The rise in prices in the Florida housing market worries analysts



Florida home sales are showing strong monthly and annual gains, but recent analysis warns that prices are so high that first-time home buyers may want to stay on the sidelines for now.

A 25-year analysis of Zillow data by Florida Atlantic University College of Business found that by May 31, homes in the Sunshine State were selling at a premium 19.24 percent above their long-term price trend – up from 17.17 percent at the end of the period. April.

“The acceleration in price increases in all of these markets is particularly troubling,” said Ken Johnson, real estate economist and deputy dean of FAU Business College, who co-authored the report. “While I don’t believe a devastating housing crisis is inevitable, the larger the premium gets, the more I’m worried about future price volatility.”

Tampa Bay saw the biggest dynamic, with homes sold at a 28.53% premium in May, up from 26.14% in April. Miami homes sold 14.88% above long-term trends, up from 13.18% a month earlier, while Orlando homes sold at a 19.79% premium, up from 18.45%.

“Given where prices are in Florida right now, the best way to avoid being more exposed to future price volatility is for more potential buyers to seriously consider renting and reinvesting at this stage,” wrote co-author of the report, Eli Beraca, Ph.D. D. from Hollo School of Real Estate FIU. “This will restrict property demand and slow pricing, which will help stabilize the state’s housing market.”

According to a May report by the Florida Association of Realtors, the state-wide average selling price rose 27.7% annually to $ 344,900. A year ago that figure was $ 270,000. The average selling price is up 2.5% compared to April when that figure was $ 336,525.

Home demand remains high due to low supply and low interest rates. According to Freddie Mac, 30-year fixed rate mortgages averaged 2.96% in May 2021, down from the 3.23% average in the same month a year earlier.

“I had a property in Coral Gables that I put up for sale on Tuesday morning. By lunchtime, I had five offers, ”said Lourdes Alatriste, executive director of luxury sales at Douglas Elliman in Miami.

While homebuyer interest remains high, Alatriste has seen a slight decline in the past one to two months, which she attributed in part to families looking to move from the northeast, facing problems as private schools were full. Combined with the fact that many schools have started to open for face-to-face classes, she said, many northern families have chosen to stay where they are.

In May, stocks of single-family homes increased for the first time since March 2020, rising to 32,021 by the end of May from 31,618 in April, according to a Florida Realtors report.

“Of course, we’re still 58.2% less than a year ago, so we’re by no means dead in terms of housing shortages,” Brad O’Connor, chief economist at a Florida real estate agency, said in a press release. “But we can at least take this flattening stock curve as a sign that we may finally be at the beginning of a long journey towards a balanced market.”

Single-family home sales in May were up 57.9% from the same month in 2020, when the state began lifting certain restrictions related to the pandemic. Last month, 30,985 homes were sold, up from 19,622 in May last year.

O’Connor said the number of existing homes listed for sale in each of the past three months was broadly in line with recent historical rates before the pandemic, helping to prevent further inventory declines.

“Until [inventory] has been falling on a very consistent basis since the start of the pandemic, from month to month, the last three months have been very stable for single-family homes, ” he said. “So it’s not getting better, but it’s not getting worse either. So that’s good. “


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