To be able to see where you are going you have to give some attention to where you’ve been… but don’t spend too much time looking backward, the future comes pretty fast. With this in mind, I hear a lot of talk about how the real estate market in Florida is going to crash like it did in 2008.
Headlines vs. Reality
The media everywhere are pointing to the inventory of homes and condos for sale in Florida spiking and prices are dropping like a rock.
According to a Fortune Magazine headline, Now might be the time to move to Florida as inventory levels surge and sellers slash prices. A Newsweek Magazine headline screams, Florida down payments plunge as people rush to sell houses
The Sky Is Not Falling
Here’s what is actually happening. Are inventory levels up? Yeah, some, no doubt, but surging? I don’t think so. Are prices down? Yeah, maybe in some spots, but plunging? Again, I don’t think so.
A couple of truths that I know for certain.
- All real estate is local.
- Real estate doesn’t always go up, but it does tend to go up over time.
While mortgage rates and certain laws can impact prices in the short term, always remember these two truths and you will be okay. Heck, you will do great… over time.
Florida’s Emerald Coast Real Estate Update
Let’s take a look at what is happening here in Destin, Fort Walton Beach, Miramar Beach (including Sandestin), 30A and Panama City Beach.
Destin Area / 30A Condos Listed For Sale (Inventory / Supply)
Historical Context: The supply of condos listed for sale took off in 2003 and spiked in 2006 with 2,945 condos being listed for sale.
Current Trend: The most recent spike was coming out of Covid in 2022 when the inventory climbed to 1,426 which is the highest it’s been since 2008. Still that number is 61.58% less than the all-time high in 2006 and certainly higher than the “inventory surge” of 1,259 new listings that we are sitting at now.
Takeaway: I’m not prepared to panic about the supply and how it’s going to send prices plunging as Newsweek and Fortune Magazines would have you believe?
Destin Area / 30A Houses Listed For Sale
Historical Context: The number of Destin Area Homes listed for sale trend is similar to condos in that it also experienced a significant spike in supply back in 2006 only to see the number of listings for sale plummet three years later bottoming out in 2011 – dropping almost 56% in the process.
Current Trend: Since then the numbers of homes listed for sale have been on a steady climb, spiking in 2021 at 1,512 houses listed for sale. Clearly the “Covid Spike” was nowhere near the spike of the Financial Crisis 2005 -2006 nor was the fall off.
Takeaway: The same logic applies with the houses as with the condos, while there is more supply than last year, it’s nowhere near enough to cause a plunge in prices.
Florida’s Emerald Coast Real Estate Update
Panama City Beach
Panama City Beach Condos Listed For Sale (Inventory / Supply)
Historical Context: Condos in Panama City Beach saw the number of new listings skyrocket during the financial crisis, jumping from 468 new listings in 2003 to 1,749 in just three years in 2006. As with condos in Destin, the fall off was severe, dropping to 634 in 2012 – a decrease of 63.77%.
Current Trend: Once they hit bottom the supply of condos coming on the market listed for sale have followed a bit of a herky jerky upward climb, a brief uptick followed by a brief fall back, overall moving in an upward trajectory. During the Covid period Panama City Beach saw maybe a two steps forward followed by one step back motion with regard to inventory of condos listed for sale. It is currently in an up period again but nowhere in the spike during the financial crisis.
Takeaway: Because of this, I don’t see how the supply (even though increasing like it is) will be enough to have a significant impact on long term price of Panama City Beach condos.
Panama City Beach Houses Listed For Sale
Historical Context: The number of new homes listed for sale in Panama City Beach jumped dramatically during the Financial Crisis of 2004 – 2008 when there was clearly a bubble in our real estate market.
Current Trend: Once the market bottomed out though the number of homes listed for sale has taken on a fairly steady upward incline, even during the Covid “bubble” in 2020 through today.
Takeaway: Again, even though inventory (supply) is up I can’t see how the supply is going to be enough to impact the housing market in any noteworthy way.
What does this mean for you?
Markets are economics driven – supply and demand generally determines what happens with prices. Of course there are short term blips but over time prices tend to go up. Because the supply right now is up more than it’s been in a while there may be a softening of prices – but I think it’s going to be short term in length.
For Short Term Sellers
The opportunity for short time owners considering selling in the next two years or less (I normally say five years but this feels less than that) you should sell now before prices do drop (even some).
For Long Term Holders
If you are planning to own long term (longer the better) then you may see rents fall off some over the next year or so but that is a natural cycle. Over time, you will be fine, you may even decide to buy another property if prices drop more than I expect.
For Short Term Buyers
If you are buying a condo or house at the beach the same considerations apply for you. If you are planning on buying and owning for a short while then you may want to consider not buying and simply renting. It’s a safer short term bet.
For Long Term Buyers
If you are a buy and hold investor you should start looking now, if you find a property that achieves your goals for investing buy it. Then, if mortgage rates come down you can refinance into a better deal. If they don’t, you are in at a good rate.
Pro Tip: If prices take a substantial downturn (and they could) then you need to be sure you have the liquidity to carry the property through the down cycle.
Final Thoughts
Bottom Line?
Committed to your success,
John Moran – CEO
The Smart Beach Investor | Keller Williams Realty AT THE BEACH TEAM
We Make Real Estate Easy.