Ever since the dramatic collapse of the economy in 2008, Florida has emerged as one of the leading real estate markets in the entire country. Over the first quarter of 2020, the housing price index (HPI) indicated that the Florida real estate market was the 12th most active, with a median year-over-year price increase of 7.1%. Local markets including Jacksonville, Fort Lauderdale, Orlando, and Tampa all exhibit sustainable appreciation that is projected to continue well into the future.
Although Q2 of 2020 was hampered by COVID-19, the incremental reopening of the economy have prompted a resurgence in the Florida real estate industry. The following are some market predictions for the future performance of the Florida market to assist you in making informed real estate investment decisions.
The present number of residents in the state is 21,993,000. The current growth rate is approximately 1.6%, which is expected to increase considerably in the coming months. A large percentage of the anticipated population rise is attributable to increased overseas immigration—particularly from individuals hailing from Cuba, Spain, and Latin America. As a result of this population expansion, the real estate market is projected to experience increased demand for both rental properties and single-family homes. With supply levels somewhat low in relation to the rising demand, landlords and property owners will be able to net a significant profit.
As can be expected, most potential buyers and sellers in Florida held off on conducting transactions last year due to the coronavirus pandemic. Still, the real estate market rebounded fast—exhibiting initial signs of recovery as early as last July. Based on data compiled by the Florida Realtors Association, the annual single-family unit home sales rate jumped 11.7%. The major factors fueling this surge is the pent-up demand from the suppressed spring buying window on top of historically low mortgage rates. Considering rates are expected to remain low, the Florida housing market projection is that demand will continue to rise for the foreseeable future. Statistics show that for every person that moves out of Florida, seven are moving in. This imbalance translates into increased demand for housing options which will continue to drive property prices and bidding wars for listed properties.
Notwithstanding the rising demand for housing in the Florida real estate market, the mid-year housing inventory levels are extremely low—having decreased by 27% since 2019. This depleted inventory combined with increasing demand translates into a corresponding rise in home values. Research conducted by the Florida Realtors Research Department indicated that the average price for single-family residences was over $277,000 in Q2, a substantial jump of 4.7% from 2020. Similarly, the average price for condos and townhomes was around $207,000, which equals a 6.2% increase. This trend of property value increases is fully anticipated to continue in the Florida market as builders contend with increased prices for lumber, land, and steel along with labor shortages—making it difficult to add properties to boost supply levels.
Based on a recent study conducted by the University of Central Florida, short-term rental properties in Florida produced nearly $27 billion in passive income annually. While the vacation rental market was periodically shuttered due to the virus, activity is resuming to pre-pandemic levels. To illustrate, vacation rentals in Northeast Florida received the go-ahead from government authorities to reopen on May 19. Bookings doubled in the area in just a single 24-hour period. The continued reopening of the Florida coast and all of the associated attractions including Disney World and the Space Center will continue producing demand for rentals throughout the remainder of the year and well into 2022. Another advantage is that Florida has some of the most favorable regulations when it comes to Airbnb properties—with laws in place to prevent cities and counties from barring short-term rentals of residential homes.
Florida Real Estate Market Projections | Gauntlet Funding – Melville, NY