{"id":227096,"date":"2023-01-24T15:14:59","date_gmt":"2023-01-24T20:14:59","guid":{"rendered":"https:\/\/www.livabl.com\/articles\/?p=227096"},"modified":"2023-01-24T15:14:59","modified_gmt":"2023-01-24T20:14:59","slug":"interest-rates-inflation-florida-housing-market","status":"publish","type":"post","link":"https:\/\/www.livabl.com\/articles\/news\/interest-rates-inflation-florida-housing-market","title":{"rendered":"Interest rates and inflation continue to keep Florida’s housing market up in the air"},"content":{"rendered":"

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Interest rates and inflation had a major effect on the Florida housing market after the unprecedented strength and record-setting activity of 2020-2021. By the end of 2022, Florida\u2019s real estate market was comparable to its pre-pandemic state in terms of the annual number of closed sales.<\/p>\n

Total closed statewide sales for 2022 totalled up to 287,352 existing single-family homes and 125,494 condo\/townhome units \u2013 down 18 and 21.7 percent year-over-year respectively.<\/p>\n

Florida Realtors chief economist Dr. Brad O\u2019Connor described Florida\u2019s housing market in 2020 and 2021 as being \u2018on a sugar high,\u2019 and expects the 2023 market to continue its trend back to balance.<\/p>\n

As sales activity returns to pre-pandemic levels, one major question on everyone\u2019s minds is whether we can expect a price correction in 2023.<\/p>\n

The statewide median sales price for a single-family existing home by the end of 2022 was $402,500 \u2013 up 15.7% year-over-year. Condo-townhouse prices rose by 21.6 percent as well, selling for an average price of $306,500.<\/p>\n

According to O\u2019Connor, predicting price corrections is a little more complicated than previous years thanks to interest rate uncertainty, inflation and a slower construction pipeline.<\/p>\n

\u201cPrices are determined by both demand and supply,\u201d O\u2019Connor said. \u201cFalling demand is only one ingredient needed for a large correction; we also need a flood of supply \u2013 in the last housing cycle, this came from overbuilding and foreclosures. And it\u2019s unlikely that we\u2019re going to see a flood of newly built homes on the market for several reasons.\u201d<\/p>\n

\u201cFirst, fewer home builders currently exist than in years past,\u201d he said. \u201cBuilders are more conservative when it comes to taking on new builds, and home builds are taking longer to complete. Supply is also being affected by homeowners who don\u2019t want to list their house and buy a different one because they\u2019re likely to have to pay more on the next home due to higher mortgage interest rates.\u201d<\/p>\n

Interest rates and inflation created a whirlwind of economic uncertainty that caused both buyers and sellers to pull back from the market almost purely because of higher financing costs.<\/p>\n

Recent economic news shows the Federal Reserve\u2019s action to fight inflation is having a positive effect, but whether interest rates will start inching back up to 7 percent in 2023 is still up in the air. According to Dr. John Leer, chief economist for Morning Consult, economic changes over the last year have eroded consumer confidence as well as their savings accounts.<\/p>\n

\u201cIn 2023, consumer confidence is starting to rise across most of the U.S. but remains far off from where it was a year ago,\u201d he said. \u201cWhile we\u2019re seeing in the news that inflation is starting to cool, inflation is still impacting consumers. They still feel and see that inflation is costing them more. Consumers have exhausted their sources of spending.\u201d<\/p>\n

But despite what feels like a constant cycle of bad news for American consumers, homeownership remains a priority for many \u2013 meaning demand will continue to trend high throughout 2023.<\/p>\n

\u201cBuyers are still waiting in the wings, interested in purchasing a home as soon as they\u2019re able to do so financially,\u201d he said. \u201cWe continue to see that homeownership remains a strong goal for consumers, particularly for young adults looking to start and family and who feel secure in their jobs and ready for that next transition.\u201d<\/p>\n

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By the end of 2022, Florida\u2019s real estate market was comparable to its pre-pandemic state in terms of the annual number of closed 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