Florida’s housing market has gone through some major shifts over the last few years.
The Covid-19 pandemic had a significant impact on the market, just like it did on the other states of the country. Over the early stages of the pandemic, many people started to predict that the housing market would crash. However, this hasn’t proved to be the reality! Instead, many neighborhoods experienced an increase in demand as the number of remote workers increased and more people started looking for larger homes with outdoor spaces.
In the near future as well, the demand for Florida real estate is likely to stay strong. In this article, we will disclose why the Florida housing market is likely to stay stable over the next few years, and why people should debunk the crash speculation right away!
Florida Housing Market Trends
Figure: Median Home Sale Price in Florida Over the Last 3 Years
Source: Redfin
Despite various external threats such as the Covid-19 pandemic and more, the Florida housing market has been able to maintain stable growth. Below, we have shown some major metrics that help to understand this stability even better:
Market Metrics | Market Trend June 2023 | YoY Comparison |
Median Sale Price | $409,100 | -0.35% |
Number of Homes Available for Sale | 139,146 | +6.8% |
Number of Homes Sold | $38,045 | -9.55% |
Median Days on Market | 41 | +17 |
Months of Supply | 2.9 | +0 |
Sale-to-list Price | 97.4% | -2.5% |
Florida’s housing market reflects the nationwide trend of low supply and high demand. However, after home prices grew steadily for a decade, the housing market has now reached the affordability range for many homeowners. At present, the market is moving toward an equilibrium in demand, supply, and other intricacies that reflect stability.
What’s Going on with the Neighborhoods?
Beauclerc is a neighborhood from Jacksonville, and Jacksonville was recently named as one of the best cities to work in Florida. Despite having excellent demand due to its amazing job opportunities, great schools, and affordable housing, this neighborhood has a stable market. The median sale price is $251,000 here, which is changing at a -4.7% year-over-year rate.
In Northwest Florida, East Milton is a renowned neighborhood with above-average public schools and good quality of life. This neighborhood has a median sale price of $373,881
If we move to Southern Florida now, we find Coral Lakes – a neighborhood that characterizes excellent housing affordability and stable price growth. Currently, Coral Lake Homes are selling at a median sale price of $311,000.
Reasons Why Florida Housing Market is Unlikely to Crash
While the Florida housing market shows signs of slowing down in 2023, it is not likely to crash anytime soon. With the mortgage rates stabilizing after the recent bank crisis, buyers are now more confident to get their footsteps into the housing market.
Some major market trends in Florida indicate that the market is going to remain stable over the next few years. Here are five reasons why the market is not likely to crash soon:
- Limited Supply of Newly Constructed Properties
The current supply of newly-constructed homes in Florida is still lower than the pre-2007 levels. Also, homebuyers don’t have the opportunity to purchase land, get regulatory approval, and improve the supply quickly.
- Low Months of Supply
According to March 2023 data, Florida has only 2.9 months’ supply. Not only the scarcity of inventory but also a strong demand for properties is resulting in low months of supply in Florida.
You might be assuming that rich cities are experiencing a descending demand in Florida, but the reality is totally opposite! Boca Raton shows a strong demand thanks to its excellent climate, beautiful coastal locations, and upscale lifestyle. The same goes for other rich and expensive cities including Miami Beach, Naples, Bal Harbour, etc. According to the supply-demand law, it is safe to predict that home prices in Florida will stay stable for now.
- Strong Economy
Florida has a strong economy with a robust job market, which is contributing significantly to maintaining a healthy housing demand and good prices in this area. The unemployment rate here is only 2.6% currently, and the private sector has a job growth rate of 4.6%.
- New Buyers Entering the Market
There are some new demographics of buyers that are showing a huge demand for homes across Florida. Millennials and Hispanics for example, are in prime buying years. Because of them, the demand will stay strong and the market will not crash so easily.
- Stricter Lending Standards
One of the prime reasons behind the 2008 market crash was the numerous cases of liar loans in 2007. The lending standards were not strict then, and anyone could grab a mortgage without a proper credit check. Gladly, things are not the same today. Especially, Florida mortgage lenders now place much higher lending standards on the borrowers. In most cases, buyers have to show an excellent credit score to qualify for a mortgage.
- Fewer Foreclosures
The number of foreclosures in an area is another aspect that can lead to a market crash. The good news is a majority of current Florida homeowners own significant equity in their homes. At the same time, homeowners are financially much stronger today than they were 15 years before. This indicates that the risk of rising foreclosures is much lower at this time in Florida.
To conclude, the Florida housing market is currently in a much safer position if you compare it to the Great Recession that we witnessed in 2008. This is largely because of the tighter lending laws that came from the financial crisis. Borrowers are in much better shape too, and their credit scores bear testimony to that. Thanks to the rising home values, homeowners have excellent equity too.
So, there is nothing to be fearful of the speculation that the market is going to crash! Florida’s housing market does not show any major sign of crashing, and it will remain stable in the upcoming few years as well.
This content is part of the HWM Partnership.
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