Florida real estate inventory finally shows solid signs of growth. The Orlando region has already recorded the fourth consecutive month of growth in the number of properties for sale, a scenario that seemed distant at the beginning of the year, when the market was overheated and with buyers aggressively vying for the few properties available on the market. However, there is still a significant shortage of properties, which delays the projections back to normality of the market and keeps the region as one of the most promising for investors.
A recent report released by Up for Growth’s, an association focused on housing solutions, revealed that the Orlando metropolitan area (Orlando-Kissimmee-Sanford) currently has a deficit of 20,136 properties.
Builders will not be able to deliver as many properties. Prices tend to stay high
The number is significant, as it will be practically impossible for construction companies in the region to deliver such a large number of properties in the short or medium term. New ventures can take 3 to 6 years to complete. And there is not enough land, labor and material to supply such a demand in such a short time.
Given this scenario, it is assumed that prices will maintain an upward trend.
In fact, the average property price for the month of June 2022, despite the high inventory, hit a new record at $387K. Up 1.9% from May, according to the Orlando Regional Realtors Association.
Why have prices risen so much and remain at a high pace?
Prices have been rising rapidly in the last two years, mainly due to the invasion of residents of other states, mainly New York and California. Florida is perceived by the rest of the United States as a region where real estate is cheaper, yet it has appreciated. In addition, the “Sunshine State” is seen as a more “business friendly” state, with lower taxes and higher quality of life. In this context, large American corporations are migrating their divisions to Florida and, with them, their employees.
It is estimated that by 2026 Florida will receive 849 new residents per day. It can be concluded, therefore, that the deficit of houses and apartments tends to get bigger and bigger, with the consequent pressure on prices.
High interest rates “brakes” the market, but does not stop the rise in prices
The Fed’s latest decisions significantly increased US interest rates and their main objective is to stop the escalation of inflation, a global problem.
High interest rates directly impact the real estate market, as higher financing costs lead more people to cancel or postpone the purchase of the property.
Fewer people buying leads to an increase in the number of properties available for sale on the market (larger inventory).
However, more properties on the market, as explained above, does not necessarily mean a drop in prices.
In the case of Florida, the deficit is so large that an increase in the number of properties on the market may “cool off”, but not reverse the upward trend in prices.
Peak has probably passed, but prices remain high. Market may be returning to normal
It is consensus in the market, however, that the peak of the market has probably passed. The situation seen in the last two years was not sustainable and it was a one-off context, caused by the pandemic.
Although shy, the movement back to normality is seen with good eyes. An unbalanced and unsustainable market can bring great opportunities, but also great risks.
Opportunities remain and now in a safer market
If before the market was favorable for investors, now it is even more so.
Before, the demand was so great that even a buyer interested and willing to make a good offer, could not go ahead with the proposal.
The so-called “Bidding War” still exists, but not in the aggressive form it once was. It is possible to research and find a good opportunity more calmly and make a solid and safe investment.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida. If you want to know more about real estate opportunities in Orlando, Miami and Tampa Bay, contact me right now and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).