A real estate projection is dependent on several variables and uncertainties. According to the Fannie Mae Economic and Housing Outlook issued on March 17, 2022, monetary policy and geopolitical instability pose risks to the housing outlook. A large increase in mortgage rates will likely price many potential purchasers out of the market and raise the number of foreclosures.
When analyzing Florida real estate projections for the next two years, you must recognize that there are several possibilities. Check out these forecasted Florida housing market trends in 2022–2023 and get an idea of the average house prices.
Florida Real Estate Market in 2023
These variables might have a significant impact on Florida real estate predictions during the next two years. Housing median sales prices in Florida continue to rise, and availability is extremely limited. The number of purchasers paying cash for single-family homes has nearly doubled.
Every urban region in the state saw property prices rise by double digits in the third quarter of 2021. The median price of a property was $355,000. Because of the rise in cash purchasers, contract time decreased by 65.5%, from 29 to 10, and time to sell decreased by nearly 30%, from 73 to 52 days before acquisition.
Zillow forecasted a house price increase rate of up to 16.4% for 2022, but it was recently expected to peak at 21.5% in May and then decrease to 17.3% at the end of the year. The value of homes in the United States has more than quadrupled from the downtrend of the post-recession economy and the related building slump.
More than 60% of the entire market value is accounted for by the most costly third of residences. The market value reached $40 trillion in June of the previous year and has been increasing at a rate of more than $500 billion per month since then. It is expected that supply will remain tight and that there will not be enough properties to meet demand, resulting in a red-hot housing market in which properties move within hours of being posted and for substantially above the asking price.
Despite rising mortgage rates and higher costs, the housing market should stay robust, owing to rising demand as more youngsters are expected to purchase homes in 2022. According to a 2020 NAR poll, millennials account for the majority of purchasers in the United States. According to a recent Realtor.com analysis, purchasing is more cost-effective than renting in an increasing number of the country’s major cities. This is great news for millennials who are nearing the prime homebuying age.
Forecasted Inflation of Real Estate in 2023
Inflation has been running at an average of 1.8% during the previous decade. Inflation is defined as the average increase in the cost of services and goods in a particular economy over a certain time period, which is often assessed year on year. Essentially, it is the gradual decline in the purchasing power of the dollar. That is why the current inflation estimates have reduced buying power significantly.
Rising rental market rates are one benefit during inflationary times. It might be difficult to obtain a mortgage during periods of high inflation. Since high mortgage rates reduce purchasers’ purchasing power, most will consider renting. Real estate prices inevitably rise during times of high inflation, but property investment has inherent value (people still need places to live), so hard money lending might be quite beneficial if interest rates go up.
Rental property will almost certainly have a higher-than-average demand and return. It is important to note that real estate investing in metropolitan areas where banks may be unloading larger-than-normal volumes will lead to less competition and cheaper pricing.
REITs, like physical real estate, will probably follow appreciation and economic needs and may be an excellent portfolio investment. As properties may fall into default during times of high inflation, having the finances to seize an opportunity such as a foreclosure or tax deed when it happens will be crucial.
In a short period of time, a steady global world order appears to be in jeopardy, which may eventually impact interest rates. Many economists are moving their inflation estimates upward. According to Oxford Economics researchers, the latest data in the United States is running at 7.5%, with a high of 8% projected in April.
Florida Real Estate Price Forecast in 2023
Affluent purchasers from the Northeast and California moved to Florida in unprecedented numbers in the first half of 2021. However, analysts believe that by 2022, consumer demand for luxury homes will have peaked and will migrate to more inexpensive residences, such as those in Naples and North Port.
The housing boom in Tampa occurs at a period when the median 30-year fixed cost of borrowing has risen beyond 5%. Mortgage rates started rising after the Federal Reserve unveiled plans to increase interest rates and restrict monetary policy in order to contain inflation. As a consequence, Fannie Mae forecasts that home prices would rise 10.8% this year and 3% in 2023.
