Florida’s real estate is so atypical it’s hit a new record! According to the U.S Census Bureau, the state of Florida is at the top of the ranking of states with the highest number of unoccupied properties. There are 1.68 million vacant properties in the Sunshine State. The total unoccupied properties in the entire American territory is 16 million.
Theoretically, vacancy rates should have an inverse relationship with real estate prices. That is, a high vacancy rate (a high number of vacant properties) would supposedly mean that demand is low, resulting in a greater supply of homes available for sale on the market. That would push prices down.
The reverse should also occur. A low vacancy rate would mean high demand from buyers, less supply in the market (low inventory), which would push prices up.
However, this is not true in Florida! Why?
Keep reading to understand!
Investors operating in the market
The high number of vacant properties accompanied by low inventory and high prices in Florida is related to strong investor performance.
In recent years, the average price of real estate in downtown Orlando and suburban areas of large centers, such as Miami and Fort Lauderdale, has risen significantly. In 2021, the average price of residential homes in the greater Orlando area rose by more than 20%.
The inventory of homes available for sale on the market is one of the lowest in history.
And then how to explain the large number of unoccupied houses?
Simple! They are in the hands of speculators.
These speculators are domestic and/or international investors who, seeing the significant appreciation of real estate in Florida, bought Vacation Homes in Orlando or Condos in Miami with the sole purpose of waiting and profiting from the appreciation.
We have already mentioned in this blog that residents and so-called “First-Time Home Buyers” (people who are buying their first home) face difficulties in accessing the market. Prices are often prohibitive. These buyers not only face competition from other locals and other states (New York and California), but also from investors.
The situation has become so critical that the same house receives up to 6 “cash” offers (in cash, without financing). A true informal auction that was dubbed the “Bidding War” by the market.
Uptrend in prices remains
With the heavy action of investors and the lack of houses on the market, the trend remains for prices to rise. An even more tempting situation for investors, who will buy more houses, and will contribute to the worsening of the situation.
In the meantime, Florida homebuilders, faced with a unique opportunity in a super heated market, race against time to bring new units to market. However, a residential project can take up to 6 years to be delivered, from all approvals and bureaucracy to actual construction, marketing and delivery. It is worth noting that the market remains with the production chain affected by the pandemic, with a lack of materials and labor, pushing all deadlines forward.
Want to know more about opportunities in Florida?
AMG International Realty is an global real estate company specialized in Florida. If you want to know more about the opportunities in the real estate market in Orlando, Miami and Tampa Bay, contact me right now : +1 305 318 6968 (Heloisa Arazi).