When the swath of the 2009 Recession finally petered out, Florida like other real estate concentrations of the country was buried in foreclosures and a glutted market. Aside from a few exceptions, buyers could practically spell out the price they were willing to pay for a house. However, like so many other situations Donald Mihalik has seen in real estate, nothing ever lasts. By 2020 and the arrival of the pandemic, people wanted away from their cities and cold locations. Instead, they wanted to be where it was warm, with tons of outside options and recreations, and better life than they had in their old neighborhoods. The glut that made up the Florida real estate market had been liquidated by the population shift to the Sunshine State.
By 2022, what used to be a stuffed market is now realizing a heated bidding war for available homes. Donald Mihalik notes that the average price increase is over 21 percent over the prior year, and most homes are easily demanding $420,000 per location. So much for Florida foreclosures never being cleared out.
Of course, the turnaround isn’t a general increase across the board. As usual with real estate, some areas are moving upward in price far faster. That said, there really isn’t much in the way of old prices left anymore. Florida is pretty much-seeing increases in every county, easily creating the beginnings of a flipping market as well, where buyers are adding into the mix for speculation as much as others looking for an actual home and long-term residence. The whole dynamic has moved Florida in national media real estate rankings from the bottom rungs all the way up to being one of the most expensive markets to buy in now in 2022. What a change from just a few years ago.
Even more interesting for those who have real estate in Florida, the current market isn’t expected to die down anytime soon. In fact, multiple expert opinions are pegging that the heated-up Florida market is probably going to stay the same for at least the next five years until about 2027. Donald Mihalik warns, however, that there are a few factors that could slow this expectation down though.
First, the move to increase mortgage rates is definitely in play and making home loans more expensive. If that direction continues, then at some point the combination of higher interest rates for borrowing and the high prices of homes are going to make it impractical for most people to buy. Donald Mihalik remembers from previous market cycles rate increases have been a recurring reason for home prices to slow down and start dropping as sales fall off and buying demand lessens.
Second, with so much demand in play right now, builders aren’t going to sit on the sidelines. They are also going to want a share of the market and will add additional units to capture some of the sales going on. That in turn also increases supply and ultimately ends up slowing down demand as well. While the builder effect takes longer, it does tend to contribute over three to twelve months once it’s put into motion.
So, in short, yes, Florida’s real estate market already came back, and then some. The real question Donald Mihalik asks now is, what are homebuyers and sellers going to do in the meantime until the latest surge comes to an end?