased during 2017 by an overall 3.0% gain.

Nine of the major private sectors in Florida now employ more people than before the pandemic. Miami-Dade (1.4%) and Monroe Counties (1.4% each) experienced some of the lowest unemployment rates during December 2022; St Johns County followed with 1.8%, and Wakulla and Okaloosa Counties, each with 1.9%.

Highlands County in Florida had one of the highest unemployment rates (3.6%) in Florida by December 2022, followed by Citrus (3,5%) and Sumter County (3.4%). Over the course of December, Highlands County saw significant employment gains due to mining-related industries as compared to its peers, particularly citrus (3.5%), palm (3.5%) and sod (3.4). Within Highlands County alone, there have been notable gains within various subsectors: citrus (35%) and palm olein production (90%). Throughout Florida, various sectors have seen employment growth over recent months in Highlands County, such as citrus (35 per cent), and marine oil (3.44%); industries which experienced employment gains include mining-related industries gained employment were: construction (87%); industries which gained employment most over this last month were: Highlands county (41%); industries which gained most were: palm onion production (95%); palm 3.2 per cent). These industries saw the most employment gains by November: industries that gained employment: palm leaf production (90%); pinewood products (10 percent); citrus (35%); Sumter County (4 percent); citrus (5 percent; 3.5%); Citrus County (35%; 3/5 percent), citrus (35%); Sumter county (44%); as well as Sumter county (35%); as well as Sumter county (44%); These industries gained over their counterparts (24%);

Florida Is an Ideal State for Real Estate Investment

Florida is an attractive location for investment in real estate due to its diverse economy, strong population growth and affordable property prices.

1.  Florida boasts a robust job market and growing population, particularly in Miami, Orlando and Tampa, with phenomenal population expansion and real estate investment success. Florida also features a diverse job market which attracts new residents who then help contribute to increased housing demand in this state.
2. Florida’s real estate industry is flourishing thanks to tourism. Florida has long been a top tourist destination, making vacation rental property especially sought-after in popular spots like Miami and Orlando. Vacation rentals provide more privacy and space for visitors than hotels – giving investors another way to earn income while increasing property values.
3. Due to high demand, vacation rental properties tend to be more profitable and reliable than other rental properties. Comfortable vacation rentals attract more tourists; moreover, vacation rental properties tend to be less vulnerable to market fluctuations as tourist demand remains steady; Florida tourist attractions provide real estate investors with both stable revenue streams and capital appreciation opportunities.
4. Florida Property Prices Are Reasonable: Compared to states such as California, Florida’s property prices can be more appealing to investors looking for high returns and multiple acquisition opportunities. Property values differ considerably based on location or property type – for instance, tourist areas may offer cheaper property values, while beachfront areas could command greater costs for property acquisition.
5. Florida lacks a state income tax, which makes the state an appealing investment destination and increases potential returns for real estate investors.
6. Florida boasts an economy replete with agriculture, tourism and aerospace sectors that safeguard it against economic downturns while offering real estate investors many investment opportunities.

Before investing, you must conduct in-depth research, understand the market and property involved, and create an action plan for managing risks.