Florida Property Market Gains Speed on Road to Recovery
After attracting the largest share of foreign investment of any US state in 2013, Florida has started 2014 in a similar vein, with the price of townhouse-condos and single-family existing homes continuing to surge as the Sunshine State gains speed on its road to recovery.
Florida has started 2014 with a flurry of positive economic results which has seen the state continue on an upward trajectory, following the burst of Florida’s real estate bubble in 2007.
Florida Realtors have reported that January saw the median sale price for single-family existing homes reach US$162,500, jumping 12.1% year-on-year. However, an acquisition of this type of property still remains an attractive prospect for investors, as these properties represent lower priced investment opportunities when compared to those prices seen in other states; in California, $438,040, and in New York, $236,875.
This view was reflected in the number of closed sales of single-family homes seen throughout January, the total of which reached 15,000, 10.2% higher than the figure 12 months previously.
These increasing prices and rising levels of buyer activity, however, are not the result of a dearth of properties on the market and a rush to snap up housing as inventories remain low; in fact, supply is correlating directly with demand, with new listings for single-family homes in January rising 13.8% year-on-year.
Vitality also continues to return to the Florida condo market, with townhouse-condo values experiencing their 26th consecutive monthly rise, reaching the median price of US$131,000, up 17%. Again, this upward flow of prices has not caused condo sales to ebb, rising 9.3% annually to reach a total of 7,377.
These price rises are not the result of stunted supply levels in the condo market; with new townhouse-condo listings in fact rising by 7.4% in January 2014, determining that inventory is at a six months’ supply for townhouse-condo properties and a five to six months’ supply in January for single-family homes.
Forecasts for 2014 also mirror the positivity currently spreading through the Florida market, with Dr John Tuccilo, Chief Economist of Florida Realtors, predicting housing sales to rise between 10% and 12%. This rise in purchasing power is also set to correspond with a rise in general wealth across the state, with BMO Economics expecting GDP to increase by 3% during 2014.
A Boom Year
This news follows what was a truly remarkable 2013 for the state. Florida attracted more foreign investment than any other state throughout the year, and median sale prices accelerated at a pace far beyond the rest of the USA.
Closed sales of single family homes jumped 11.8% in 2013 compared to 2012, even though the median sale price surged 15.9% for the same period; a much faster pace than the US average median sale price, which jumped 11.5%.
Perhaps the best news for those investing in Florida properties was that the average median price of single family homes in Florida remained over $USD30,000 below the national median figure, highlighting the high level of growth still available in the market and that, despite increased interest, saturation remains a long way off.
The property market in Orlando is also yet to reach rollercoaster heights, with prices remaining well below the median peak price of $264,000 experienced by the city in 2007, which again raises excitement about the high levels of growth available within the market.
This possibility of growth helps account for the surge of foreign investment seen in Florida real estate throughout 2013, with data from the NAR Profile of International Home Buyers showing that foreign investment in Florida represented 23% of total foreign investment into the US in 2013, with non-resident foreigners pumping over $6.4 billion into the sunshine state.
These factors also have had a positive effect on the state’s populace, with job growth rising 2.6% compared to results in December, as a host of jobs appeared within the construction sector, where housing starts rose by 35% in 2013.
A Boom for the Long-Term
With boom normally comes bust, however the future ahead of Florida may deem this particular lesson of history fruitless.
This break with tradition is set to be the result of an increase in population within the state, where numbers are set to increase by some 1.9 million people, according to the University of Florida's Bureau of Economic and Business Research. This population boom will see Florida become the third most populous state in the US, becoming home to more than 21 million residents.
This influx of residents is set to see demand for housing rise and, when this is combated with the record-breaking numbers seen in Florida’s tourist market last year, it appears that the sunshine, in terms of Florida’s property market, is set to blaze brighter than ever.
Courtesy of Knight Knox