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The Florida housing market has been on a remarkable upward trend in recent years, with Florida home prices rising by 78% in the past five years and the same trend is expected to continue through the next five years. What is driving this surge in real estate prices?
Population growth in the Sunshine State has been a primary driver for rising housing costs. More and more interstate migration, especially in the wake of the COVID-19 pandemic, new residents seeking a better quality of life, including more space and more time outdoors. In fact, over 1,200 people move to Florida every day!
Florida real estate agent, Chris Spina of Spina Realty Company, and FastExpert partner shares his professional perspective on the Florida housing market.
Let’s dive into the biggest drivers of this real estate market and some Florida housing market data and predictions for the end of 2024.
Florida Housing Market at a Glance
According to Chris, the current state of the Florida housing market can be summarized in a few key statistics.
While Florida’s home prices have increased comparatively year over year, we’re seeing a decline in home prices month over month.
Additionally, homes are staying on the market 8 days longer than the national average. The median days on market in Florida is 50 days, which indicates that Florida’s hot market may be cooling. Yet, Florida’s real estate market has been alluring for decades, and even with bumps, the Sunshine State is expected to continue to have strong buyer demand.
As of December 2023, Florida home prices are up 4.9% year over year, with a median sale price of $404,100. This median sale price is slightly higher than the national housing market average. Throughout the United States home prices have risen 3.7% year over year.
Florida also has the most homes for sale in the nation with 157K on the market, followed by Texas with 120K homes on the market.
“High home prices and so many homes for sale usually spell disaster in most real estate markets. However, not Florida.” states Chris.
Florida has become a highly sought-after location thanks to high population migration, a very desirable location for real estate investors, and strong buyer demand. Coupled with low taxes and relatively affordable housing, makes Florida’s real estate market much more stable. Therefore, the Florida market is experiencing a much softer correction relative to the rest of the nation.
The Market Survives the Hurricane
The real estate market in Florida has proven to be resilient in the face of natural disasters. Despite the havoc caused by Hurricane Ian, real estate prices in Florida are still expected to continue their upward trajectory.
What does this mean for Florida? One of the main reasons for the resilience of the real estate market in Southwest Florida is the strong demand for housing in the state.
”Don’t expect prices to drop significantly despite recent storm damage. Florida remains a popular destination for both domestic and international homebuyers. This steady influx of new residents keeps the demand for housing steady.”
The Impact of Rising Interest Rates on the Florida Housing Market
he Florida housing market has been a hot topic in recent years, with many buyers and sellers trying to navigate the ever-changing landscape. One of the major factors influencing the housing market is interest rates. Interest rates directly impact buyers’ purchasing capacity and, subsequently, home prices. Not to mention buyer and investor attitudes about the overall economy.
“Despite rising interest rates, I still anticipate Florida housing prices to increase over the next five years.” states Chris.
South Florida Housing Market is Booming
The South Florida housing market is still relatively strong. Albeit inventory has increased significantly year-over-year, rising 15.2% since last year. Housing supply sits at 5 months, which is close to a balanced market.
Yet, demand is steady, especially compared to the states that were effectively shut down during the peak of the pandemic. Those states have proven to be a fertile breeding ground for people moving to Florida.
Further, with the ability to live and work remotely, people have taken advantage of no state income taxes in Florida. Housing is really determined by supply and demand, and the demand has been so great over the last 2-3 years that housing prices have increased significantly.
The high demand has kept property prices elevated, causing some to wonder if Florida has one of the most overpriced housing markets. Since the start of the Pandemic in March of 2020, Florida’s housing market has experienced rapid growth. The median sale price went from $270,500 to today’s median sale price of $404,100, a 49.3% increase in the median sale price.
Yet, this home value increase doesn’t indicate overpriced housing markets, it is reflective of the high demand and rapid home sales of the Florida real estate market.
However, with mortgage interest rates near or above 7%, some buyers are shying away from purchasing a home, which has had a slight cooling effect on the market. However, higher net worth and cash buyers are still actively purchasing the homes sold in Florida.
Why is everyone moving to Florida?
Over the past few years, there has been a significant increase in the number of people moving to Florida. This trend has been observed not just among retirees, but also among young professionals and families. The most compelling reasons are – great weather and that Florida is very tax- friendly with no state income tax and no estate taxes.
Additionally, Florida is a homestead state, meaning that once you own a property and homestead your residency, your property tax assessments are limited to a maximum increase of 3% per year. Homeowners also receive a total of a $50,000 reduction from the assessed valuation, which ends up saving around $500-$700 per year in property taxes, depending on where you live.
Apart from the financial benefits, Florida also offers a diverse range of lifestyle options. The state has several cruise ports, Disney World, Universal, top-rated beaches, golf courses, casinos, and much more. Florida’s real estate market offers residents a multitude of lifestyle options.
Living in Florida is Alluring
Florida’s warm climate, beautiful beaches, and vibrant lifestyle have about 1,200 people moving here per day, every day throughout the year.
Southwest Florida is very temperate during winter and feels like Summer year-round. Many people choose to have a second home in Florida, which they use as a vacation home or a winter residence. With a variety of housing options available, from luxury condos to waterfront estates, there is something for everyone in Florida.
Florida Housing Market Predictions
In the short run, the Florida housing market will sputter. The recent impact of Hurricane Ian, high inflation, and increased mortgage rates will pressure the real estate market.
However, this will be short-lived as people are still moving here in droves. This steady stream of new residents is expected to keep the demand for housing high, which will ultimately drive the market forward.
Looking ahead, the Florida housing market is expected to continue to thrive, albeit with some fluctuations. The demand for housing in Florida is expected to remain strong due to the state’s favorable tax policies, its warm climate, and the rise of remote work.
As long as these factors remain in place, the Florida housing market will continue to chug along and provide a stable investment opportunity for buyers. Florida remains an excellent destination for those looking to invest in the housing market.
As a real estate Broker with 25 years of experience in Southwest Florida, Chris has seen the market go through its fair share of ups and downs. Yet, overall, the market continues to chug along. Fueled by the continued infusion of people of all ages, families, retirees, and young professionals, all drawn to the Florida lifestyle, and this trend is expected to continue in the coming years.
The Bottom Line Is:
As a top destination for homebuyers, Florida will continue to grow in leaps and bounds as it has over the last many years!
Find a Trusted Florida Real Estate Agent
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