What most people consider Florida pricing is not what they’re witnessing right now. Prices in South Florida have risen so dramatically in recent years that the state is no longer for sale.
Not only should housing prices be considered, but so should the whole cost of life.
As if first-time homeowners didn’t have it tough enough, major businesses that purchase properties to rent add strain to an otherwise tight housing market, driving up rents.
According to a new Florida Atlantic University research, rising property prices throughout the country pale in contrast to the rates being charged in Florida cities, with the Sunshine State having the top five overpriced real estate areas in the country.
The region mostly around Miami and Fort Lauderdale is ranked first, followed by Miami-Dade, Broward, Jacksonville, Fort Myers, and Palm Beach. On average, renters pay $2,832 for a rental that should cost $2,325.99. Living in Miami costs an additional 21.75% which rivals that of New York.
Whatever your budget, there are plenty of great options available in the Orlando housing market. With a bit of research, you’re sure to find the perfect home for you and your family.
Trends in House Selling by 2023 in Florida
The FMHPI is a measure of average home price inflation in the United States. It reveals that home prices climbed by 11.3% in 2020 and 15.9% in 2021 as a result of strong housing demand and record-low borrowing rates. According to Freddie Mac’s most recent housing projection, house value increases in 2022 will be far less than half of what was seen last year.
Given the expected rise in mortgage rates, Freddie Mac predicts a cooling in housing demand, with home price growth slowing from 15.9% in 2021 to 6.2% in 2022 and then 2.5% in 2023. In 2021, house sales were high, with 7.1 million predicted in the fourth quarter. They predict that house sales will reach 6.9 million in 2022 and rise to 7.0 million in 2023.
They expect refinancing activity to slow as mortgage rates rise in 2022 and 2023, with refinancing originations falling from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023. Total originations are expected to fall from a peak of $4.7 trillion in 2021 to $3.3 trillion in 2022 and $3.1 trillion in 2023, according to the industry.
According to Fannie Mae, double-digit house price increases will persist until the middle of 2022, but it will not be until 2023 that property price appreciation returns to the pre-pandemic pace of 5%. Potential investors may be gloomy about the market in 2023. They forecast that the median 30-year mortgage rate will climb to 3.5% t by the end of 2023, up from 3.7% before the pandemic. Low financing costs provide purchasers little respite when prices rise, which is good news for speculators looking to sell houses.
Fannie Mae also expects pricing increases to be slower than usual in 2023. A decrease in home price growth and maybe more supply might help prevent a housing market collapse in 2023. As housing prices have risen at an exponential rate, many potential buyers, specifically millennials, have really been priced out of the market.
Average House Price Trend by 2023 in Florida
The real estate market has had tremendous ups and downs since the onset of the epidemic in 2020. Despite a brief pause in early 2020, the market bounced back stronger than ever in 2021. As we approach 2022, the housing boom has slowed slightly but not much. According to the National Association of Realtors, the median house price in January 2022 was $350,300, up from $356,700 in August 2021. According to Zillow, the current median home price is $331,533, with a projected median of $390,546 by the end of 2023. The following is the median price trend in Florida:
- One-year projected growth rate: 22.04%
- Change in home value in 2022-2023: $82,371
- In 2023, the median house value is expected to be $456,106
- The median house value in 2022 will be $373,735
With inflation on the increase, interest rates on the rise, and the currency losing value, now is an excellent time to invest in flip houses. It is an excellent investment technique to have passive income and consistent cash flow during times of rising inflation. There are many possible tenants on the market, so do your homework and double-check your figures before investing.
A more dramatic economic slowdown in the coming years might diminish housing demand, but due to limited supply, housing is likely to hold up quite well in comparison to previous recessionary times.
Companies that buy houses in Florida have become more popular for homeowners to sell to because they provide a fast and easy process. Selling to cash home buyers benefits homeowners in numerous ways. Are you wondering, “Who will buy my house in Tampa?” Worry not, because we buy homes in Orlando in any condition without commission fees. Feel free to contact us today!