Florida’s real estate market will slowly begin to grow in 2024 as interest rates flatten and consumers begin to realize that what they are seeing is the new normal in prices and interest rates, Florida Realtors® Chief Economist Dr. Brad O’Connor said Friday during the annual Florida Real Estate Trends Summit.
The state of the sun saw almost $200 billion in closed sales in 2023, which wasn’t far below 2022, a super-strong sales year post-pandemic, he told a packed room of Realtors®.
Moreover, that number was substantially higher than in the pre-pandemic year of 2018, according to Florida Realtors data.
“There’s still a lot of money flowing through our industry. We’re not dead,” O’Connor said. “Over the next several months, the market could reignite a little bit. Even though there aren’t as many homes for sale, the ones that are for sale are selling for more.”
The summit was part of this year’s Florida Realtors’ Mid-Winter Business Meetings at the Hyatt Regency Orlando. In addition to O’Connor, the summit featured Dr. Sean Snaith, a nationally recognized economist in the field of business and economic forecasting. Snaith has won multiple awards for the accuracy of his forecasts and research.
Mortgage interest rates have likely peaked, and there’s a good possibility that the Fed could begin cutting rates in the coming months — and that could reinvigorate buyers. O’Connor speculated a cut to below 6% could be in the forecast with the first relief possibly coming by May.
“The psychology of buying or selling a home is closely tied to these rates,” he said.
In addition to interest rates, Florida’s high property insurance prices paired with inflation continue to slow buyer demand, O’Connor said.
“People are still saying the real estate market is going to crash. But that’s just not the case,” he said, explaining that adjustable-rate mortgages, which played a large part in the housing crisis of the aughts, aren’t as widespread. “We have weathered the pandemic with no foreclosure crisis. We are not in a position for a crash to happen.”
Recession on the horizon?
Both O’Connor and Snaith acknowledged that signs point to a slowdown in economic growth at the national level, but that a full-blown recession isn’t likely. Even so, Florida’s strong economy is well-positioned.
“We are forecasting a slowdown, not a downturn at this point,” said Snaith. “I think Florida is prepared to weather any national economic storm. We’re ready.”
Several factors are contributing to the resilience of the Florida real estate market against certain national economic trends, creating a unique landscape for both potential buyers and investors. Firstly, the state’s labor market is robust. Moreover, Florida’s population continues to grow significantly, at a rate of about 1,000 new people each day, a trend that Snaith believes leads to increased economic activity, as “An increase in population means an increase in economic activity.”
This demographic expansion is further bolstered by the state’s appeal to “untethered” remote workers, a group for whom O’Connor has observed, “The workplace will never be what it used to be.”
Finally, retirees with home equity who are looking to relocate appear undeterred by high interest rates, indicating a strong demand within this demographic.
