Florida’s housing market is undergoing a significant shift, moving from a seller’s to a buyer’s market. This change is characterized by increasing inventory, longer selling times, and moderating prices, a stark contrast to the pandemic-fueled boom. Factors like high mortgage and insurance rates, coupled with rising association fees for condos, are contributing to this cooling trend.
Florida’s Housing Market Cools: A Buyer’s Resurgence
Florida’s real estate landscape is experiencing a notable cooling period, marked by a surge in available homes and a slowdown in sales. Active listings across the state jumped by 35% year-over-year in April, reaching 182,589 homes, the highest since 2016. This increase is not due to a sudden influx of new listings, but rather a decrease in demand, leading to properties sitting on the market for longer periods.
Key Takeaways
- Increased Inventory: Florida’s single-family home inventory reached a 5.3-months’ supply in February, indicating a shift towards a balanced market. Condo and townhouse inventory is even higher at a 9.7-months’ supply, firmly placing it in a buyer’s market.
- Moderating Prices: While median sales prices for single-family homes remained relatively flat year-over-year at $415,000 in February, condo-townhouse median prices saw a 3.1% decline to $315,000. This suggests sellers are increasingly needing to adjust prices to secure sales.
- Demand Destruction: The rapid price escalation seen during the pandemic has led to demand destruction. High mortgage rates (around 7-8%) and rising insurance costs are making homeownership less affordable, causing buyers to be more hesitant.
- Regional Variations: While the statewide trend points to a cooling market, regional nuances exist. Miami’s inventory, though increasing, is still lagging behind other major metros like Tampa, Orlando, and Cape Coral-Fort Myers, where inventory levels are significantly higher compared to pre-pandemic levels.
- Condo Market Pain: The condo market is experiencing particular pain due to high mortgage and insurance rates, coupled with increased association fees driven by new reserve requirements following the Surfside condo collapse. Recovery for coastal condo properties, especially in Southwest Florida, is expected to be slow.
Factors Driving the Shift
Several factors are contributing to the current market dynamics:
- High Mortgage Rates: Interest rates, which were historically low (2-3%) during the pandemic, have now climbed to 7-8%, significantly impacting buyer affordability and enthusiasm.
- Rising Insurance Costs: Florida’s insurance market has been volatile, with increasing premiums adding to the overall cost of homeownership.
- Increased Condo Association Fees: New regulations following the Surfside condo collapse mandate stricter reserve requirements, leading to higher association fees for condo owners.
- Post-Pandemic Correction: The market is correcting after an unprecedented boom fueled by low interest rates and a surge in demand during the COVID-19 pandemic. Prices had spiked to unsustainable levels, leading to a natural rebalancing.
- Buyer and Seller Disconnect: Many buyers still perceive it as a seller’s market, while sellers are reluctant to lower prices, creating a stalemate that slows down transactions.
Outlook for Florida Real Estate
While the market is cooling, experts do not anticipate a housing crash similar to 2006. Instead, it’s viewed as a correction towards a more balanced market. The increased inventory and moderating prices offer a more favorable environment for buyers, who now have more options and negotiating power. However, affordability remains a key challenge, and the pace of recovery, particularly for the condo market, is expected to be gradual.
Sources:
- A look into Florida real estate market, home sales slowdown, WUSF.
- Fla.’s Housing: Inventory Up, Median Prices Ease, Florida Realtors.
- Inventory of Homes for Sale in the Biggest Florida Metros Piles Up to Highest in Years as Demand Has Withered
| Wolf Street, Wolf Street. - Buyers Gain Ground In Florida Housing Market – NMP, National Mortgage Professional.
- Unsold Inventory of Homes for Sale in Florida Pile up Further in April. Some Metros Start Seeing Gluts, Miami
Still Lags a Little, Wolf Street.