Don’t Buy a Home in Florida Until You Know This Number
This article will explain the 1 number you must know before house-hunting in Florida. As explained in the Florida Move Guide, Florida’s real estate market is like a roller coaster and it’s probably far different than the state you’re familiar with. During good economic times, Florida home prices soar rapidly, but during challenging times, Florida home values can sink drastically and fast. That’s why it’s so important to know where this all important number is, before buying or selling in Florida.
Why Buying Real Estate in Florida is Different
Balanced real estate markets are most common in non-transient states with “normal” population growth. Historical examples might be Nebraska or Alabama. Large numbers of people don’t normally move into, or out of, these states in any given year. This results in a real estate market that is more stable than in high growth states.
On the contrary, high growth states such as Florida do experience large numbers of people moving in, and out yearly. As these numbers fluctuate in Florida because of economic conditions, natural disasters, etc., they can produce wild price increases and downward spirals. In my experience, Florida rarely has a balanced real estate market except when it is changing from one market to another.
So yes, the real estate market in Florida is likely much different than where you are moving from. So if you approach real estate in Florida just like you would “back home”, you could easily make the mistake of buying or selling at the wrong time which could cost you a lot of money.
How to Know Where the Florida Real Estate Market is Right Now With This 1 Statistic
What this important statistic is and how to find it:
- Visit any of the major nationwide home for sale listing sites such as Realtor.com or Zillow.com
- After putting in the town you are interested in the search bar and hitting enter, look for the “days on market” statistic provided for that specific area. On some sites you may have to click to another page to get housing market data. Be sure it’s local data for the place you’re considering, and not state or nationwide data. All real estate is local and demand (and therefore prices) can vary wildly, even in nearby locations.
- Once you have the days on market number, match that number to the appropriate paragraphs below.
A balanced Florida Real Estate Market
165-195 Days on Market
When an area’s days on market is in this range, it’s considered a balanced market. This means homes that sell, will have a good chance of doing so within a “normal” 6 month listing. In a balanced market, neither the buyer nor the seller has a built in advantage. Supply and demand for homes is about equal. Sellers can expect to sell within a reasonable time frame for a reasonable price and buyers can expect to buy a home they like within a reasonable time period for a reasonable cost.
A balanced real estate market is a good time to be a buyer or seller of real estate in Florida.
Florida Sellers Market’s (Aka Buyer Beware)
135-164 Days on Market
This is considered a seller’s market. The demand for homes is clearly stronger than than the desire to sell in a given area. In a market like this, home prices rise and inventory sells down which can make it hard to find any suitable homes to buy in your price range.
In this type of market, the seller clearly has the advantage in price and terms in most cases. A possible exception may be foreclosures that need a lot of work and therefore may be difficult to finance for most buyers.
When the days on market is in this range, it’s a very good time to be a seller, but not much fun to be buyer.
134 Days on Market and Lower
This is a strong seller’s market where the seller can dictate price and terms. Even previously unsalable junk may sell at top dollar when the days on market is this low, usually to buyers (from out of state?) who are not familiar with how the Florida or local market works, but has the resources to overpay. If you are thinking of selling when the days on market is this low, do it, because markets like this in Florida are what normally happens before the market flips sharply. When the days on market is this low, sellers can usually find a buyer quickly without a real estate agents help, just by putting a for sale sign in the yard. However, a homeowners equity gains can disappear quickly in Florida if you don’t cash in your chips when the market is sizzling, and the market flips and prices drop rapidly.
A market like this can be a dangerous time to buy because you’re likely paying too much for a home, that could be worth far less in a year or two after you move in.
Florida Buyers Market’s (Aka It’s Fun Time to Go Home Shopping)
196-226 Days on Market
When the days on market is in this range, it’s a good time to to be buyer in Florida because there are more homes on the market than will sell, in a “normal” 6 month listing period. This causes the sellers who want out the most to reduce their prices. Since the market is slow, it’s these lower priced homes that will sell because they are the obvious “bargains” to buyers.
Over time, these lower prices show sellers and real estate agents where homes must be reduced to, in order to sell. These lower sale prices then provide enough “comps” and become the market. Even if a buyer unfamiliar with the market tries to buy an “overpriced” home using a mortgage, that sale will likely fall apart because it won’t appraise for the sale price.
This is a fine time to be a buyer but can it can frustrating for sellers, especially if they paid more for their home than what it’s now worth and they feel they must sell anyway.
227 Days on Market and Higher
I know, you think this will never happen again in Florida. However, it will happen again and it may be sooner than most people believe…
When the Florida real estate market is this range, there are homes for sale everywhere. If you wait until next month, prices will even be lower and there will be yet more listings to choose from. Prices can drop below what people owe on their mortgages if they just bought them during the “if you don’t buy now prices will just be higher next week/month” market (134 days on market or less).
Markets like this occur because of events that drastically slows the number of people moving to Florida. Events like recessions or multiple years in a row of bad hurricanes damage on the national news. When people in FL lose jobs during these difficult to sell markets, or just can’t take the heat, humidity, evacuations, etc. any longer but can’t sell, they may just stop paying their mortgages and walk from their homes and that’s when the foreclosure numbers can shoot up.
This is a great time to be a buyer in Florida, but you do not want to be a seller in a market like this if you can avoid it.
The Bottom Line…
Knowing where the real estate market is by using the days on market statistic can help you buy low or sell high. It can also help you avoid buying high and then later selling low if Florida doesn’t work out (ouch). It happens far more often than what most realize
- Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.