The one real estate question on the minds of buyers, sellers and investors is, will home prices drop in Florida? The answer is simple; depends on who you ask.
For the past two years, the housing market has soared with Florida leading the boom with the beginning of the COVID-19 pandemic. According to the state’s Office of Economic and Demographic Research, an estimated 329,717 new residents settled in Florida between April 2020 and April 2021.
We had the demand for real estate, but not the supply, which caused our real estate inventory to plummet and our prices to skyrocket. So where do we go from here?
Realtor.com predicts prices will increase in 2023 by 3.4%, especially in South Florida and Miami-Dade County. Redfin believes that the market will cool down and home sales will fall to their lowest level since 2011. Zillow’s monthly home value forecast expects home appreciation to ease down over the coming months.
What do I think? Yes, our home prices will have a downward trend in 2023; when our inventory increases, historically our prices will decrease.
In September of 2022, I predicted by the end of January 2023 our months of inventory would exceed 3 months. The Realtor Association of Sarasota and Manatee recently published our November statistics. For single-family homes in Sarasota, our months of inventory is 2.4 months compared to November of 2021 at 0.7 months. In Manatee County single-family homes have 3 months of inventory compared to 0.7 months in November of 2021.
There are other indicators besides months of inventory that suggest a downward trend in home prices. We have experienced major mortgage interest rate increases in addition to inflation. Both factors will have a negative impact on our housing market. Fear not, this is not the housing crash of 2008. We will not see major price decreases nor 13 months of inventory. Remember in the past 18+ months our home prices increased by 29.1%. There is some room for a slight correction.
Florida remains a very popular State. It is economically sound, and it is still a strong state for real estate investment. Furthermore, our home prices and property taxes are relatively low compared to other states, ask my sister who lives in New York.
I welcome your comments and feedback.