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2022-2023 South Florida Real Estate Forecast & Predictions

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When looking at the U.S. housing market in Florida, there are various possible outcomes and a few gray areas as well. According to research done by the Fannie Mae Economic and Housing Outlook, the increase in mortgage rates will lead to more foreclosures and fewer prospective buyers.

Nonetheless, even with the average sales price for properties in Florida steadily rising, homes are being purchased quickly, and the number of homebuyers closing on single-family homes has doubled since the same time last year. So what’s in store for the real estate market in the coming months? Read on to find out.

2022-2023 South Florida Real Estate Forecast: Overview

Many are predicting what the South Florida real estate market might look like this year. Overall most experts agree that housing demand is likely to fall, and interest rates in the housing market will continue to rise. However, market conditions can be unpredictable and are ever-changing.

Key Takeaways:

  • Demand may fall as remote workers return to the office
  • High inflation will lead to an interest rate hike, potentially slowing the South Florida housing market
  • Still, it’s hard to predict exactly how severe the impact will be — South Florida real estate is still likely to be a great market in 2022-2023

The demand for housing increased during the pandemic because many people were now working from home. This led to a market increase of 23.8%, the fastest jump ever recorded. However, as people return to the office, it’s predicted that home sales may decrease due to a lack of demand.

 

When prospective homebuyers spend less time at home, they aren’t as concerned about upgrading their living environment. Those searching for new homes should also expect rate hikes as a result of the rise in inflation. This is likely to slow down the real estate market in Florida, at least temporarily.

 

However, these are only possible outcomes, and anything is possible. The housing market in South Florida is typically stable, so any fluctuations are likely to be temporary. Florida is a great place to invest in real estate for this reason, among many others.

2022-2023 South Florida Predictions

There are several predictions about what the South Florida housing market may look like this year in terms of overall home value and sales.

  • Demand falls
  • High Inflation, high mortgage rates
  • Prices continue climbing

Demand Falls

It is predicted that the demand for housing will fall due to the high mortgage interest rates. Many prospective homebuyers cannot afford to keep up with the price increase, so they’re stepping out of the market.

The demand for homes is lower when interest rates rise. The federal reserve is responsible for maintaining a stable market, which is why they have to increase the interest figures on the housing market from time to time.

So what does this mean for first-time homebuyers? They must either pay the high home prices or wait until the rate decreases and the market is more favorable.

 

High Inflation, High Mortgage Rates

When inflation is high, mortgage rates go up as a result. This is because the federal funds rate increases. Put simply; the federal funds rate is the frequency at which commercial banks lend their extra money to each other overnight.

The Fed resets the target rate a total of eight times per year. Higher mortgage rates mean higher monthly mortgage payments, which could present a problem for buyers without much extra cash flow.

Prices Continue Climbing

Home prices are predicted to continue climbing, which presents an interesting opportunity for real estate investors. Purchasing and flipping a property during high-interest times could prove to be a lucrative investment opportunity.

For those wanting to purchase single-family homes, they’ll find that asking prices are higher than ever, and price increases are expected to continue through mid-2022. However, they will likely slow down by Q1 2023, which could be disappointing for investors who didn’t take advantage of the market.

How Will the War in Ukraine Affect South Florida Real Estate?

Since the war in Ukraine has led to an increase in energy usage, prices have gone up. It takes a significant amount of energy and effort for construction workers to perform their job responsibilities. Sourcing the proper materials needed to build new homes is energy intensive and quite dangerous.

It’s likely that we’ll see an increase in housing prices as a result of the increase in energy use. Construction workers and real estate developers have to tweak their pricing to account for their extra costs. Unfortunately, the longer the war lasts, the higher home prices will likely be.

Will the Housing Market Crash in 2023?

Market crashes include economic downturns, low housing demand, and high-interest rates. When the economy is volatile for an extended period (several months or sometimes years), the housing bubble will pop, and this is referred to as a market crash.

