The Florida housing market has been on a tear in recent years, with home prices skyrocketing. But with rising interest rates and inflation, many buyers are wondering if the market is due for a crash. In this article, we will take a look at the factors that could influence the Florida housing market in the next five years, and we will try to answer the question: will it crash?

First, it is important to note that the Florida housing market is not a monolithic entity. There are many different submarkets, each with its own unique dynamics. For example, the Miami market is very different from the Ocala market.

However, there are some general trends that are affecting the entire state. For example, Florida's population is growing rapidly, and this is putting a strain on the housing supply. Additionally, Florida is a popular destination for retirees and second-home buyers, which is also driving up demand for housing.

On the other hand, there are some factors that could put downward pressure on the Florida housing market in the coming years. For example, rising interest rates are making it more expensive to borrow money to buy a home. Additionally, inflation is eroding the purchasing power of consumers, which could make it more difficult for some people to afford a home.

So, will the Florida housing market crash in the next five years? It is impossible to say for sure. However, there are both positive and negative factors that could influence the market. Let's take a look at the latest housing market trends in Florida.

As of September 2023, home prices in Florida have not shown a significant drop. In fact, the statewide median prices for both single-family homes and condo-townhouse units have demonstrated stability and, in some cases, moderate growth. While there may be fluctuations at the local level, the overall trend suggests that home prices are holding steady in 2023.

The Florida housing market, despite facing challenges such as higher mortgage rates, has not exhibited a significant slowdown in 2023. Closed sales of single-family homes have seen a healthy increase of over 6% in September. This positive trend, coupled with an expanding inventory and resilient condo-townhouse sales, indicates that the market is far from stagnating. Florida's housing market continues to adapt and attract new residents, offering opportunities in an evolving landscape.

Latest Florida's Housing Market Report: A September 2023 Overview

Stabilized Prices and Growing Inventory

According to the latest data from Florida Realtors®, in September and the third quarter (3Q) of 2023, Florida's housing market showcased promising signs of stability in statewide median prices and an increase in inventory levels. This positive trend can be attributed to the state's ability to attract new residents and robust single-family home sales. Let's delve into the details of Florida's housing market in September 2023.

Single-Family Home Sales Surge

The dollar volume of single-family home sales in September soared by 14.1% year-over-year, reaching an impressive $12.2 billion dollars. This substantial increase is a testament to Florida's enduring appeal. Closed sales of single-family homes also experienced a healthy 6.1% rise during the same period.

Condo and Townhouse Sales

While single-family home sales were on the rise, existing condo-townhouse sales remained stable, with a slight 0.2% decrease compared to September 2022. In the third quarter of 2023, statewide existing condo-townhouse sales were down by 5.8% year-over-year.

Positive Signs for the Fall Season

Florida Realtors Chief Economist, Dr. Brad O'Connor, pointed out some increasingly positive signs as the market entered the fall season. Closed sales of single-family homes were up for the first time compared to the previous year, rising by over 6%. This trend indicates resilience in the face of challenges, such as higher mortgage rates.

Median Sales Prices

In September 2023, the statewide median sales price for single-family existing homes reached $409,243, marking a 1.3% increase from the previous year. For condo-townhouse units, the median price surged by 5.8% to $324,990 compared to September 2022. In the third quarter of 2023, Florida's single-family median sales price was $414,000, a 1.0% increase over the second quarter of 2022, while the condo-townhouse median sales price stood at $320,545, reflecting a 5.8% year-over-year increase.

Inventory Growth

Despite challenges posed by higher mortgage rates, the level of new listings has been steadily increasing. In September, new single-family listings exceeded the number of listings for the same month in 2019 (pre-pandemic), with an impressive year-over-year increase of 8%. As a result, there's more active inventory at the end of September than at the beginning, particularly for single-family homes.

Supply Side Insights

On the supply side, Florida had a 3.2-month supply of single-family existing homes in September, reflecting a 28% year-over-year increase. For condo-townhouse units, the state had a 4.1-month supply, marking a significant 78.3% year-over-year increase.

