Florida's real estate market has expanded immensely since the 2008 recession and hasn't slowed down, despite the massive uncertainty and instability posed by the COVID-19 pandemic. As a result, Florida's real estate market has topped the hot seller list through 2020 and 2021.
Although there was much concern surrounding the potential for dropping sales prices due to the pandemic and recession, Florida has weathered the threats well, with increasing sales prices across most of its housing markets. Currently, the typical value of a middle-price-tier Florida home stands at $321,643, noting up to a 22.2% increase over the past year.
What's creating today's competitive market in Florida?
It is pretty evident that not only has Florida's real estate market survived but thrived during the pandemic with exceptionally high buyer demand.
Here are a few critical reasons for the substantial increase in the real estate competitiveness in Florida.
Demand outpacing supply
A significant reason for the increase in Florida home prices is the demand outpacing supply. All economics students know how this scenario pans out. For instance, according to statistics, from 2010 to 2016, Florida added 114,744 new households per year but only 57,952 housing units. The increasing demand and stagnant supply have driven up Florida housing prices, leading families to outbid to acquire properties and, of course, the historically low-interest rates (below 3% as of the date of this publication).
The significant disparity between the demand and supply of Florida homes is due to its rapidly increasing population. As a result, the average sales prices of homes in Florida are almost five times higher than a median household income, which is well above the general house finance standard of three to four times income.
Although somewhat eased now, the net migration to Florida remains on target to continue at 1.5 % per year over the next five years. Those over 55 make up almost 53.2% of those migrating to Florida from other states. Moreover, with Florida, housing nearly 32 Fortune 500 companies, people from all over the country flock in herds to seek jobs in this sunny state.
As previously mentioned, despite the predictions of negative repercussions, COVID-19 has had a positive impact on Florida's real estate market from a significant aspect. With the rising popularity of the work-from-home model due to the pandemic, Florida is pulling in retirees and families from cold-weather states in the North and Midwest and states with higher taxes like New York.
The potential for increased foreclosures
Unfortunately, Florida was one state that had to bear the brunt of the impact of foreclosures after the housing market collapse in 2007. As a result, the moratorium of foreclosures in Florida has already been extended by Governor DeSantis twice. However, this ban applies only to single-family homeowners impacted by the pandemic, which has driven analysts to fear that the extension's vague language might increase statewide foreclosures. Although no one wants to see an increase in foreclosures, many experts say that the potential of this happening has presented an investment opportunity for real estate investors in Florida.
A boom in Florida home-building permits
Florida's real estate growth over the past year wasn't just a stroke of luck or coincidence. Florida witnessed an increasing number of metro areas with more building permits for single-family houses than other states. However, Orlando wasn't in the top 50 metros, despite many communities just outside the city on the list. Either way, the increase in the allowance of home-building permits has also played a prominent role in shooting up the Florida real estate industry prices.
Florida's top five fastest-growing real estate markets
Cape Coral is one of the top metropolitan areas for jobs in the United States. The Cape Coral Metro area includes popular cities, such as Fort Myers, which are amongst the country's fastest-growing regions in terms of population. The average home price in Cape Coral is $332,155, which has increased 32.5% over the past year.
Jacksonville, Florida, experienced a 10.9% growth over the past year, with experts predicting a whopping 50% population increase within the next decade. The average price of a home in Jacksonville is $254,834, an increase of 23.3% since last year. Jacksonville homes remain on the market for about 35 days and typically sell for about 2% below the listed price. Overall, Jacksonville is an excellent bet for investors looking to purchase a refurbished foreclosure for less than its listed value.
Orlando presents a fairly competitive real estate market as the home to some of the country's largest theme parks. The typical value of an Orlando home stands at $322,201, with the prices noting an 18.5% increase over the past year. With a 20.4% increase in its population over the past decade, Orlando continues to grow at a fast pace, attracting more and more people every day. Moreover, an Orlando home sells within just 22 days on average.
Due to robust employment prospects and opportunities with well-known companies and organizations, such as the University of West Florida and Gold Coast Health Care, homes in Orlando are selling fast. It is awe-inspiring as the stable employment rates and increasing household incomes make it more than possible for people to invest in property purchasing, not to mention the low-interest rates.
The medium value of a Pensacola home stands at $203,995. Overall, Pensacola home values have undergone a 22% increase with a projected growth of at least 10% in the years to come. Pensacola's hike in home values is primarily due to the vast availability of public schools, incredible diversity, and great nightlife.
The average price of a home in Port Charlotte is $268,065. Properties have increased almost 29.9% over the past year, with a listing spending only 23 days on the market. Although foreclosures are rising in the area, experts believe this could present an investment opportunity for those searching for pre-foreclosures, auctions, or bank-owned properties. Overall, Port Charlotte has excellent public schools and relatively low crime rates, which influence property rates. Moreover, it is also a pretty popular destination for retirees.
The bottom line
Despite the concern over the massive potential impact of the COVID-19 pandemic, Florida's real estate market has come out on the greener side. Most of Florida has witnessed an exponential growth in home values, sales prices, and even the population. Florida homes are selling like hotcakes right now; faster and for much higher prices than before the pandemic. There was a rise in foreclosures, but this has calmed down as the economy recovers from the effects of COVID-19. Overall, it seems like a pretty great year to be a part of the Florida real estate and community management market.