One-Year Outlook for the Florida Real Estate Market 4/26/2023

by

Introduction

The Florida real estate market has been experiencing strong growth, fueled by a combination of favorable economic conditions, demographic trends, and low-interest rates. As we look ahead to the next year, several factors will influence the market’s trajectory, including interest rates, population growth, housing supply, and the ongoing COVID-19 pandemic. In this analysis, we will explore these factors and their potential implications for the Florida real estate market.

Interest Rates

The Federal Reserve has signaled its intention to raise interest rates in response to rising inflation, which could impact the Florida real estate market. Higher interest rates lead to increased borrowing costs for homebuyers and investors, potentially dampening demand and slowing price growth. However, it is expected that the pace of rate hikes will be gradual, which may result in a modest cooling of the market rather than a sharp downturn.

Population Growth

Florida has been experiencing significant population growth, driven by factors such as a favorable climate, attractive tax environment, and strong job market. The influx of new residents, particularly from high-tax states, has increased demand for housing in the state. This trend is expected to continue over the next year, supporting the ongoing growth of the Florida real estate market.

Housing Supply

Housing supply in Florida has been struggling to keep up with demand, resulting in rising home prices and a competitive market for buyers. The next year may see some improvement in housing supply as new construction projects are completed and more inventory becomes available. However, challenges such as labor shortages and rising construction costs may continue to constrain supply, maintaining upward pressure on home prices.

COVID-19 Pandemic

The lingering COVID-19 pandemic will remain a minor factor influencing the Florida real estate market in the coming year. While vaccination rates have increased and pandemic-related restrictions have eased, the potential for new virus variants or resurgences in cases could impact the market. Additionally, the pandemic has led to a shift in housing preferences, with many homebuyers seeking larger homes and more outdoor space. This trend is expected to continue, supporting demand for suburban and single-family homes in Florida.

Conclusion

The one-year outlook for the Florida real estate market remains positive, with factors such as population growth, low-interest rates, and changing housing preferences contributing to sustained demand. However, challenges related to interest rate hikes, housing supply constraints, and the lingering COVID-19 pandemic could introduce some uncertainty into the market. Investors and homebuyers should remain vigilant and adapt their strategies to capitalize on opportunities and mitigate potential risks in the evolving Florida real estate landscape.

BRENT LEATHWOOD, MBA

LICENSED REAL ESTATE BROKER | BK 3300751

CROSS BORDER REALTY LLC | CQ1046895
2100 CONSTITUTION BLVD. #207
SARASOTA, FL, 34231
(941) 882-2995
Contact
3 Big Mistakes Buyers make:

  1. 1. NOT KNOWING THE NEIGHBORHOOD...ContinuedReal estate always has been and always will be a local business. Know your neighborhood is a cardinal rule in this business. A real estate professional knows what is going on in their local market area. Hire a knowledge, local professional. When we see folks wandering around with a notebook and a list of questions, we know they are the most likely to make a costly mistake. A PROFESSIONAL Realtor, (please note the word professional), can spend 15 minutes listening to your needs and wants, and probably rule out 90% of the local market options, and focus your attention, on the 3 or 4 or 5 communities that will meet your needs, and make sense from both a financial and lifestyle point of view. I am amazed at how many people from out of State, go it alone, end up buying in the wrong community, and come to regret it. I meet people like this everyday, and everyone single one of them will say to me: “I wish we had met you first.”
  2. 2. GETTING STUCK IN AN HOA NIGHTMARE...ContinuedHome owners association nightmares are the stuff of legend in our State. Do not buy the wrong property in the wrong community. A knowledgeable real estate professional can explain to you upfront, the ins and outs of the HOA regulations of the community you are considering, and help you avoid 99% of these potential pitfalls. This is another very costly mistake.
  3. 3. THINKING YOU DO NOT NEED A REALTOR WHEN BUYING A NEW HOME...ContinuedEverybody knows you need a Realtor to represent you, when buying a resale home. Many do not know, you also need a Realtor to represent you, when buying a new home. The new home sales person in the model home works for the Builder, not the Buyer. They are paid to look out for their employer’s interests, not yours. You will not save $1 by going it alone. You will lose money. A lot of money. One of our largest local builders reported 872 annual sales, of which, 762 were handled by Realtors representing the Buyer. That is 87% of the total. The Builder has already factored paying a finder’s fee into the price. The Builder will not rebate $1 of this money back to you. Builders laugh under their breath, when Buyers try this negotiating tactic, even though they will politely agree with you. Professional representation costs you $0, why would you fend for yourself, in a market you know almost nothing about? Buyers know less than 20% of what they actually need to know, to get a great deal. Having gone through the new home buying process hundreds of times with clients, we know all the pitfalls to avoid, and how to make the process go smoothly. Do not go it alone, get professional representation, it costs you $0. Not doing this is the most costly of the 3 mistakes. But everyone has heard the old saying, you can lead a horse to water. We are in the business of helping our customers solve a problem. Our ability to do that, is the sole reason we have a thriving business. We are here to help you through the entire process, and get a great deal.

4 Big Mistakes Investors make:
  1. INCOME... ContinuedThe rental income does not justify the $/sq. ft. purchase price.
  2. EXPENSES... Continued The monthly expenses are too high, relative to the property type and rental income produced.
  3. CAP RATE... Continued The capitalization rate is too low to justify the investment.
  4. HOA REGS... Continued The home owners association regulations are too restrictive, or do not permit the intended use. Frequently overlooked or glossed over by some sales people, the long run financial consequences are catastrophic if a mismatch occurs.
Avoid Costly $$$ Mistakes: Hire Brent. Costs you $0.