This has been an atypical summer in Florida! The pandemic does not seem to give the state a respite and the crisis persists. However, even in the midst of layoffs and negative news about the economy, the average property price continues to rise, especially for residential single-family homes. And the potential for recovery is high.
If you think about selling, now it may be one of the best times in history to take advantage of opportunities. See below 6 reasons that explain the appreciation of real estate in Florida, even in times of pandemic.
1 – Few houses for sale (low inventory)
With the advent of the pandemic, the prevailing feeling among homeowners is that now would not be the most propitious time to put the property up for sale. Many understand that it is better to wait for the pandemic to pass before they can get better prices. Others are afraid to receive strangers to show their home, and to increase exposure to the spread of the new virus.
The second reason is true! Better to avoid contact with people in times of pandemic. However, the first reason is unfounded. With fewer houses on the market, demand exceeds supply. This imbalance presses house prices upwards.
The latest report released by the Orlando Regional Realtor Association showed that the overall average price of Orlando properties (all types combined) sold in May 2020 was US $ 260,000, 7% higher than the average price verified in the same period 2019 ($ 243k). The average price of single-family homes sold in May 2020 was $ 277,000, up 5.4% from May 2019.
Orlando, and other centers in Florida, remain with high potential for appreciation.
2 – Demand for residential homes is high
With the “punishment” imposed by the quarantine, those people who were considering moving or buying a new home were forced to postpone their plans. With the economy gradually reopening and the rules of isolation being relaxed, people are returning to the market more aggressively. There is clearly a pent-up demand, known as “demand for revenge” or “consumption for revenge”. It is a sensation of time wasted during quarantine that would need to be recovered. Buyers are anxious, which positively impacts the housing market, which already sees signs of recovery in Florida.
Demand is strongest for residential homes in suburban areas. People tend to flee large cities, where contagion rates are higher. With flexible work and the advent of the home office, professionals are working remotely. This allowed to advance the plans of many Americans who already intended to live in more remote areas, with better quality of life, security and good schools. The pandemic precipitated that decision.
Many companies are encouraging this new corporate dynamic and creating satellite offices to support these professionals and employees who have decided to live in suburban areas.
“There is a great demand for homes in regions around Orlando and Miami,” says Carlos Barros, international investment consultant and partner at CAP International – Imóveis abroad. “Cities like Windermere and Winter Garden are beginning to emerge in the preference of buyers”, he adds. “In Miami, we are seeing great interest in cities like Weston and Doral,” says Barros.
3 – The inventory has been decreasing year on year in Florida, regardless of the pandemic
Demand far exceeds supply, not only because of the new behavior related to the pandemic. The number of homes for sale in Florida is at the lowest historical level. The supply was already insufficient before the crisis. With the pandemic, the imbalance has intensified.
One reason is that people are living longer in their homes than before. NAR data show that Americans are spending an average of 13 years in their homes before moving out.
According to the portal Realtor.com, the lower inventory is also the result of fewer struggling properties on the market. The American government has implemented several incentive and credit policies, with tolerance to mortgages and benefits for unemployed people.
4 – Low interest
The basic rate of American interest has never been so low, in a historical analysis since the 1970s. As a result, purchase orders financed have increased a lot since last year, intensifying the pressure on the buying end.
5 – The needs of home buyers have changed
In the article The future of new post-covid-19 residential environments we explain the new trends and desires of post-pandemic residents. People, forced to remain in quarantine for a long period, began to see the home differently. The new residential environment requires a home office, an outdoor area, more spacious rooms, perhaps a mini gym, etc. The fact is that needs have changed and the current home may no longer serve them, forcing people to seek new homes. This move also increased demand for new homes in Florida.
6 – Economy shows signs of recovery
The state of Florida was one of the most affected by the pandemic in the United States. Florida is heavily focused on tourism, a sector that has been hit hardest by the imposed restraint measures. The pandemic drastically reduced economic output and consumer spending in March, April and part of May. As a result, unemployment has increased.
Imagine the city of Orlando, where everything revolves around the parks. With the parks closed for months, several restaurants and establishments carried out mass layoffs and many permanently left the market.
However, the coronavirus crisis is fleeting. Although the state of Florida is going through a difficult time, with daily records of new contagions, we know that all this has a date to end, and it is not far away. May and June data suggest that companies are resuming hiring and jobs are returning.
With the gradual recovery of the economy, the buying movement in the Florida real estate market tends to intensify. The number of houses for sale will not necessarily increase. This is a strong indication that prices will appreciate even more.
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