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Tuesday, August 24, 2021

Florida's home prices spike ‘well in excess of recent norms,' but could cool soon

 


With the number of existing homes being listed for sale increasing, Florida’s sellers’ market that spurred a 24.3% spike in single-family home costs over the last year could simmer down in coming months, said Florida Realtors Chief Economist Brad O’Connor.

“Florida’s red-hot rate of home price growth could begin to cool down somewhat in the coming months,” he said, “although that will also depend on whether interest rates start to trend higher again, as well. For now, though, the numbers continue to astound.”

During the second quarter of 2021 (2Q 21), April through June, the statewide median sales price for a single-family existing home increased by nearly one-fourth with the median asking price at $345,000, according to updated housing data from Florida Realtors.

Meanwhile, the statewide median price for condo-townhouse properties in 2Q 21 was $250,000, up 20.8% over 2Q 20.

Those trends continued in June, Florida Realtors reports, with statewide median sales price for single-family existing homes at $351,000 and at $256,945 for condos/townhomes.

O’Connor said Florida home sales and prices are typically higher in winter and spring, but “price growth this year has still been well in excess of recent norms.”

Falling mortgage rates in 2020 allowed buyers to bid on higher-priced homes, he said, fostering competition and the “seller’s market” that has “driven prices up so much.”

The interest rate for a 30-year fixed-rate mortgage averaged 3% in 2Q 21, down from 3.23% average in 2Q 20, according to Freddy Mac.

With mortgage rates unlikely to go down further, O’Connor said it will have “the gradual effect of pricing more prospective buyers out of the market, which will reduce the level of competition until price growth falls back to a more normal pace.”

He pointed to 2Q 21’s increase in new listings of existing single-family homes, up 24.2% over 2Q 21 and 8% higher than 2Q 19, and a 27% increase in new condo/townhouse listings during the same span.

Despite the boost in existing home listings, demand is such that the state’s inventory of active listings is still tight with a 1.2-months’ supply for single-family homes and at a 1.8-months’ supply for condo-townhouse properties, Florida Realtors reports.

O’Connor noted cash sales are a growing trend with 31% of all single-family homes all-cash deals in June, compared to 19% a year ago and 22.4% in 2019.

“The last time Florida had more than 31% single-family cash sales in June was in 2015, when the state was still working the last foreclosures from the Great Recession out of the system.”

O’Connor cited a rise in the percentage of single-family home cash sales below $400,000. “This indicates a rise in investor activity, so of course Florida Realtors will be watching these numbers closely,” he said.

Overall, the 98,414 2Q 21 closed sales of existing single-family homes was a 43.3% increase over 2Q 20 sales and 16% more than pre-pandemic 2Q 2019 sales.

Existing condo and townhouse sales between April and June totaled 48,976 – a 117% surge compared to last year and up nearly 44% compared to two years ago, according to Florida Realtors.

“Coming out of a record spring home-buying season, the state’s housing market continued its strong gains in June,” Florida Realtors President Cheryl Lambert said. “Of course, the impact of the pandemic last June is still a factor to consider when looking at the comparison data.”

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