Florida Real Estate Market: Will it Crash in 2023?
The California housing market is undergoing a significant shift. Although the median sale price increased by 0.5% year on year in September 2022, the number of homes sold fell by 37.5%.
With mortgage rates at a 20-year high of 7.08%, homes are staying on the market for longer as buyers struggle to find affordable housing.
Now that the California housing market is threatened by rising mortgage rates and the possibility of a recession, buyers and homeowners are asking a familiar question: when will the housing market crash?
Florida Real Estate Market Trends
The current state of the Florida housing market reflects the national trend of high demand and low supply. Home prices increased as home sales fell by double digits across the state.
After a decade of steady home price gains, the market has reached the affordability limit for many homeowners. Mortgage interest rates are at an all-time high.
Will Home Prices Drop in 2023?
The housing market continues to slow down between rising mortgage rates and economic uncertainty. The rate of rising home values will slow down in the coming months.
As per Zillow’s monthly home value forecast, the national Zillow home value index is expected to rise by only 1.3% in the following year. Last year, it was 12.9%.
Another reason that may support the forecast is lower home sales. Zillow predicts that there will be 5.2 million existing home sales in 2022.
Also, a recent decline in mortgage applications by 41% and pending home sales data suggest a lower sales volume in 2023.
Florida Housing Market Predictions 2023
Housing market majorly depends upon the economy’s health. As economies slow, the money supply becomes limited. It becomes difficult to borrow money. Fewer home buyers enter the FL housing market.
Florida real estate prices are increasing at a slower rate of 14.2%, 9.06% lower than the previous year. The rate of increase is predicted to decrease further and reach 1.3% by next year. However, the market will remain hot because the absolute prices will continue to rise.
Florida job market is also strong. The unemployment rate is at 2.7%, down 0.2 pt. from last month. The private sector’s over-the-year job growth rate grew by 5.6% exceeding the national rate by 1.6%.
Here are a few real estate housing market predictions for 2023 based on the experts’ forecast.
1. Mortgage Rates will Continue to Trend Higher
Experts predict that mortgage rates will continue to climb because of continued inflation and the Fed’s efforts to tackle that.
Financial market participants anticipate the Fed raising its target Fed funds rate by 175 to 200 basis points from current levels.
The 30-year and 15-year mortgage rates will then average at 8.50 and 7.70, respectively.
2. There will be Fewer Home Sales
Increasing mortgage rates will surely have a major impact on home sales in 2023.
With the observed trend, higher interest rates could cause a 10% drop in home sales next year.
Home listings will no longer go out of inventory at a faster pace.
Also, the median days on the market might reach up to 35 days or more in the next year, with a current avg of 40 days.
3. Home Prices will See Downward Pressure
Some experts predict that due to low inventory, home prices won’t drop in 2023.
While others believe that due to the higher interest rates, sellers will lower their prices to current levels.
Home values are expected to go down by 5% to 10% due to unaffordability. As the Fed attempts to control inflation by increasing mortgage rates.
4. Housing Inventory will Continue to Remain Low
Before the 2008 real estate housing market crash, the housing supply or inventory peaked at a 13-month supply.
We only have enough for 3.5 months’ supply, of inventory.
Homeowners are unlikely to trade in their 3% mortgage for a new home with a 7% loan unless necessary. As a result, there are chances that the housing supply will remain low.
5. Housing Affordability will Remain Steady at Current Levels
Experts believe that home affordability will not change dramatically.
Home prices may continue to fall but will not be enough to offset the higher interest rate.
As a result, the monthly mortgage payment will remain high, and homes may look less affordable.