Will a Housing Crisis Hit Florida?
At the end of 2022, the Florida Business Observer reported that home sales had fallen by nearly 40% in the publication’s home state. At a glance, that puts Florida on par with the rapidly cooling real estate market in the country as a whole. All over America, prices are falling as high inflation and rising interest rates tamp down demand for properties.
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But despite the steep decline in sales, home prices in Florida keep going up, up, up.
It’s part of an ongoing trend that’s starting to feel unstoppable. According to Norada Real Estate Investments, Florida home values have risen by an eye-popping 80% over the last five years — and GOBankingRates spoke with several experts who expect the upward trend to continue for at least another half-decade.
While a handful of cities are driving much of the growth — Zillow ranked Tampa as the country’s No. 1 real estate market last year — the overall market is strong statewide, and experts who predict a crash, crisis or collapse in the near future are few and far between.
The Market Is Always More Precarious in Florida — Sort Of
According to Forbes, Florida was among the hardest-hit states during the housing collapse of the late 2000s because of two factors that remain in place today. Many of the state’s markets have both a high concentration of foreign investment and stark wealth inequality, both of which are key ingredients for volatility in real estate.
Even so, there are few signs that the current Federal Reserve-devised cooling period bears any resemblance to 2008 — but that’s not to say that Florida isn’t flashing mixed signals.
According to Redfin, the median sale price in Florida rose by 6% year-over-year in January to $386,500 — nearly identical to the U.S. median — despite a 35% year-over-year drop in the number of homes sold.
During the same period, however, the number of homes for sale jumped by 34% while the state experienced a roughly 20-point increase in the percentage of homes with price drops and a 20-point drop in homes that sold above list price.
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So, what’s with the flood of new inventory in a state where prices are rising despite the fact that sales are falling?
In a word, optimism.
“Despite the frenzy building of new houses, I still see demand outstripping supply,” said David Hampshere, a 20-year industry veteran and CEO of Purple Egg Real Estate. “I think one of the main reasons is that remote work is allowing people to choose their own location to live, and sunny Florida is a top destination for the foreseeable future.”
In fact, sunny Florida might just be the top destination.
Allied Van Lines is a leading national mover that conducts an annual study of interstate moves to define trends in nationwide migration. In the top 10 list for incoming household moves last year was — you guessed it — Florida. Also in 2022, the Census Bureau ranked Florida as the fastest-growing state in America for the first time since 1957.
Redfin’s migration report ranked Florida as the No. 1 state for homebuyers searching for places to move. Five Florida cities — Miami, Tampa, Cape Coral, Orlando and Sarasota — account for half of the top 10 list of inbound metros where people want to relocate.
All the Trendlines Point to Many More Sunny Days
Yes, Florida is reacting to the Fed’s cooling actions, but the hallmarks of the state’s real estate market continue to be gushing appreciation and a flood of incoming buyers from every corner of the country.
“Home values in Florida have risen by 75%-80% over the last couple of years and the forecast is expected to have a positive trend,” said Jon Sanborn, co-founder of Brotherly Love Real Estate. “Tampa and Miami have been at the forefront of this rise. Overall, the market in Florida is stable and strong, and is expected to remain as such in the next five to six years.”
The professionals on the ground note that if hidden underlying weaknesses existed, recent cataclysms would have exposed them.
“It certainly feels unlikely that Florida will suffer a housing crisis in 2023,” said Mark Washburn, a realtor with Naples Condo Boutique. “The number of people looking to buy in Florida seems almost endless. The devastating impact of Hurricane Ian has not throttled buyer demand here in Southwest Florida. Higher interest rates are also somewhat of a non-factor as so many of our baby boomer buyers are paying cash for their Florida home or condo. Home builders seem to share this sentiment with new communities being announced nearly every week in this market.”
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This article originally appeared on GOBankingRates.com: Will a Housing Crisis Hit Florida?
