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Some Highlights
- Today’s strong sellers’ market is the direct result of high demand and low supply.
- Low mortgage rates and generational trends have created an increased demand for homes. Meanwhile, the slower pace of new home construction and homeowners staying in their homes longer have both led to today’s low supply. Add to that supply chain issues, and new homes, as well are remodels are taking much longer than they were previously.
- If you’re thinking of selling, let’s connect to talk about our local area and how you can take advantage of today’s housing market.
Since the crash of 2008, the real estate market in Florida has emerged as one of the hottest real estate markets in the US. In the first quarter of 2020, the housing price index (HPI) ranked the Florida real estate market no. 12, with an average year-over-year price growth of 7.1%.
However, in the second quarter of 2020, the Florida real estate market felt the impact of COVID-19 and the ensuing economic turmoil. Data from Florida Realtors revealed that closed sales of condo-townhouses dropped 33.9% from the Q2 2019 level, while closed single-family homes were down 19.2%.
With the gradual reopening of the economy, things are now changing for the better in the Florida real estate market. Here are Mashvisor’s stats for how the real estate housing market is generally performing, as of the end of Q3 2020:
Mashvisor’s Florida Real Estate Market Statistics
- Median Property Price: $487,033
- Price per Square Foot: $281
- Price to Rent Ratio: 22
- Traditional Rental Income: $1,883
- Traditional Cash on Cash Return: 2.6%
- Airbnb Daily Rate: $187
- Airbnb Rental Income: $2,359
- Airbnb Cash on Cash Return: 2.2%
- Airbnb Occupancy Rate: 54%
Of course, Florida is not in the clear yet as far as COVID-19 is concerned. Still, there are some positive real estate market trends on the horizon for the Sunshine State. Here are some Florida housing market predictions for 2021:
5 Florida Housing Market Predictions for 2021
The population will increase
The current population of Florida is 21,993,000. With a growth rate of about 1.6%, the number is expected to rise significantly in 2021. Much of the population increase is a result of migration from overseas, as well as from within the US itself. There is especially a large influx of Hispanic immigrants from Cuba, Spain, and Latin America. Due to this, Spanish is now spoken by 20% of Florida residents. With this population growth, the real estate market forecast is that the demand for rental properties will be on the rise in 2021. This means landlords can charge higher rental rates for their properties.
Understandably, many buyers and sellers in the Florida real estate market hit the pause button earlier in the year due to coronavirus. However, the Sunshine State started showing signs of recovery in July. According to Florida Realtors, the year-over single-family unit home sales increased by 11.7% compared to July 2019. According to the Chief Economist Dr. Brad O’Connor, the main factors contributing to this surge is the pent-up demand from the failed spring buying season, as well as record-low mortgage rates. Since the interest rates are not expected to increase in the near future, the Florida housing market forecast is that demand will continue increasing well into 2021.
Despite the increased demand for property in the Florida real estate market, the mid-year housing inventory levels are very low. Chief Economist O’Connor says that inventory levels are down 27% compared to 2019.
Low inventory combined with rising demand means a rise in property prices. Data from the Florida Realtors Research Department showed that the median price for single-family properties was $277,500 in the second quarter, an increase of 4.7% from the previous year. The median price for a condo-townhouse home was $207,000, 6.2% higher than in 2019. This trend of increasing prices is likely to continue in 2021.
There will be high demand for Airbnb rentals
According to a recent study by the University of Central Florida in the real estate market, short term rental properties in Florida generated about $27 billion in 2018. Though the vacation rental industry was adversely affected by the coronavirus, things are now picking up. For example, vacation rentals in Northeast Florida got permission to reopen on May 19. Key Data Dashboard reports that the number of bookings doubled within 24 hours. The reopening of Florida’s coastline and attractions such as Disney World, Kennedy Space Center, Universal World, and The Ringling will keep demand for short-term rentals high in 2021.
When it comes to rules and regulations in the real estate market, Sarasota,Florida has some of the most Airbnb-friendly laws. The current law does not allow cities and counties to prohibit short-term rentals of residential properties. And Mashvisor recently reported that new legislation might put all Airbnb Florida income properties under state regulation. As of now, there are no major changes on the horizon for Airbnb Florida laws in 2021.