Florida Housing Market Predictions 2023 & 2024

The Florida housing market, according to Zillow's data through September 30, 2023, presents an interesting snapshot of the real estate landscape. The average home value in Florida currently stands at $392,922, which reflects a 0.7% increase over the past year. Additionally, homes in Florida go pending in approximately 22 days, indicating a relatively fast-moving market.

Key Market Metrics

Zillow provides several key metrics that offer valuable insights into the Florida housing market:

1. Median Sale to List Ratio

As of August 31, 2023, the median sale-to-list ratio in Florida is 0.982. This metric is crucial as it indicates how close homes are selling to their listing prices.

2. Percent of Sales Over List Price

In August 31, 2023, approximately 18.0% of sales in Florida were over the list price. This suggests a competitive market where buyers are willing to pay more for their desired properties.

3. Percent of Sales Under List Price

Conversely, around 62.8% of sales in August 31, 2023, occurred under the list price, highlighting the variety of price points and negotiation opportunities in the Florida real estate market.

4. Median Days to Pending

Homes in Florida have a median of 22 days to go pending as of September 30, 2023. This metric is a reflection of the market's pace and demand.

Florida MSA Housing Market Forecast

To gain insights into the Florida housing market's future, Zillow provides forecasts for various Metropolitan Statistical Areas (MSAs) within the state. MSAs are regions with high population densities centered around one or more major cities. Let's delve into the MSA forecast data:

Clewiston, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.9%
– Forecast for 31-12-2023: 2.2%
– Forecast for 30-09-2024: 7.8%

Okeechobee, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.4%
– Forecast for 31-12-2023: 0.9%
– Forecast for 30-09-2024: 5.2%

Palatka, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0%
– Forecast for 31-12-2023: 0.6%
– Forecast for 30-09-2024: 5.1%

Wauchula, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.6%
– Forecast for 31-12-2023: 1.2%
– Forecast for 30-09-2024: 5%

Sebring, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.3%
– Forecast for 31-12-2023: 0.7%
– Forecast for 30-09-2024: 4.8%

Naples, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.2%
– Forecast for 31-12-2023: 0.4%
– Forecast for 30-09-2024: 4.5%

Arcadia, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.1%
– Forecast for 31-12-2023: 0.4%
– Forecast for 30-09-2024: 4.5%

Port St. Lucie, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.3%
– Forecast for 31-12-2023: 0.5%
– Forecast for 30-09-2024: 4%

Homosassa Springs, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: -0.1%
– Forecast for 31-12-2023: 0%
– Forecast for 30-09-2024: 4%

Lake City, FL MSA

– Base Date: 30-09-2023
– Forecast for 31-10-2023: 0.1%
– Forecast for 31-12-2023: 0.5%
– Forecast for 30-09-2024: 4%

These forecasts offer valuable insights into the expected performance of Florida's different MSAs, helping buyers, sellers, and investors make informed decisions in the real estate market.

Florida Real Estate Forecast Next 5 Years

Florida home values have risen by about 80% over the past 5 years and a positive trend is forecasted for the next 5 years. With the recent spike in mortgage payments as a result of rising interest rates, analysts are watching the Florida housing market closely to see what effect this will have. It is likely to restrict house price increases, but to what amount is unclear because there is still a “fear of losing out” attitude among purchasers, which is fueling the market, although slowly.

It's no surprise that Zillow ranked Tampa, Florida, as the top real estate market in the United States in 2022. Florida housing prices have witnessed some of the most dramatic increases in the country, with Miami and Tampa at the forefront of the upswing. Due to a variety of variables, the housing market in Tampa has outpaced many others, including a large number of potential buyers, a scarcity of supply, strong property sales, and an active employment market in the area.

Overall, the Florida housing market is strong and is predicted to remain so in the next five years. If you're a seller, this is wonderful news since it implies property values are rising and there isn't much selling competition, giving you the luxury of selecting from the best offers on your schedule. Higher mortgage rates may cause unprepared house buyers to postpone their purchases.

