Is Price Deceleration in Florida Market Creating Depreciation of Home Values?

Gayle Kurtzer-Meyers

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Is price deceleration creating depreciation in the housing market? /Photo by REX WAY/ Pexels

Are you wondering if price deceleration in the Florida market is creating depreciation of your home value?

"History has shown that rising mortgage rates may take the steam out of rising house prices, but they don't necessarily trigger a decline."-Mark Fleming, Chief Economist

When it comes to describing the real estate industry in terms of what is happening with home prices, certain words are often used, like “appreciation,” “depreciation,” and “deceleration.” These terms describe the increase, decrease, and appreciation of home prices in real estate.

  • Appreciation - home prices increase
  • Depreciation - home prices decrease
  • Deceleration - home prices continue to increase but at a slower pace

What does market deceleration look like in today’s market?

Before ascertaining that the recent market deceleration doesn’t necessarily mean a depreciation in home value, it is essential to identify where the concept evolved.

The term “The Great Deceleration” was first coined by Fortune to describe the steady slowdown of the housing market after a massive rise in home values and demand. In the last two years, the prices of homes have skyrocketed, and their importance has increased in value.

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Home prices have appreciated since 2012By Keeping Matter Current / Source: FHFA.

In my travels and personal experiences, I have noticed that home values have increased consistently over the last ten years. However, since the COVID-19 pandemic, home prices have accelerated dramatically. Why is this so? Simply put, the number of buyers outweighs the number of homes for sale. This imbalance has put upward pressure on home prices because the demand is high and the supply is low, causing an appreciation for the houses available.

What causes home values to depreciate

Several elements affect the value of homes nationwide, ranging from consumer confidence in the demand for real estate, the economy, job growth, and interest rates. In addition, the actual value of your home is often a combination of local factors that can cause the deal to depreciate. Some common elements that affect the valuation of homes in Florida are location value and foreclosures. While not set in stone, typically, location plays an important role. In areas that people do not consider conducive, demand declines, often creating a decrease in homes’ valuation. Nearby foreclosures, for instance, the concentration of foreclosures in a neighborhood can make buyers less attracted to an area, primarily if the properties are not adequately managed and maintained.

Stats and trends of the real estate market in Florida 2022

The prices and value of homes are rising while inventory decelerates. Every metropolitan area in the state has increased home prices by double digits. Some key points to note are the median home value in Florida s $378,104. The median house values in Florida have grown by 33.1% over the last year.

In the last five years, the home values in Florida have increased by over 78%. The median time to contract for single-family houses in Florida is eight days, the same time you need to receive a sales contract after it is listed. The key real estate market stats in Florida vary from area to area. For instance, the value of real estate differs substantially between Miami, Orlando, Tampa, and Jacksonville.

Other market Predictions for July 2022

The cost of buying a single-family home jumped more than 20% nationwide in April from the same month last year. Mortgage rates experienced a spike in May but may level up by July to about 5.7%. However, these higher costs will pressure the housing market and cause a steep decrease in mortgage applications to buy and refinance, with the market index down to the lowest level.

The high housing demand and low supply will keep the rent prices climbing up the ladder, rising from 3.2% to 5.81%.

Where experts say home prices are going

The real question people have been asking is, “Is the deceleration in the market directly proportional to the depreciation of your home value?” So, if you read the headlines and hear rumors about a potential housing crash in Florida’s real estate market, a closer look at the data and expert opinions describe a different story.

For instance, in a recent survey from Pulsenomics asking over a hundred housing market experts if they believe the housing market is crashing, take a glance at the graph below. The statistics indicate that a majority believes that the market is not crashing; even though there is a noted market deceleration, it doesn’t automatically mean a depreciation of home prices.

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Is there a housing bubble about to burst? /Keeping Current Matters/ Source: Pulsenomics

“In today’s housing market, demand for homes continues to outpace supply, keeping the pressure on house prices, so don’t expect house prices to decline.” -Mark Fleming, Chief Economist at First American

Though the supply of houses is beginning to rise again, it is not enough to say the value of homes will depreciate because there is a gap between the number of homes available for sale and the volume of buyers looking to buy.

“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant.” -Terry Loebs, Founder of Pulsenomics

Some other reasons these experts gave are: The recent market growth is due to demographics and low inventory. It means the supply of homes needed to sustain the real estate market is approximately six months. When there are more houses, creating an overabundance will cause prices to depreciate. However, the recent market deceleration is causing an appreciation of the home’s value.

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Should you buy a home now or later?Photo by Luis Yanez/ Pexels

Should you buy now or wait?

Though getting a house is a personal decision, still, buying a home holds a solid financial position. However, before you take on a mortgage, you must determine how much your monthly housing costs will be. This figure combines the down payment and interest rate. Please don’t base your decision on what might happen in the market; instead, find it based on your budget and needs.

Is the deceleration in the market equal to the depreciation of your home value? Because the demand for houses exceeds the supply, the weight is on the available ones. Therefore, what the industry predicts is price deceleration and not depreciation. It means home prices will continue to rise but at a slower pace.

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Make sure the home has market appeal when listing.Photo by Pixabay: /Pexel

Tips for selling houses in a decelerated Florida market

Make a plan on how you want to sell your market. For instance, ensure the house is ready for people to live in, and if there are existing tenants, ensure the tenants receive proper legal notice to vacate. You can also add a little incentive to selling houses in a decelerating market by offering a free consultation call to answer questions and brainstorm options.

Finally, prepare for home staging, especially for buyers who want to see the home for themselves before paying for it. One of the worst things you can do is to price your house too high because the market determines the price of homes. Another note to consider is that the longer a residence stays on the market, the less likely it is to sell, so be quick about how you reach out to customers. Set a price, reach out to buyers, negotiate, and get the best price.

This article is for informational purposes only. It should not be considered Financial, Real Estate, or Legal Advice. The market fluctuates; therefore, not all information will remain the same. Consult a financial or real estate attorney before making significant real estate decisions.

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I am a Licensed Community Association Manager for the State of Florida and a published author. My top articles are about Florida RE, property management, and the many beautiful venues and activities available in the Sunshine State. Thank you for reading my work and joining me on the journey.

Kissimmee, FL
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