With the increased demand for vacation rental properties in the real estate market and the friendly Airbnb laws, real estate investors in Sarasota, Florida will continue enjoying a good Airbnb occupancy rate in 2021. Below, you’ll find a list of the best places to buy a vacation home in the Florida real estate market.
There is clearly a high demand for Florida investment property, whether it’s vacation rentals in Sarasota, condos, single-family homes, or even multi-family homes. With the shortage of supply, in Sarasota, Florida home prices will continue to rise. So, is it a good time to buy real estate in the Sarasota Florida real estate market? If you are thinking of buying a Florida real estate investment, this is the best time to make your move. Towards the end of 2020 into 2021, affordability could become an issue.
You can use Mashvisor’s real estate heatmap tool to find the best-performing neighborhoods in each city. Mashvisor’s rental property calculator will help you analyze the potential profitability of homes before buying property in Florida.
In this red-hot real estate market environment, any part of town with a home for sale can be considered red hot. Just 905 single-family homes were on the MLS on July 1 in the entire two-county area. That’s a two-week supply of listings; a normal balanced supply is in the four- to six-month range. Compare that with 4,702 single-family homes on July 1, 2019, and 3,275 on July 1, 2020. (A slight uptick in mid-September—1,083 homes for sale—perhaps portends a return to something slightly more normal.
The U.S. real estate market is better off today than it has been in recent history. While fear in the real estate market and uncertainty remain in the wake of the Coronavirus, it’s important to remember that there are many positive indicators on the horizon. In particular, the economy is starting to show signs of life, and the U.S. unemployment rate is on the mend. As things begin to return to normal and the light at the end of the tunnel grows brighter, activity will pick up.
More importantly in the real estate market, builders will be more equipped to handle the influx of demand. With building permits on the rise, it’s safe to assume an easement of the inventory crises in real estate will happen sooner rather than later. When builders in the real estate market can add to existing inventory sufficiently, the real estate market will become more balanced and work in everyone’s favor: buyers, sellers, and investors.
Despite the road ahead in the real estate market, however, the American real estate market boasts countless opportunities for real estate entrepreneurs looking to make a career out of investing. With the right systems in place, there’s absolutely no reason anyone shouldn’t be able to realize success as an investor in the U.S. housing market.
One great city you would love to invest in the real estate market is Sarasota, Florida.
For such a gorgeous location, Sarasota is also incredibly affordable. Compared to other major cities in the real estate market, Sarasota has tons to offer at an affordable price, and as a bonus, there’s no state income tax. Sarasota homes for sale are modern, popular, and spacious with realtor.com citing the Sarasota real estate market as “warm.”
Sarasota homes appreciate quicker than the national average; in fact, 7.6% faster, according to Fortune Builders. The city’s job market is incredibly healthy with expansions seen in healthcare, technology, and manufacturing.
Cost-of-living index is a common way to find out how cheap or expensive it is to live in a certain area in the real estate market. The cost of living in Sarasota is 102.7, meaning it’s extremely affordable. Surrounded by the best outdoor living Florida has to offer, there’s no better place to call home.
Sarasota is home to Siesta Key Beach, which has been ranked by Tripadvisor in the real estate market as the #1 beach in the U.S. and #11 in the entire world. It’s no surprise that a day at the beach is arguably everyone’s list of the best things to do in Sarasota. Tourists and locals alike flock to Lido Key, Longboat Key, Siesta Key, Venice Beach, and more for colorful sunsets, fun water sports, or simple relaxation on the shore.
Just like evaluating a property, one of the keys to understanding your real estate market and your industry is knowing your numbers. In particular, the unique characteristics of the real estate market must be accommodated. These characteristics include: Durability. Real estate market is durable. A building can last for decades or even centuries, and the land underneath it is practically indestructible. As a result, real estate markets are modeled as a stock/flow market. In real estate market, you want to take your time when you are searching for properties of your interest.
Contact us today to discuss the Sarasota area real estate market. We can help point you in the right direction!
