For years, buyers and investors have bemoaned the lack of U.S. housing inventory, which has kept prices artificially high despite soaring interest rates. That’s why a recent report from Redfin showing a surge in inventory along parts of Florida’s Gulf Coast surprised many.
Inventories rising, prices falling across much of Florida
Inventory in Florida’s western Gulf Coast region, including Cape Coral and North Port, is up 50% from last year’s levels, outpacing other U.S. states and giving buyers and sellers much-needed breathing room, the report said.
Inventories in other parts of the state are also growing: Stocks at the Port of North Sarasota are up 48%, while inventories in pricey West Palm Beach, often home to snowbirds in the New York tri-state area, are also up 20%.
However, more listings are not leading to more sales – the opposite appears to be happening. Redfin data shows that at the start of the year — when residents typically flock to the warmer Sunshine State — sales were down 27% in areas like Jacksonville; even Miami was down nearly 9%.
The latest data from March backs up these numbers:
- The number of homes sold in the state fell 11.3% year over year.
- Days on market increased by 8 days.
- Inventories soared 28%.
- Supply doubled from two months to four months.
So what’s going on?
Redfin lists the 10 cities across the country where sellers are most likely to drop prices. Florida has five:
- Northport-Sarasota
- tampa
- cape coral
- orlando
- jacksonville
Why are prices falling?
The reasons for the decline appear to be multifactorial.
Price is too high
“Two years ago, the North Port Metro was one of the most competitive housing markets in the country because of affordability for remote workers and a shortage of homes for sale, but today neither of those conditions are true,” said Eric Eric Auciello, local Redfin sales manager, said in a statement. “Sarasota, in particular, has been overvalued for decades and is finally getting its comeuppance. Metro Tampa is doing a little better.
The number of remote workers is declining
As the pandemic recedes, more employers are requiring employees to be physically present in the office, at least on a hybrid basis or even full-time. CNBC reports that by 2024, eight out of 10 companies will track employees’ office attendance, and 95% of companies surveyed said employees who don’t comply will suffer consequences such as being fired and potentially losing bonuses or wages.
Florida, with its warm weather and no state income tax, has been a favorite destination for remote workers during the pandemic, a large number of whom have moved there from other states. If they are called back to the office now, this could lead to a drop in percentages.
Insurance costs are high
Florida has been the focus of some of the most destructive hurricanes in recent years, resulting in rising insurance costs, property taxes and overall rising costs of living, creating a perfect storm of unaffordability (pardon the pun).
“The tax savings from eliminating state income taxes will only benefit the highest earners because other cost-of-living factors are so high,” said Erin Sykes, chief economist at Nest Seekers International. wealth About the Florida Market. “Therefore, most [are] This move to Florida was driven by other benefits—political, business-friendly. While list prices remain stable, it’s still a buyer’s market due to low transaction volumes. Now is the time to make a deal.
HOA fees soar
The Florida real estate market is divided into two segments: single-family homes and condominiums. Condominium sales are particularly affected as HOA fees rise due to high inflation.
this pensacola news magazine In Altamonte Springs, residents of Lakewood Park Condos told WESH 2 their HOA fees increased by nearly 100 percent. For example, the owner of a 649-square-foot apartment now pays $712.93 in monthly HOA fees. The Wekiva Country Club Villas Homeowners Association in Longwood also raised HOA fees, with its annual insurance premium rising from $91,000 in 2023 to $233,000 in 2024.
Additionally, the collapse of the Champlain Towers in Surfside, Florida in June 2021 resulted in changes in high-rise building laws that further increased HOA fees. The passage of SB 4-D would require condominium and co-op buildings with three stories or more to undergo landmark structural inspections and impose new requirements, reserve funds to pay for future long-term maintenance costs and more.
A report from online insurance agency Insurify predicts premiums will increase 7% in 2024, bringing the average annual cost to Florida residents to about $11,759.
Competition from other fields
New Yorkers have historically favored Florida as a place to relocate and escape the cold winters of the Northeast. The U.S. Census Bureau ranks Florida as the state with the fastest growing population in 2022, with an annual population growth rate of 1.9% in one year. This is the first time since 1957 that Florida’s population has grown faster than anywhere else in the United States. Recently, however, other southern states have attracted new residents due to job opportunities and low cost of living.
final thoughts
If inventory continues to increase along the Florida Gulf Coast, there will be a tipping point where it makes financial sense to purchase a home in the area despite increased insurance and HOA fees.
This may have been reached for many cash buyers, where they can negotiate a great deal and only have to pay taxes, insurance, and HOA out of pocket. It also makes sense for snowbirds or vacation homeowners who still have one foot in another city to use a Florida home as a short- or mid-term rental. By accumulating enough cash flow to offset the increased costs, they can benefit from equity purchased at a deep discount, depreciation, and have a nice place to retreat during the icy winters of more northern states.
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