Are Florida real estate prices going down?

Are Florida real estate prices going down?

After months of solid price rises – double-digit in many cases – signs are now pointing to a change in trend. A new report finds that more and more sellers are rethinking their asking prices. As a result, Florida real estate prices are going down. 

Change in direction for Florida real estate prices

Property in the Sunshine State has experienced massive value increases, particularly since summer last year. As recently as April, all types of Florida real estate saw double-digit upticks in prices. For example, single-family homes went up by 21.8% in the year, while condos rose by 24%. 

But recent research by the property portal Redfin would appear to indicate a change in direction. Their statistics suggest that sellers are starting to drop their asking prices, and consequently, house values have halted their upward trajectory. 

Specifically, Redfin reveals that the trend is particularly apparent in hot spots for relocation, such as Cape Coral, North Port and Tampa in Florida. 

A third of sellers drop their asking price 

The Redfin study found that Cape Coral real estate experienced the most significant shift in trend. In April, 32.5% of sellers brought their asking price compared to 18.5% a year ago. This increase has significant ripple effects on the market, where real estate values have skyrocketed by 63.8% in the year. 

Similar tendencies have appeared in other Florida metros, although none as acutely as Cape Coral. For example, in North Port and Tampa, the percentage of sellers rethinking their prices rose to 29.6% and 27.8%, respectively. In Jacksonville, it almost doubled and in April, over one-fifth of sellers had brought their prices down. 

In other metros, however, the shift was marginal. For instance, the percentage rose by 1.1% to reach 24.4% in Orlando. And in Miami, it went up by just 0.3% in the year. 

Trend hottest in migration destinations 

The Redfin statistics find that price drops are most common in places popular for relocators within the US. For example, Boise in Idaho and Sacramento both joined Cape Coral in the nation’s top five for highest percentages of lower prices. 

“Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,” says Redfin Chief Economist Daryl Fairweather. According to Redfin, the statistics speak for themselves – over 20% of sellers brought their prices down in the top migration spots in April. 

Reasons behind the new trend 

Analysts have pointed out that double-digit monthly upticks are unsustainable in a market, particularly in one where demand far outweighs supply. In addition to this imbalance, mortgage interest rates have recently risen by more than 2%. 

“When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices; but at 5%, many are now priced out,” said Fairweather. 

Mortgage interest appears to be set on its current upward course, and as a result, sellers will increasingly find themselves with less demand for their homes. Everything points to a new trend on the horizon, one that will lead to Florida real estate prices going down.

(Source: Redfin)