2023 Florida Housing Market Recap
Everyone’s talking about the Florida housing market as we move from 2023 to 2024. Last year, even though interest rates dramatically increased, real estate prices still increased in many places in Florida. We saw this happen in many areas, especially popular cities like Destin, Sarasota, Orlando, Naples, and the Florida Keys.
In this blog, we’re going to look closely at what might happen in Florida’s housing market in 2024. We’ll also tackle a big question that a lot of people who want to buy a house are asking: “Is it a good time to buy a house in Florida?”
A Lookback at the 2023 Housing Market Landscape in Florida
In 2023, the Florida real estate market was characterized by persistent demand despite increasing rates and increasing housing supply. This situation was especially noticeable in urban areas like Orlando. For example, despite the increase in interest rates and FL having one of the biggest housing stock increases in the nation, the demand for housing remained strong and pushed up prices by almost 16% in Orlando and 5% on average throughout the Sunshine state. While this rise in prices was good news for sellers, it put more affordability strain on buyers, especially first-time buyers.
The Florida housing market predictions for 2024 are largely positive. With a robust economy, business friendly political climate, 300,000 new residents moving in last year, and a steady supply of new homes added to the market, it appears that Florida will have one of the most balanced and active housing markets in the United States.
Supply and Demand Dynamics in Florida
In 2023, Florida’s real estate market was influenced by changes in both supply and demand.
On the supply side, Florida built the 2nd most homes out of any state in the country, thanks to their builder friendly political climate. In addition to aggressively building new homes, many owners have been listing their condos due to rising HOA and condo insurance costs. Both of these trends have led to a rise in the number of homes available for sale year-over-year, giving more options for buyers to choose from.
On the demand, the state’s attractive tax benefits, business friendly environment, and desirable climate and lifestyle drew in a growing population. According to Redfin data, Florida was the number 1 destination buyers researched moving to, and experts predict another 360,000 new residents will move to the state this year, on top of the 300,000 that moved last year. This large population influx helped drive up housing demand, and ultimately prices, throughout the state despite the large growth in housing supply and rates.
This trend of increasing demand pushing up housing pricing is not isolated to Florida. This recent blog – Population and Households Grew Far Faster Than Home Supply – provides more detail as to how far undersupplied the United States housing market is as a whole. What is unique about Florida is that while their housing supply did grow aggressively, their population grew that much faster.
The Airbnb Effect on Florida’s Market
Airbnb rentals have really taken off in Florida, particularly in popular tourist spots like Miami Beach, Orlando, and the Florida Keys. These areas see a constant demand for vacation stays all year round. The popularity of short-term rentals has led to higher property values in some neighborhoods. However, it has also sparked concerns about making sure there are enough affordable homes for people who live in these areas all the time.
State and local governments in Florida are working through legislation to regulate some aspects of Airbnb in many popular destinations, especially for rowdy guests that disturb the locals. While the future of Airbnb in Florida is likely still strong, there may be some owners who seek to sell. However, the number of Airbnb units relative to the total market remains very small, so negative effects will likely be localized and not meaningfully harm the overall housing market in Florida. This recent blog explores the issue in more detail if readers are interested.
Interest Rates and Their Impact on Florida’s Housing Market
In 2023, Florida’s housing market was significantly affected by the Federal Reserve‘s decision to raise interest rates in response to inflation. This increase in interest rates led to higher mortgage costs, prompting some potential buyers to reconsider or delay their home purchases. This hesitation from buyers slowed down the overall demand for houses in the state.
At the same time, another trend observed was the ‘mortgage rate lockdown’ effect. Homeowners who had mortgages with low interest rates were reluctant to sell their properties and enter a new mortgage with higher rates. This reluctance to sell to contributed to a reduced number of homes on the market, which put upward pressure on home prices. At the same time, the decrease in buyer demand from higher rates put downward pressure on home prices. However, given the increase in home prices in Florida, it seems that strong demographic trends and increasing demands from a growing population won out at pushing up prices overall.
As we look towards 2024, the future trajectory of the housing market in Florida is expected to continue being heavily influenced by interest rate trends. If rates start coming down in 2024, prices will likely increase as lower rates will likely bring more buyers into the market and increase demand.
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April 30, 2024
Housing Market Predictions for 2024 in Florida
Looking ahead to 2024, Florida’s housing market is expected to continue climbing upwards steadily. Prices may level off and even pull back slightly while rates stay elevated. This may be seen especially in areas where demand is less intense and where there is a lot of new builder activity. However, if rates start heading decreasing in 2024, the growing population will lead to increased buyer demand. This will likely push prices in Florida even higher.
Increased Inventory and Construction in Florida
In 2024, Florida’s housing market is expected to see an increase in construction activities, leading to a growth in housing inventory. This development is particularly significant in high-demand areas such as the Jacksonville and Orlando. This rise in new construction could help alleviate the current imbalance between supply and demand, and potentially lower the median sale prices in these sought-after metro areas.
Investor Activity in Florida’s Real Estate
Investor activity in Florida’s real estate market is poised to significantly influence its direction in 2024. This ongoing long-term interest from investors is likely to increase the housing supply, responding to the consistent demand. In addition, the popularity of diverse investment solutions such as PadSplit. Airbnb, and the more traditional condotel options make Florida real estate a popular investment destination.
Additionally, the introduction of new development projects can provide a broader range of options for investment. While this influx of new properties is expected to help balance the supply-demand dynamic in Florida’s real estate market, strong demographic trends adding new buyers into the marketplace will still hold values high – another benefit for potential investors.
Understanding this impact of investor activity on real estate in Florida is crucial. It not only affects the availability and variety of properties but can also influence price points and market competitiveness.
Interest Rates and The Florida Housing Market in 2024
In 2024, interest rates are anticipated to be a key factor in shaping Florida’s housing market. The direction and fluctuations of rates will affect multiple dimensions of the real estate scene. They will influence the affordability of homes, mortgage rates, property prices, and the general momentum of the market.
Keep in mind, the cost of buying a home in Florida is linked to current mortgage rates. Rates are often affected by larger economic policies and market conditions. Keeping an eye on interest rate trends is crucial for making well-informed decisions about home purchases in Florida.
Frequently Asked Questions
Should I buy a house now or wait?
The decision to buy a house depends on a variety of factors, including your financial situation, the specific market conditions, and your long-term goals. Ultimately, in the long run, data show that buying a home now results in a positive outcome for most people. We advise talking with one of our mortgage experts at JVM Lending for personalized guidance based on your financial and homebuying goals. Buyers might also consider buying now while there is much less competition in the market and then hope to refinance into a lower rate when rates fall in the future.
What should I consider before entering the real estate market?
Evaluate your financial readiness, understand the prevailing market trends, and seek advice from a mortgage expert. Being informed upfront will help you make a sound decision about your long-term homeownership goals.
Conclusion for Florida’s Real Estate Market
Heading into 2024, Florida’s real estate market stands at an important juncture, influenced by several key factors. Interest rate trends, demographic changes, and regional economic developments are expected to shape the market in various ways. In regions like Orlando, continued growth is anticipated, driven by its strong economy and appeal as a tourist destination. Conversely, the Florida Keys may experience a different trend, influenced by environmental considerations and the preferences of the luxury market.
It’s important to consider these regional nuances and how broader economic factors could impact your buying decision if you are thinking about buying a home in Florida? If you have any questions about the housing market or buying a home, don’t hesitate to reach out to a mortgage expert at JVM Lending. Our team of experts can provide you with valuable information about mortgage rates, loan programs tailored to your unique financial situation, and provide educated insight into current housing market trends.
