The Florida Real Estate Market is the Best It’s Ever Been, if You Want to Sell.
If you already own a home in Florida, you know that right now your home is almost worth its weight in Bitcoins.
Why is the Florida real estate market so hot right now? Here’s a few reasons…
- The winter of 2020-2021 was one of the coldest, snowiest we’ve had in years. Every winter a certain percentage of the population in colder northern states becomes “tired” of the cold weather and shoveling snow and considers moving south. Usually the colder the winters “up north” are, the higher the number of people who act on this impulse. This creates higher demand for homes which results in more sales, lower inventory and then even higher prices.
- Florida took a different tack during the pandemic and offered a place with less restrictions. Lock-down-weary newly remote workers and tourist eventually flocked to the state and this helped support Florida’s real estate market and businesses that were still open. Many who closed their shops and restaurants in locked down states, moved to Florida and opened, bringing along some of their employees and hiring Floridians.
- Many of the people who moved to Florida during the winter, when the weather is the best and everything is open and humming because the population swells due to snowbirds, told their friends how great Florida was based on a few days or weeks of “living” there. People are most infectious with Florida is paradise syndrome when they first move to the state.
- Tax increase ideas are being floated or they have already been approved in states where some residents feel taxes are already too high. This has further accelerated the trend of people leaving higher tax locales for lower tax places, which increased after the $10,000 Salt cap was put into place.
- It’s hard to visit a news website lately without seeing a new article on how great Florida is and how many people are moving to the sunshine state. This becomes a factor because if it’s in the news it must be true, and many people feel safer following the crowd. Just like negative news reports of damage and heartbreak in the news for months after a major hurricane hits Florida can shut off buyer demand, months of widespread farts smell like roses in Florida reporting increases buyer demand and pushes prices up
The Florida Real Estate Market is the worst its ever been, if you are a buyer.
What do you think would happen to the price of homes, or a loaf of bread for that matter, if rather than the normal supply, there were only 5 available to buy in your town? If you have been shopping online for a home in Florida right now, you know every week there are fewer homes for sale and new listings that come on the market are priced higher than similar ones that are still in pending status and haven’t even settled yet.
I obtained my first real estate license in 1986 and still have one today. In those roughly 35 years (yet I’m only 39) I have never seen a market this horrible for buyers. The real estate market in Florida from 2005 to 2007, right before the crash of the Great Recession was a brutal market for buyers. Every week there was less inventory to look at, and even the junk that came on the market at inflated prices sold right away. If you’re in the market as a buyer now, does any of this sound similar to today’s market?
Most who purchased during the last strong market hostile to buyers, saw their home plummet in value and it took years to climb back to what they paid.
You see, this has all happened before. Many times. The Florida Move Guide explains this in detail.
So When will the Florida Real Estate Market Change Direction?
Well, lets take a look at the points discussed earlier…
- Coldest snowiest winter in years. Is this the new normal or have we returned to the past? Did Joe Biden solve climate change already, in just a few months? My guess is that an usually cold winter is now just something that happens about once every 10 years or so, and we return to the pattern of warmer winters with less snow like the last 20 years.
- Lock downs and the pandemic. This will end at some point because of vaccinations, herd immunity, etc. When all states are fully open again, the advantage of being one of the few that are open will evaporate.
- People who move to Florida during the winter when the weather is truly just warm and told everyone how great it was, will start to sing a different song during Florida’s other 3 seasons , summer, summer and summer. And no, Florida summers are not the same as they are in California, Michigan or New York. That’s just what they think based on vacations, wait until you live through a few of them.
- Taxes, Salt cap. Will the Salt cap be repealed? Will high tax states continue to raise taxes? If Salt is repealed, that would probably slow the flow to Florida and may encourage some recent Florida transplants who are experiencing buyers remorse to move back.
- The current relentless everybody is moving to Florida reporting that is encouraging even more people to do the same, isn’t entirely accurate. Here’s an excellent article written by Candace Taylor, a reporter for the Wall Street Journal, that explains what is really happening.
History Shows Us That All Bubbles Pop Eventually, This Latest Bubble in Florida Real Estate is No Different
I don’t know if they teach this any longer, but when I was in elementary school (no, I’m not going to say how long ago that was), we learned about what may have been the very first asset bubble, and crash ever recorded. If your as
old (experienced? wise? what’s the word I’m looking for?) as I am, then you may know what happened during the 17th century to people who continued to pay too much for Dutch tulip bulbs as the price shot skyward, until there were no more “greater fools” left. Every bubble in history popped eventually.
Now I’m not saying that everyone who overpaid to secure a home in Florida in 2021 is a fool. If a buyer has more than enough money that they can buy assets like homes or stocks and then watch the value of them plummet and it would not affect them at all, that’s fine. But if a buyer is using a big chunk of their net worth, or going heavily into debt to overpay for a place in Florida, at the top of the worst buyer’s market the state has ever seen, and will be negatively affected if that home drops in value by at least 40%…
Some bubbles, like the ones that develop in the Florida real estate market, inflate and pop over and over again. I’ve heard some say that this time is different, it’s not like the subprime bubble that popped over 10 years ago, and they’re right. This bubble is worse. Multiple buyers are/were regularly offering far more than list price or what an appraisal of the property would show it is worth. You didn’t see that before the last crash, that is different.
It wasn’t the first bubble, but the real estate market in Florida inflated and popped in the past when President Carter was in office and the average mortgage rate rose to 16%. It happened during the 1979 energy crisis. Then it was because of the dot-com stock market melt down and so on. Saying it’s “safe” to badly overpay for a home or condo in Florida now, because factors that caused the last crash are present, ignores the fact that there have been many different causes in the past. FYI- There are lenders that are now offering mortgages similar to what was available before the subprime crash.
Bottom line: I don’t know exactly what pin will cause this current Florida real estate market bubble to pop, or exactly when it will happen (although I have my suspicions of both), but I do know this bubble will pop and it’s going to be something to watch.
Ron Stack “That Best Places Guy” of Zeus Press Inc.
- You may be able to save yourself from all of the drama of the current market by reading the Florida Move Guide.