December 24, 2022
Florida Housing Market
The housing market in Florida has been making headlines as loads of people pack their bags and head south. Florida has led the county in net migration — people moving there from another state — for five years in a row, and the pandemic accelerated that population growth. The state’s warm weather and relatively low cost of living makes it attractive for retirees, but it’s also a great spot for those still in their prime working years, whether they’re searching for an office environment or looking to log on from the beach.
While the state is clearly an appealing place to live, buying or selling a home here in 2023 will look much different than it has for the past couple of years. Mortgage rates have more than doubled, and real estate doesn’t look quite as sunny anymore as homes stay on the market for longer. Read on for everything you need to know about the Florida housing market.
Florida housing market overview
Florida is big, covering more than 65,000 square miles. To get a sense of the pulse of buying and selling activity across the state, it’s important to remember that real estate is a hyper-local industry. What’s happening in Miami, where loads of wealthy out-of-staters have been relocating, is going to look much different than what’s going on in, say, Tallahassee.
And while the best places to live in Florida naturally include easy access to the beach, they also include inherent downsides and dangers, as evidenced by the horrific damage of Hurricane Ian along the Gulf Coast. Climate change could cause major long-term challenges for the Florida housing market: A recent report from McKinsey projected that some coastal homes could lose 35 percent of their value by 2050 due to rising sea levels.
Florida housing market trends and stats
- Median sale price: In September of 2022, the state’s median sale price was $403,880. That’s a nearly 14 percent increase versus the year before, and about $25,000 over the national median.
- Sale-to-list price: Back in September 2021, buyers typically paid the full 100 percent of the list price. But in September 2022, buyers paid around 97.2 percent of the original list price — an indication that buyers are gaining more leverage in the market.
- Days on market: The median time to contract for a single-family home was 22 days in September, more than double the typical 10-day timeframe of the year before.
- All-cash deals: Many Florida buyers do not need to secure financing for the deal. Of the 20,099 single-family homes that were sold in September, nearly 6,000 were purchased in cash. This makes the market more difficult for buyers who do need a mortgage.
- Closing costs: The state’s average closing costs total 2.3 percent of the purchase price, according to research from ClosingCorp. So, on a $400,000 sale, that’s an additional $9,200 in costs like title insurance, transfer taxes, appraisal fees and more.
Buyers and sellers in the Florida housing market
Is it a buyer’s market or a seller’s market in the Sunshine State right now? Well, kind of neither. A shortage of available inventory puts the power in the hands of the seller here, but rising mortgage rates mean fewer qualified buyers, and more closings for under asking price mean buyers do have some leverage. Here’s what to know, depending on which side of the table you’re on.
Selling a home in Florida
Sellers still have the upper hand in Florida, simply because there aren’t enough homes available to meet demand. In September, there was just a 2.5-month supply of single-family homes; 6 months is considered a balanced market. However, there are warning signals that sellers should consider. For example, it’s taking 12 days longer for a new listing to go to contract now than it did last year, and overall sales dropped by 29 percent, according to Florida Realtors.
With that in mind, don’t get greedy with your pricing strategy right now — an elevated list price might scare off buyers, who are already feeling the pinch of higher mortgage rates. Take steps to figure out what your house is worth, and price it competitively. You might even be able to attract an all-cash offer, which is common in Florida. West Palm Beach, Jacksonville and Fort Lauderdale are all in the top five cities in the entire country for all-cash offers, according to Redfin data.
Buying a home in Florida
First, the good news: Prices have fallen in recent months. Now, the bad news: They’re still pretty high. With a median price tag of more than $403,000, a typical Florida buyer would need a down payment of more than $80,000 to avoid paying private mortgage insurance. However, if you have excellent credit, you might qualify for a down payment of just 3 percent.
Many buyers have retreated in the current market conditions, so this may be a great time to avoid dealing with the high level of competition that shaped much of the past two years. If you go house hunting in Florida, keep these tips in mind:
- Compare cost of living: As you try to figure out how much house you can afford, it’s important to keep in mind how much you’ll need to spend on other essentials. The cost of living varies across Florida. For example, Bankrate’s calculator shows that life in Jacksonville is nearly 15 percent cheaper than in Fort Myers or Cape Coral.
- Get preapproved: Once you have an idea of how much you can contribute toward a down payment and how much you can comfortably pay back each month, get preapproved for a mortgage. It’s a simple step that involves a preliminary review of your finances, and having a preapproval letter means sellers will take you more seriously.
- Negotiate: The past two years have been marked by buyers waiving contingencies, engaging in bidding wars and doing basically anything to secure a home. Those days are gone. As more Florida sellers drop their prices, you aren’t at the full mercy of the market anymore — or at least not as much. Work with your real estate agent to make sure you aren’t offering more than you need to, and ask for concessions if your home inspection uncovers problems.
Florida housing market predictions: Will it crash?
Rising mortgage rates and persistent inflation have fueled worries of a housing market crash. But most expert predictions for the country’s housing market, including Florida, do not foresee a crash. A cataclysmic drop in prices similar to the housing crisis of 2007 and 2008, when clouds of foreclosures hung over the Sunshine State, is very unlikely. Instead, the Florida housing market seems poised for a cooldown with a soft landing. A recent analysis from TD Economics projects that home prices in Florida will decline by somewhere between 10 and 15 percent by the middle of 2023.
To keep reading the most up-to-date information in the real estate world follow our blog https://whiteandbluetitle.com/blog/.
Source: David McMillin
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