It’s still a seller’s market, low inventory is still causing elevated prices and bidding wars. What lies ahead?
A lack of inventory is pervasive across the housing market statewide. “We got our hopes up for inventory, but except for a few months that didn’t happen,” said Florida Realtors® Chief Economist Brad O’Connor, Ph.D., at the 2022 Florida Real Estate Trends summit in Orlando last month. “We started the year with a 1.6-month’s supply of existing single-family homes, but we ended 2021 with a 1-month’s supply; and in many of your local markets, it’s down to a half-a-month’s supply.
For years, Florida has had more existing condos than single-family homes, but by the end of the year, existing condos and townhomes are down to a 1.3-month’s supply, which is very close to the single-family category.”
Property valuations should climb even higher in 2022, as inventory continues to wane. Here’s a look at some of the state’s top markets.
Tampa Bay is No. 1
Tampa Bay is the hottest real estate market out of the 50 largest metro areas in the nation, according to Zillow. It’s also the No. 1 market in the state. “Homes go here as quickly as they hit the market,” said Rae Anna Conforti, sales associate with RE/MAX Alliance Group, whose farm area includes all of Tampa Bay, St. Petersburg and Clearwater.
“The lower the price point, the more offers we are getting. But it’s the same across the board—from $350,000 to million-dollar homes. More people want homes than we have inventory. I’ve been in the business for 20 years and I feel like inventory is at the lowest point that it’s ever been. Sellers have complete control right now, which is sad for buyers and extremely frustrating.”
Home values are expected to rise 24.6 percent in 2022, thanks to Tampa’s strong job market, high demand for housing, an ever increasing population of home buyers and steady home value growth.
“We’ve gotten a lot of press recently with our sports teams all doing well, so I think that is creating even more of a desire for people to want to come down here and see what it’s all l about,” Conforti said. “People don’t necessarily have the luxury of picking the location like they used to. Now it’s which house is available. Some neighborhoods have no homes for sale.”
Buyer fatigue is also beginning to take hold. “Buyers are tired of submitting offers and getting rejected,” Conforti said. “Interest rates are going up eventually and that may prompt some sellers who have been holding off to put their home on the market.”
There is fierce competition in new-home construction too. “What I’m being told by builders is they only have so many permits that they can build and there are waiting lists for people to buy,” said Conforti. “Some builders are going back to buyers on their waiting lists and asking for their highest and best offers. They are creating their own bidding wars. I never saw builders do that before; it’s crazy.”
Northeast Florida: A Hidden Gem
Jacksonville, once largely overlooked by people moving to Florida, is now trailing right behind Tampa as the second hottest real estate market in the nation. “Jacksonville is also the No. 2 market in the state,” said Geoffrey Blum, sales associate with Keller Williams Realty Atlantic Partners in Jacksonville Beach. “It’s a great place to live—and still affordable compared to the rest of the state. But it has been behind the eight ball for 50 years because people cruising down Interstate 95 look at the sign that says, ‘Welcome to Florida’ and they’re excited to get to Orlando and the attractions or on to Fort Lauderdale for spring break.”
In December 2021, the median sales price of $350,000 was up 22% from the year before. Inventory dropped 22.7% to 1.1-month’s supply [Source: Northeast Florida Association of REALTORS®]
What’s driving the influx of buyers? “We have a lot of good things going for us,” Blum said. “We have the ocean, a major port, the St. Johns River, an NFL football team, the global headquarters for the PGA Tour in Ponte Vedra Beach, and of course St. Augustine is in our backyard.”
The area is also home to Naval Air Station Jacksonville, Association of Tennis Professionals, CSX, and business data titan Dun & Bradstreet among others. And, according to Bloomberg and LinkedIn, Jacksonville ranks ahead of Seattle and San Francisco as a preferred destination for tech workers.
Demand for homes is strong and seems likely to stay that way; however, housing inventory is low. “Our supply is so weak that it’s like when Covid first hit and there was a run on toilet paper,” Blum said. “Multiple offers will stay strong and on the best terms cash will win out. The normal flow of real estate has been decimated by people from blue states such as California, Washington, Oregon, Minnesota, New York, New Jersey, Maryland, Delaware and Virginia who are getting out of Dodge because of high property taxes and crime rates. All those people are moving to Texas or Florida, but a majority are moving to Jacksonville. It’s the x variable that went unnoticed and our real estate is being gobbled up by Pac-Man. As a result, prices are going up steadily and we are eventually going to become the pricing of California.”
Central Florida Continues to Break Records
According to the Orlando Regional Realtor Association, December’s median home price was recorded at $340,000—up 23.6% from $275,000 in December 2020—closing the year with the highest median home price ever recorded. Meanwhile, inventory was down to a historic record low of 47%.
Orlando-based real estate attorney Kevin Pribell, broker at Acres, Inc., is seeing multiple full-price offers within days of listing properties for sale. “I’ve recently had three listings that got between $7,500 and $23,000 over the Zillow estimated value on medium-priced residential properties,” he said. Rising interest rates could eventually impact home prices. “The escalation in values will slow down as interest rates go up, but the buying frenzy won’t stop.”
South Florida Prices Steadily Rising
Neal Oates, broker-owner of World Renowned Real Estate in Fort Lauderdale, said the market is frustrating some consumers to the point where they’ve decided to hold off while others are having to get “creative” to make a transaction work. “Buyers are asking, ‘If I want a piece of this dream what concessions do I have to make?’ Some are being asked to waive the appraisal contingency or they’re having to put more down even if they have 90% financing. Some sellers are asking for larger escrow deposits simply because they want to see if the buyers are willing to meet their requirements. Others are asking for post-close occupancy for the seller until they find a new place or they’re asking for the addendum that says the contract is contingent upon seller closing on their property in X amount of time. So, buyers in this marketplace can purchase property and go under contract but may not be able to occupy it immediately.”
Home prices in South Florida are projected to rise by upwards of another 6% this year, Oates said. As of December 2021, the median sale price for a single-family home in South Florida was $475,000.
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Another trend is single-family buyers opting for condos and townhouses instead. “Dr. Brad O’Connor mentioned that as well,” Oates said. “Today, we strongly encourage buyers to be flexible unless they have the means to potentially pay more than appraised value. Skilled agents who used to only work in single-family are asking buyers during their initial consultation if they would consider a condo or townhouse. We obviously want to work the way the client or customer wants, but we have to add our professional experience in a market like this.”