If this reduces buyer demand sufficiently in some Florida areas, price appreciation may decrease. The lower price increase may provide remaining buyers who can afford higher interest rates more confidence in locating a home they can afford. And that leads to fewer home sales. If you're selling a home in Florida this year, the odds are good that you'll come out ahead financially. Real estate prices and mortgage rates are rising, and the few affordable houses that remain are being snapped up like sardines. If you want to buy in this market, now’s not the time to buy.

Whether or not the country enters a recession, the housing market appears to be in good shape for the foreseeable future. Perhaps not at the same rate that the United States has lately seen, but growth nevertheless. This is an excellent moment for real estate investors, particularly those interested in Florida, to capitalize on market possibilities.

Florida Real Estate Appreciation Rates For 10 Years

Florida's real estate market has seen unprecedented price rises during the last few years, as a result of a lack of supply and high demand. Most of the emphasis is focused on the prices and the possibility of a housing bubble. While Florida's mild temperature, cheap taxes, and natural attractions have historically enticed newcomers to the state, if affordable housing challenges continue to prevail across the state, these enticing elements may go away.

A post-pandemic world necessitates that the state of Florida deal with the fact that pricey housing can in certain respects impede economic growth and have an unequal impact on critical segments of the population. Florida has had some of the strongest housing appreciation rates in the country over the past decade.

Real estate appreciation rates in Florida have shown significant growth over various time periods, making it an attractive market for investors and homeowners alike. Here's a breakdown of the appreciation rates based on data from NeighborhoodScout:

Latest Quarter (2022 Q4 – 2023 Q1)

During the latest quarter, spanning from the fourth quarter of 2022 to the first quarter of 2023, Florida's real estate market experienced a modest appreciation rate of 0.02%. While this figure may seem relatively low, it's essential to note that it outperformed the national average by 0.08%, indicating a resilient housing market in the face of economic fluctuations.

Last 12 Months (2022 Q1 – 2023 Q1)

Over the past year, from the first quarter of 2022 to the first quarter of 2023, Florida's real estate market saw a substantial appreciation rate of 13.07%. This robust growth mirrored the average annual rate, once again highlighting the state's resilience and attractiveness to investors, with a remarkable performance ranking of 10 compared to the rest of the country.

Last 2 Years (2021 Q1 – 2023 Q1)

Examining a slightly longer timeframe, from the first quarter of 2021 to the first quarter of 2023, the appreciation rate in Florida stood at an impressive 44.36%. This growth far exceeded the national average, by 20.15%, reinforcing Florida's reputation as a thriving real estate market.

Last 5 Years (2018 Q1 – 2023 Q1)

Over the past five years, from the first quarter of 2018 to the first quarter of 2023, Florida's real estate market exhibited substantial appreciation, boasting a rate of 77.01%. This rate exceeded the national average by 12.10%, signifying Florida's consistent and strong real estate performance.

Last 10 Years (2013 Q1 – 2023 Q1)

When considering the last decade, from the first quarter of 2013 to the first quarter of 2023, Florida's real estate market recorded remarkable appreciation of 174.83%. This growth, which surpassed the national average by 10.64%, demonstrates the state's enduring appeal to real estate investors.

Since 2000 (2000 Q1 – 2023 Q1)

Finally, when looking at the broader picture from the first quarter of 2000 to the first quarter of 2023, Florida's real estate market experienced exceptional appreciation, amounting to 281.81%. Even over this extended period, Florida outperformed the national average by 6.00%, reaffirming its status as a top choice for real estate investment over the years.

These appreciation rates indicate the dynamic and resilient nature of Florida's real estate market, making it an attractive destination for those looking to invest in property.

Within Florida, Tampa Bay has one of the most overpriced housing markets in the nation, according to new research from Florida Atlantic University. Extremely low mortgage rates drove our red-hot housing market, particularly during the epidemic, and intensified bidding wars. Lakeland ranks 12th nationally, and second in the state, with homes overvalued by more than 53.2%. North Port-Sarasota-Bradenton is No. 17 nationally, fourth in the state at 48.9%.

