In the past few years, Florida's real estate market has been booming. With so much new construction and prices rising, it's easy to think that Florida real estate will be slowing down soon. But you would be wrong! According to Florida Realtors, All of Florida home prices in July 2021 were up 20.3% for single-family homes, and up 20.5% for condo-townhouse properties, compared to 2020. The South Florida market was the hottest of the state with single-family median home prices in Miami up 31% year-over-year, from $380,000 to $500,000. Condo prices were up 25%, from $262,250 to $330,000
With more and more people moving to Florida from other states, the demand for properties has risen significantly, however active listings remain scarce. Today, inventory supply for single-family homes lasts 1.2 months and 1.8 months for condo-townhouses. For comparison, a balanced housing market should have at least 6.5 months of inventory supply.
The booming Florida real estate has many agents, buyers, and sellers wondering, what happens next? We wrote this blog article to help you predict future trends, so you clearly know what to expect from the South Florida real estate market.
1) Sustained Interstate Migration
With COVID-19 influencing many aspects of the US economy, migration from Northeastern and Midwestern states as well as California is expected to continue through 2025. According to the Office of Economic and Demographic Research, Florida gained 329,717 new residents from April 2020 to April 2021 which made it the number one destination for relocation in the country.
It's no surprise that warm weather, tax savings, and the availability of larger homes and high-end condominiums attract buyers from many states. And the prospect of paying no state income tax and lower real estate taxes compared to other states makes it a great incentive for relocation.
2) An Increasing Gap Between Supply and Demand
Current migration and demographic growth will continue to drive high demand for South Florida real estate. With the Millennial workforce moving to Florida and entering the housing market for the first time, many home shoppers will take advantage of record-low interest rates and first-time homebuyer programs. On another hand, sellers will continue to hold on to their properties in hopes of reaping even more profits in the future, expanding the gap between supply and demand.
3) Tech Giants Moving to South Florida
Venture capitalists like Peter Thiel and Keith Rabois, the general partners at Founders Found, chose Florida not only for its no-state income tax and business-friendly political climate but also for a less restrictive approach to the pandemic. A recent survey of over 600 elite tech entrepreneurs revealed their support of Florida’s labor and pricing deregulations as well as high-risk tolerance for the absence of COVID-related restrictions.
Additionally, Florida ranks number one among the Southeastern states in terms of capital investments. According to the 2021 State of Startups in the Southeast report, the state has received $12.9 billion investor dollars between 2016 and 2021 across 2,719 deals surpassing North Carolina, Virginia, Georgia, and Tennessee. It is also leading the list of private companies valued at $1 billion or more.
4) Quality of Life
Year-round gorgeous weather, dazzling beaches, diverse food scene, and vibrant nightlife make Florida tenth “Best State in the US”, according to the latest US News & World Report. Based on 70,000 people surveyed, Florida was ranked at No. 3 in education, No. 8 in the economy, and No. 8 in fiscal stability in 2021. It’s no surprise that residents from many states are looking to relocate here.
5) Record-Low Mortgage Interest Rates
In January 2021, the average 15-year fixed rate has dropped to 2.2% - the lowest in history! This makes it a perfect time for buyers to refinance or get an affordable mortgage. However, when financial markets start anticipating the growth of inflation, we foresee that mortgage interest rates will slowly begin to rise, but this is unlikely to happen at least for another year. In 2022, low mortgage rates will provide buyers with an opportunity to enjoy low monthly payments, fewer interest costs, and a bigger home-buying budget.
6) New Construction Can’t Keep Up with Demand
In June 2021, South Florida construction for residential buildings tripled compared to the same time last year. Despite shortages in materials and labor, residential construction increased 234% to $1.1 billion with high demand for luxury accommodations from out-of-state buyers. Many homes are being sold even before the construction begins. It's estimated that new housing inventory will continue to grow but can not keep up with demand in the foreseeable future.
7) Infrastructure Improvements
With new transportation projects aiming to upgrade Florida’s highways and seaports, we foresee that the quality of infrastructure will also continue to improve. Brightline, the high-speed intercity railway, has been a preferred choice for people traveling from West Palm Beach to Fort Lauderdale and Miami before the pandemic. And, after an 18-month shutdown, the train schedule resumes in the fall of 2021 with additional stations and services. Finally, the company is actively constructing a new route to Orlando offering car-less rides for business and pleasure.
8) Growing Online Real Estate Services
I-buyers, continue to rise as the "new normal" sets in. While online platforms like Zillow and OpenDoor offer these services, new independent crowdsourcing applications will continue to gain momentum amidst South Florida's tech boom.
RealTrade is the perfect example of such innovation. Our newly introduced real estate marketplace and social media platform allows buyers and sellers to connect directly with and follow agents and properties in South Florida. We do this by enabling agents, buyers and sellers to create their own real estate social-media profiles, connect and share information. We also allow agents to receive leads directly from their listings and social posts and freely interact with other real estate agents. This way they can expand their online presence, strengthen their relationships, and facilitate business more efficiently.
Interested to learn more? Take RealTrade for a spin and see for yourself how easy it is to navigate and use. It takes less than five minutes to register and it's absolutely free!