Some think the housing market is going to crash in 2023 due to issues like high inflation and the corresponding high mortgage rates. The pandemic also impacts home buying behavior, with many people being hesitant to purchase real estate during market volatility.

The South Florida Buyer’s Market

The buyer’s market in South Florida has been pricey, with mortgage interest rates rising again after reaching record lows. Many prospective buyers are interested in closing on a property in South Florida.

Here’s who’s buying:

  • Migrants from out-of-state
  • Millennials (first time)
  • Foreign nationals facing political shifts

Many first-time home buyers are looking to close on a property in Florida. Some aren’t first-time home buyers but are just looking to put their money in a safe place (ex: foreign nationals).

The South Florida Renter’s Market

Last year, the rental market in Florida was up 27%, making it the third fastest-growing rental market in the United States. The rental market went up during the pandemic, with many people looking for places to stay.

As of March 2022, rent growth reached 17% year over year, marking eight months straight in the double digits. This trend is expected to continue as prices rise steadily, and rent in places like New York is more expensive than ever.

Why Invest in South Florida?

There are several great reasons to invest in property in The Sunshine State. The weather is typically sunny, and Florida has a stable economy overall.

Here are some reasons you should invest in real estate in South Florida:

  • Job opportunities. Florida has ample job opportunities for those looking for a fulfilling career, especially if they work in the tech or finance space.
  • Economic growth. Florida’s population is steadily growing, and it doesn’t look like it will slow down anytime soon. Many people are moving to this beautiful state, whether it’s to retire or have a fresh start. It’s also a top tourist attraction, so if you invest in property here, you’ll likely have no issues keeping your rental booked up.
  • The lifestyle. Another reason to invest in Florida real estate is the attractive lifestyle. With the stunning scenery, beautiful weather, and sandy beaches, Florida will always be a place to which people are drawn.
  • There’s no income tax for individuals. Florida is a great place for investors because they can keep their profits. So if you invest in property in South Florida, you’ll have more money in your pocket.

Investing in property in Florida could be a smart move. South Florida is one of the top vacation spots, and rentals are always booked up. People who move here will have endless opportunities to grow professionally and experience a life of true luxury, making it a premier real estate hub.

How To Get Into the South Florida Real Estate Market

If you’re looking to get into the South Florida Real estate market, we can help you with that. At Vaster, we pride ourselves on being the one-stop shop for all real estate needs. If you work with us, we’ll ensure you have all you need to land your next investment property.

We design custom loan solutions for each individual, and investors who work with us close faster. Our skilled team makes the application process simple and will be by your side every step of the way.

Connect with the well connected

The housing market can be difficult to navigate, so we’re here to make it easier. With support from Fortune International Group, and The Related Group (two of the biggest real estate firms in South Florida), we can help investors close their deals confidently.

Whether you’re looking to refinance or invest — we can help you get the funds you need to make the deal happen. Are you ready to discuss your options? Let's set up a call today.

 

Sources:

How the Russia-Ukraine War Can Impact the U.S. Housing Market | bluelake-capital.com

Housing Market Trends in Florida for 2022-2023 | problempropertypals.com

Federal Funds Rate Definition | Investopedia

3 Ways Remote Work Is Changing Home Buying | Cherry Creek Mortgage

Remote work is making homes more expensive | Business Insider

Zillow January 2022-January 2023 Home Value & Sale Forecast | Zillow Research

Fla.'s Housing Market: New Listings, Median Prices Up in June, 2Q | prnewswire.com

Benefits of Real Estate Investment in Florida | dnaflorida.net

9 Reasons to Invest in South Florida Commercial Real Estate | MMG Equity Partners

Rent in Miami, Fort Lauderdale, West Palm Beach market up 57%, study says | wptv.com

March Rental Report: Rents for Smaller Units in San Francisco Bay Area Have Not Returned to Pre-Pandemic Levels - Realtor.com Economic Research | Realtor

N.Y.C. rent prices hit an all time high, costing six times what people are paying in Kansas | Fortune

Why Housing Market Bubbles Pop | Investopedia

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