Will the Housing Market Crash in Florida?

Population growth, and particularly growth in the number of households, lead to a growth in housing demand. Real estate is subject to the law of supply and demand: when there are more purchasers than available homes, prices rise.  Since the 1940s, Florida's population has increased year after year, often outperforming the national average. However, like the rest of the United States, growth plummeted to historic lows during the initial years of the pandemic until rebounding last year.

Florida is now America's fastest-growing state. According to recent census data, the Sunshine State added over 400,000 additional people between July 2021 to July 2022. It was a growth of 1.9%, bringing the total population to 22,244,823. That makes it faster-growing than Texas, which has the second-largest population in the United States, trailing only California.

According to experts, the national housing market or the market in Florida is nowhere near the crash that occurred during the Great Recession of 2008. This is partially due to tighter lending laws coming from the financial crisis. Borrowers are in considerably better shape, as seen by their improved credit scores. And as a result of rising home values, homeowners have a record amount of equity.

The current situation is a fairly complex web, but it's nothing compared to the 2008-2009 market crisis, which took years to unravel. The Fed's pandemic actions fueled a housing boom. As it tries to withdraw that support, it could be bad news for housing but will it lead to a crash? The Fed will continue to play a crucial role in the future of the housing market.

Back in February 2020, the Fed owned $1.4 trillion in mortgage-backed securities, and the number was falling rapidly. As the pandemic took root, however, the central bank initiated a new round of bond purchases (known as “quantitative easing”), bringing the number to $2.7 trillion.

Fed seeks to tighten monetary policy to combat inflation Although it wants to shrink that portfolio it is quite improbable that the Fed can unwind its balance sheet. It might simply accept the fact that it will continue to play a disproportionate role in the housing market and have a larger balance sheet than it would prefer. Prepare for a collapse, not a correction, in the housing market during the next 18 to 24 months if they do.

Florida is a Hot Spot for Real Estate Investment for a Few Reasons

Florida's strong population growth, diverse job market, tourist attractions, affordable property prices, tax benefits, and diversified economy all contribute to making it a hot spot for real estate investment.

1. Strong population growth and job market: Florida has strong population growth, particularly in cities like Miami, Orlando, and Tampa. This leads to an increased demand for housing, making it a prime location for real estate investment. Additionally, Florida's job market is diverse and growing, which attracts new residents and supports the demand for housing.

2. Tourist Attraction:  Florida is a booming real estate market due to tourism. Florida attracts millions of tourists annually. In tourist-heavy areas like Miami, Orlando, and others, vacation rental properties are in high demand. Vacation rentals offer greater space, privacy, and facilities than hotels for Florida tourists. Investors can earn rental income and gain property value via vacation rentals.

Vacation rental properties are more reliable and profitable than typical rental properties due to high demand. Tourists pay extra for comfortable vacation rentals. Tourist demand can remain consistent throughout economic downturns, making vacation rental properties more market-resilient. Florida's great tourist draw can offer real estate investors looking for vacation rental properties a reliable and successful revenue stream and property value appreciation.

3. Affordable property prices: Compared to other states like California, property prices in Florida are relatively affordable, which can make it an attractive option for real estate investors. This can lead to strong returns on investment and can make it easier for investors to purchase multiple properties. It's important to note that property prices can vary widely depending on location and property type. While some areas of Florida may have lower property prices, other areas, such as beachfront or tourist-friendly areas, may have higher property prices.

4. Tax Benefits: Florida has no state income tax, which can be a significant advantage for real estate investors. This can lead to higher net returns on investment and can make it a more attractive option for real estate investors.

5. Diversified economy: Florida's economy is diverse, with a mix of industries such as agriculture, tourism, aerospace, and technology. This diversified economy can help insulate the state from economic downturns, which can be beneficial for real estate investors.

However, it's always important to do proper research, understand the market and the property before investing, and have a solid plan in place for managing risks.