In last year’s Florida real estate market, the big story was unexpectedly low mortgage rates which, in turn, led to more people buying homes than was originally anticipated. Meanwhile, the cost of homes continued to steadily rise all throughout the year, which helped increase affordability challenges in many markets around the region.
Home sale inventories still remain low and developers are still struggling to fully meet the demand that’s being driven by a vibrant and strong Florida economy.
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2020 is finally upon us and the savvy real estate investor knows how important it is to follow the latest real estate market trends that are on people’s lips. In this article, you’ll find some of the most talked-about market trends and what to expect in the South Florida real estate market.
Tight Inventory Might Make It A Seller’s Market
This is actually a nationwide trend that’s been going around for a while. The number of real estate listings that are active just isn’t enough to meet buyer demand. Despite how much effort has been put to increase the levels of inventory, most cities in the United States still have way too low housing stock.
The cost of homes going up 5% mid last year, which also helped drop affordability, shows how apparent this is. Properties valued below two-hundred thousand dollars are selling way faster than luxury properties (Thirty days faster).
With that said, it’s still a good thing when the real estate market is hot because it means that the market is ideal for those looking to sell a home. The high demands and pressure on cost can be looked at as a sign of a possible crash. However, real estate market experts believe that the low-interest rates and a strong economy will shield this area from a housing market bubble for a while.
A Stronger Economy And An Increase In Population
The 3rd fastest-growing state in the nation is Florida. It has a population that increased by 1.64% last year, making it an overall 11% increase since the year 2010. The housing market predictions for this year are that the places that’ll witness the highest population growth in Florida include Parkland, Palm Springs, Groveland, and Sweetwater.
This state, in general, contributes a lot to the United States economy, creating about 10% of the new jobs in the entire country. With tourism and housing being the industries that drive the Florida economy, it is expected to surpass the one-trillion dollar marker in 2020.
A strong and stable economy signals positive real estate market predictions in the region. You can expect to continue witnessing more mitigation processes in Florida, a growing GDP, and strong employment rates.
An Increased Focus On Florida Spells Out Positive Market Growth
The real estate market in South Florida is looking very healthy. There’s consistent growth in real estate transactions, prices, and sales. Inventory trends are mimicking national trends. Looking at the overall numbers is the best way you can form reliable market predictions.
Real estate investment performances can differ greatly from city to city, sometimes even from neighborhood to neighborhood. Let’s take a little look at how the housing markets in Florida are expected to do this year.
- Median Property Price= $433,680
- Price per Square Foot= $250
- Average Days on Market= 126
- Price to Rent Ratio= 20
- Cash on Cash Return (Traditional)= 1.5%
- Monthly Traditional Rental Income= $1,815
- Airbnb Occupancy Rate= 55%
- Cash on Cash Return (Airbnb)= 3.4%
- Monthly Airbnb Rental Income= $2,760
The future of the housing market in this region is looking fantastic. All numbers are showing signs of lucrative and profitable real estate investment opportunities.
Another vital thing you need to consider when reviewing markets for investment opportunities is the cost of homes in those particular markets. Studies have shown that the value of homes in Florida has gone up by about 4.4 percent since 2018. The predictions for this year are that the cost of a home will continue to steadily increase up by around 2 percent.
Also, mortgage rates dropped last year, which was against what most housing experts had predicted. The hit around 3.8 percent, a rate which hasn’t been seen for almost three years now. These rates don’t look like they’ll progress much further than this year as well.
All of this mixed with the fact that it’s one of the very few states that have no income tax helps make owning a home in South Florida a potentially profitable financial decision.
Why Investors Will Still Love South Florida Real Estate Markets This Year
Here are some reasons why the demand for both renting and buying Florida real estate will continue to steadily grow this year.
Between now and April 1st, 2024, Florida’s population is said to will have grown by an average of about 900 new residents every day. In fact, in the next three years or so, the population in Florida is expected to have grown by over 750,000 new residents.
There are several reasons why South Florida will still continue to grow so fast and one of these reasons is how the state is being marketed as being one of the best business locations in the nation. The business-friendly, proactive Florida government knows exactly how to attract new and fresh high-income jobs for workers that are competitive on a global scale.
Strong Renter’s Market
The Metro Economic Forecast in Florida expects that there’ll still be a short supply of single-family housing units even though housing starts to accelerate.
Quality Of Life
There are very many reasons why folks decide to both live and do business in Florida. You can find almost perfect work-life balance with fantastic job opportunities and almost perfect weather conditions, recreation and culture.
Things Are Looking Up
All in all, the South Florida real estate market is looking to enjoy a few good times this year. As you can see above, things don’t look like they’re going to be that bad. In fact, far from it. Now you know a few of the popular market trends for 2020.
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