Watch for the Florida real estate market to slowly start growing in 2024 as interest rates flatten and consumers begin realizing what they’re seeing is the new normal in prices and interest rates, Florida Realtors® Chief Economist Dr. Brad O’Connor said during the annual Florida Real Estate Trends Summit on Friday.
Florida saw almost $200 billion in closed sales in 2023, which wasn’t far below 2022, a super-strong sales year post-pandemic, he told a packed room of Realtors®. Moreover, that number was substantially higher than in the pre-pandemic year of 2018, according to Florida Realtors data.
“There’s still a lot of money flowing through our industry. We’re not dead,” O’Connor said. “Over the next several months, the market could reignite a little bit. Even though there aren’t as many homes for sale, the ones that are for sale are selling for more.”
The summit was part of this year’s Florida Realtors’ Mid-Winter Business Meetings at the Hyatt Regency Orlando. In addition to O’Connor, the summit featured Dr. Sean Snaith, a nationally recognized economist in the field of business and economic forecasting. Snaith has won multiple awards for the accuracy of his forecasts and research.
Mortgage interest rates have likely peaked, and there’s a good possibility that the Fed could begin cutting rates in the coming months — and that could reinvigorate buyers. O’Connor speculated a cut to below 6% could be in the forecast with the first relief possibly coming by May.
“The psychology of buying or selling a home is closely tied to these rates,” he said.
In addition to interest rates, Florida’s high property insurance prices paired with inflation continue to slow buyer demand, O’Connor said.
“People are still saying the real estate market is going to crash. But that’s just not the case,” he said, explaining that adjustable-rate mortgages, which played a large part in the housing crisis of the aughts, aren’t as widespread. “We have weathered the pandemic with no foreclosure crisis. We are not in a position for a crash to happen.”
Recession on the horizon?
Both O’Connor and Snaith acknowledged that signs point to a slowdown in economic growth at the national level, but that a full-blown recession isn’t likely. Even so, Florida’s strong economy is well-positioned.
“We are forecasting a slowdown, not a downturn at this point,” said Snaith. “I think Florida is prepared to weather any national economic storm. We’re ready.”
A few of the factors buffering the Florida real estate market from some national economic trends include:
- The state’s labor market is strong. (Snaith: “Paychecks are still coming in.”)
- Florida’s population growth remains strong at about 1,000 new people a day. (Snaith: “An increase in population means an increase in economic activity.”)
- The state is still attractive to “untethered” remote workers. (O’Connor: “The workplace will never be what it used to be.”)
- Retirees with home equity looking to relocate are unfazed by high interest rates.
Snaith pointed out, however, that “commercial real estate has a much bumpier road ahead than does residential” in 2024. Commercial lending has gotten significantly tighter and is still feeling repercussions of the “work from home” transition.
© 2024 Florida Realtors®
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Home Prices Cool as Inventory Climbs in November
According to the December 2023 Market Report by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), overall inventory increased 45.9 percent to 3,949 properties from 2,706 properties in December 2022.
The report showed consistent monthly increases in inventory during the year, which means more options for buyers in 2024; especially in the condominium market, which reported a 78.7 percent increase in inventory. However, according to broker analysts reviewing the December report, the housing market faced several challenges in 2023: rising interest rates, rising insurance rates, and rising inflation. Brokers also point to increased personal travel in 2023 as another reason home sales lagged in 2023. As a result, closed sales in 2023 decreased 13.6 percent to 8,816 closed sales from 10,206 closed sales in 2022.
Despite the challenges, there were seven months in 2023 when new listings increased more than new listings reported in comparative months in 2022. For December, new listings increased 12.1 percent to 892 new listings from 796 new listings in December 2022. Interestingly, unlike other industries that experience a reduction in price when supply increases, the Naples area housing market enjoyed a 9.7 percent increase in overall median closed price in December to $631,000 from $575,000 in December 2022.
In comparison, according to the National Association of Realtors, the median existing-home price in the U.S. increased 4.4 percent in December to $382,000 from $366,000 in December 2022.
“Migration is booming in eastern Collier County,” said Cindy Carroll, of Carroll & Carroll Appraisers & Consultants, LLC, who added that it is one of the “last vestiges of affordable housing in our county”. Not surprising, in 2023, the Immokalee/Ave Maria area was the only geographic area tracked by NABOR® that reported an increase in single family home closed sales (+34.1 percent). Conversely, the report indicated a 24.8 percent decrease in closed sales for single family homes nearest the beach.
“The total cost of homeownership includes a lot more than just the home price,” quipped Jeff Jones, Broker at Keller Williams Naples. “Depending on the type and location of the property, a buyer will appreciate the benefit of working with an experienced local REALTOR® because they can help determine various contributing costs like property and flood insurance, association fees, and potential future assessments or property value adjustments when planned infrastructure projects like road expansions, rezoning, and storm-water improvements happen.”
On reviewing the report, Adam Vellano, Managing Director of South and Southwest Florida at Compass Florida, said, “One big reason we didn’t outperform last year’s sales is because buyers who had plans to eventually relocate to Florida moved up their timeline. The pandemic convinced a lot of people to buy sooner so the high sales numbers we enjoyed in 2021 and 2022 were stolen sales from what would have taken place in 2023.”
Carroll added that according to her records, “Rapid market advancement stopped in early 2022. On average, it takes 12 to 24 months for the market to readjust. What we are seeing now are more sellers accepting that this phase is over. And that’s why there was a 29.6 percent increase in the number of price decreases reported in 2023.”
The NABOR® December 2023 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges, and geographic segmentation and includes an overall market summary. NABOR® sales statistics are presented in chart format, including these overall (single-family and condominium) findings for 2023: