Florida home sales are posting strong monthly and annual gains, but recent analysis warns that prices are so high that first-time buyers may want to sit on the sidelines for now.
A 25-year analysis of Zillow data by the Florida Atlantic University College of Business found that as of May 31, Sunshine State homes were selling at a premium 19.24% above their long-term price trend. term – an increase from 17.17% at the end of April.
“The acceleration in price growth in all of these markets is of particular concern,” said Ken Johnson, real estate economist and associate dean of the FAU College of Business, co-author of the report. “While I don’t think a devastating real estate crash is imminent, the more the premium increases, the more I worry about price volatility in the future. “
Tampa Bay saw the biggest extreme, with homes selling at a 28.53% premium in May, down from 26.14% in April. Miami homes were selling 14.88% above long-term trends, down from 13.18% the month before and Orlando homes were selling at a premium of 19.79%, up from 18.45% .
“Given the current pricing situation in Florida, the best way to avoid further exposure to future price volatility is for more potential buyers to seriously consider leasing and reinvesting at this point,” wrote report co-author Eli Beracha, PhD, of the Hollo School of Real Estate at the FIU. “This will dampen the demand for property and slow down pricing, helping to stabilize the state’s housing markets. “
The statewide median selling price rose 27.7% per year to $ 344,900 according to the May report from the Florida Association of Realtors. A year ago that figure was $ 270,000. The median selling price was up 2.5% from April, when that figure was $ 336,525.
Demand for housing remains strong due to low supply and low interest rates. The 30-year fixed-rate mortgage was on average 2.96% in May 2021, down from the average of 3.23% in the same month a year earlier, according to Freddie Mac.
“I had a property in Coral Gables that I listed on a Tuesday morning. I had five offers in the afternoon, ”noted Lourdes Alatriste, executive director of luxury sales at Douglas Elliman in Miami.
While interest from homebuyers remains strong, Alatriste noted a slight decline over the past one to two months, which she partially attributed to families looking to relocate from the northeast and having issues with schools. private at full capacity. Combined with the fact that many schools have started to reopen for in-person classes, many families in the North have decided to stay put, she said.
In May, the stock of single-family homes rose for the first time since March 2020, to 32,021 in late May from 31,618 in April, according to the Florida Realtors report.
“Of course, we’re still down 58.2% from a year ago, so we’re not at all off the hook in terms of a housing shortage,” said Brad O’Connor, economist chief of Florida Realtors, in a press release. “But we can at least take this flattening of the inventory curve as a sign that we may finally be at the start of a long march towards a balanced market.”
In May, sales of single-family homes were up 57.9% from the same month in 2020, just as the state began lifting some restrictions related to the pandemic. A total of 30,985 homes were sold last month compared to 19,622 in the previous May.
The number of existing homes listed for sale in each of the past three months has generally been in line with recent historical standards before the pandemic, which has helped prevent a further decline in inventory, O’Connor said.
“While [inventory] has dropped very steadily since the start of the pandemic, month to month, the last three months have been very stable for single family homes, ”he said. “So it’s not getting better, but it’s not getting worse. So that’s a good thing.