The Central Florida real estate market is in full swing during this summer season. With a low number of listings and a record median home prices, should we expect the same performance as last year? A few factors influencing the central Florida market during the mid-year months are growth, inflation, and rising interest rates. According to the Orlando Regional Realtor Association, “Overall sales in March increased by 28.2%, with 4,100 sales compared to 3,198 in February 2022.” This indicates that more inventory is becoming available, but will it be enough to influence the market? Read more about Florida’s midyear projection on how growth, inflation, and interest rates will impact the market for the remainder of the year.

 

Population growth  

 

Population growth is creating confidence in Florida’s real estate market. According to Florida Realtors, “U.S. Census statistics show Florida’s population reached 21.5 million in 2020, up 14.6% in the past decade, with the largest growth in Jacksonville and Central Florida, including Lake, Sumter, and Marion counties.” Those are more significant demographics, but we have different projections for smaller markets. Such as Fort Myers, the Panhandle, Lakeland, and Melbourne have a pricing advantage over the State’s more significant regions. People are continuing to flock to Florida, especially since the pandemic. More millennials are settling down and securing jobs and starting families. Not only millennials but retirees continue to migrate as well. Statistics indicate that Florida is receiving about 1,000 new residents everyday in recent years. The majority of new residents choose Florida because of the sunshine, low taxes, and a more relaxed culture and are coming from larger cities such as New York, Los Angelas, and Chicago.

 

Inflation  

 

Inflation affects the real estate market in a few ways depending on your position within the market. There are three types of purchasers that will be impacted the most by inflation: the homeowners, investors, and prospective investors. Homeowners stand to gain the most from inflation as the value of their home rises. Since supply is low and demand will be high, sellers can have a chance at a high asking price and a greater chance of receiving it. The downside for homeowners looking to sell, it the replacement value if they choose to stay in a prime location. For investors, the property’s value is also rising that result in higher returns in resale or leasing. The challenge for existing investors is re-investment strategies. In other words, where do they put their returns without having to pay premium prices and capital gains taxes. Prospective investors experience a different effect from inflation compared to existing owners and investors. An essential factor to consider is timing. Do you plan for the property to be a long-term investment or a short-lived expenditure? You will see the same value increase that existing owners experience in a long-haul investment. On the other hand, if it is short-lived and you want to flip the property, it could be a loss if you don’t earn enough equity. Thoughtful planning and time management can make a difference in an inflationary market.

 

Mortgage rates 

 

Mortgage rates have been affected by different circumstances like inflation and the pandemic over the recent years. Currently, mortgage rates are low, leading to more people buying. Interest rates have been low the past few years, but are predicted to increase in 2022. The current 30-year fixed mortgage is around 2.9%. Freddie Mac forecasts rates hovering around 4% before the end of the year. George Raitu, a senior economist at Realtor.com, predicts an average of 3.6% for 2022.”

 

On the other hand, according to the mortgage reports, “Experts from the Mortgage Bankers Association, First American, and other industry leaders expect 30-year mortgage rates to keep climbing in May — though perhaps not as quickly as they have over the past month.” Experts are on the fence about mortgage rates and whether they will increase or stay moderate. They are also on the fence about whether or nto it will impact the market, especially in Florida where there is already a substantial inventory shortage.

 

Overall, the Florida midyear projection has many factors affecting the real estate market. Now the market is getting ready for the busy season, and there is still a high demand for properties. As a result, the market is moving quickly, and those in the field need to stay active. If you are selling your home or property, be sure to reach out to our highly qualified team that responds to market demands for your next closing!