Florida real estate market overvalued

You’ve heard of Florida Man, but it may not match the Florida bubble. Consider a recent study from researchers from Florida Atlantic University and Florida International University in South Florida. They found that the average home in Florida’s real estate market is overvalued by almost 35% relative to its long-term affordability, and they are sounding the alarm.

“This trend concerns me because prices are still going up in the Miami metropolitan area, but not in the rest of the measured areas in Florida” said Ken H. Johnson, a real estate economist in FAU’s College of Business, in a statement.

In a recent article, Dave Ramsey’s website, Ramsey Solutions, reported some key findings on the Florida housing market, with predictions on how it will look for the rest of this year. Whether you’re thinking about buying a home in the Sunshine State or you’re getting ready to sell, it’s important to be aware of these changes. This way, you can use your best judgment before making any major decisions.

With that in mind, here’s what Florida’s housing market looks like in 2024, according to Ramsey Solutions.

What the numbers say

Ramsey Solutions’ research shows that home prices in Florida have increased, especially when comparing the fourth quarters of 2022 and 2023.

At the end of 2022, the median sales price of a home in Florida was $401,990. A year later, it was USD 410 000 – an increase of 2%.

During the same period, the number of active listings in the Florida market also increased from 68,813 to 74,703 – or by 8.6%. This indicates that more sellers are on the market. However, the number of closed sales fell from 20,837 to 19,729.

Then there are the typical mortgage rates. In the article, Ramsey only reported on the average 15-year fixed-rate mortgage. From 2022 to 2023, there was a slight increase, from 6.36% to 7.03%.

Ramsey also found that Florida’s housing market varies by location. In Orlando, Tampa and Jacksonville, the median listing price was $412,000 or higher, which is higher than the state median sales price. In each of these cities there has been a small increase in house prices.

There is not enough supply

The cost of housing fluctuates with supply and right now there is simply not enough. But with a limited supply comes higher prices. Ramsey Solutions spoke with Ken H. Johnson, an associate dean at Florida Atlantic University’s College of Business, about whether this will change this year. According to Johnson, Florida needs at least 200,000 new homes every year to keep up with demand.

Instead, the state only gets about a tenth of it.

Both buyers and sellers can wait

It’s no secret that the cost of real estate has increased over the years. But what this means for buyers and sellers in Florida remains to be seen.

Brad O’Connor, chief economist at Florida Realtors, told Ramsey Solutions that the available supply is slowly increasing, which has slowed price growth. But both sellers and buyers are currently waiting to see what happens to mortgage rates.

The article added that waiting to see what happens to interest rates has put everyone on hold. Buyers don’t want an exorbitant price, while sellers don’t want to sell their home just to end up in the same situation.

Interest rates may fall soon

Interest rates have risen significantly in recent years, but they may fall in 2024,” says Ramsey Solutions’ post. This was supported by Lawrence Yun, Chief Economist at the National Association of Realtors (NAR).

According to Yun, it is likely that prices have already peaked. Now it’s a question of when they will start to fall – and by how much.

Currently, the average interest rate on a 30-year fixed-rate loan is around 7.5%. NAR research predicts that the rate will fall to 6.3% by the end of the year. Even a 1% decrease can bring more buyers or sellers to the market.

A crash in the Florida housing market is unlikely

While many people are worried about a crash in the housing market this year, Ramsey Solutions said it is unlikely. In fact, homes in Florida may actually increase in cost, which is good news for sellers.

The NAR even predicted that house values across the US will increase by 2.6% this year. Freddie Mac predicted a smaller increase of just 0.8%.

Is 2024 the year to buy or sell a home in Florida?

With all these numbers and potential changes on the horizon, many people are wondering if 2024 is a good year to buy or sell real estate. While it is good to know what is happening in the market, your decision should not be based solely on current or predicted trends.

As Dave Ramsey’s website pointed out, you should make your decision based on your individual circumstances and finances. For buyers, this means having no debt, three to six months of emergency money and a down payment of at least 5% to 10%. For sellers, this means considering the cost of moving and making sure it is in line with any short and long-term financial goals.

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