As with many other states in the country, the Sunshine State has been experiencing a boom in the housing market as of late. But, what Florida real estate trends does the new year have in store?
Expected Florida Real Estate Trends for the Year 2022
Florida is a highly sought-after destination for vacationers and home buyers alike. When the COVID-19 pandemic hit in March 2020, many thought the housing market would come to a complete halt. But, the health crisis actually saw a wide gap between housing supply and demand in the Sunshine State.
During the pandemic, the supply of new and existing homes failed to keep pace with the demand. It has been this way for the last 15 years and is expected to continue as such. This is largely due to the fast population growth, though other factors have also contributed to the phenomenon.
This disparity between supply and demand resulted in an extremely hot real estate market, especially during the first half of 2021. Luxury homes and condominiums, in particular, are in short supply. Buyers came from everywhere — within Florida, from the Northeast, California, and even from out of the country. Additionally, most of these buyers had a lot of money to spare.
While luxury homes were a trend last year, 2022 will likely see a shift to more affordable homes. Moreover, due to the COVID-19 pandemic, many Americans came to the realization that Florida is where they would like to live, work, and retire.
All this combined and more lead to the general prediction that the Florida housing market will continue to remain strong in the year 2022.
Demand in the Florida Housing Market in 2022
As supply wanes in the face of high demand, analysts expect home prices to rise this year. Despite this, demand for housing will not plummet. On the contrary, demand will remain high because of a number of factors.
Here are the real estate trends for Florida that will affect demand:
Population Growth
Florida ranks third in the list of most populous states in the United States. It is home to more than 21.5 million people, up by 2.7 million people since 2010. Predictions on population growth indicate that Florida will welcome about 845 new residents per day over the next few years. Nine out of the top 10 fastest-growing places in the country also belong in Florida.
New residents moving into Florida will inevitably look for homes to live in. This will directly contribute to the already-soaring demand for homes in the Sunshine State — something that supply can’t seem to keep up with.
Low Mortgage Rates
The year 2021 saw historically low mortgage rates sweep the nation. In 2022, mortgage rates are expected to rise slightly, though they will likely remain in the 3 to 3.5% range. With such low mortgage rates, buyers will not want to miss out on this rare opportunity to buy homes for much cheaper than usual.
Better Jobs
Florida is known as a business-friendly environment. With many large companies opening in the Sunshine State, high-paying jobs are soon to follow. Therefore, it is not too far-fetched to say that more people will move to this state to pursue more lucrative job opportunities.
Construction Shortages
By now, it is clear that there is a low housing supply. In addition to an increase in population, shortages in construction labor and materials are also affecting the supply chain. Development companies are having a significantly harder time completing jobs in a short period of time. Beyond new developments, the shortages are also influencing the renovation jobs of existing homes.
In June 2021, the Champlain Towers condominium in Surfside tragically collapsed. The investigation revealed that the condo’s reserve fund was severely underfunded. In the wake of this incident, condo associations are reexamining their own reserves and making sure they maintain an optimal reserve level. While this means possibly higher dues for some associations, experts don’t think it will have an impact on the overall demand for housing in 2022.
An influx of International Buyers
The COVID-19 pandemic threw a wrench in everyone’s travel plans for a long while. Travel restrictions made it virtually impossible for international buyers to purchase homes in the United States. As countries somewhat return to normal in 2022, a Florida real estate market trend sees the return of foreign buyers, adding to the overall housing demand.
Housing Market Trend for Florida: Slower Pace for Sales
Predictions say that housing prices will rise and inventory will continue to remain low this 2022. But, how will these Florida real estate trends affect the big picture?
Rising home prices and a shortage of inventory generally indicate a slowdown in the pace of sales. Whereas sellers would receive 10 to 20 offers in 2021, the new year may see them receiving three to five offers.
This does not mean, though, that Florida’s housing market will take a hit. In fact, this could be a good thing for the long-term health of the Sunshine State’s real estate market. A healthy market is one that is friendly to both buyers and sellers, and this is a step in the right direction.
What About South Florida’s Luxury Real Estate Market?
The case of South Florida is a different matter. This part of the state is home to expensive homes, attracting affluent buyers from all over the country (and even outside of the country).
For a big chunk of 2021, South Florida’s luxury housing market saw one steep price increase after another. At one point last year, one out of every five home sales in Miami-Dade had a price tag of $1 million or higher. A few years ago, the ratio was one in 13 home sales. The new year, though, is poised to restore balance in this market.
The Bottom Line
For the most part, the Sunshine State has always had an attractive real estate market, and the year 2022 will be no different. Florida real estate trends this new year include a high overall demand as a result of low mortgage rates and an increase in new residents as well as low housing supply due to construction difficulties and population growth.
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