Florida Housing Market Shift – Two Signs to Watch For
In this blog, I wanted to cover what signs to look for in a housing market shift. Are we supposed to anticipate another 2008 in terms of a housing crash? Keep reading to find out more.
Why is Florida housing so expensive?
Let’s jump right to it! First, let’s touch on 2008. 2008 was a finance and lending crisis. During this time, there were not nearly as many lending and financing restrictions as there are today.
People were flipping houses and putting little to no money down to do so. Well, then the recession hit, and these people didn’t have any equity in their homes… so they got foreclosed on. And Boom!! Instant overnight housing crash.
So, fast forward 12 years and we get hit with COVID-19 and we instantly go into a supply and demand crisis.
Due to the fear of COVID-19, many people stopped selling homes, or if they were planning on selling, they didn’t…
Yet people’s lives didn’t stop, people were still getting married, having babies, graduating college, and needing housing. Well, when tens of millions of homes come off the market overnight, there is an instant supply and demand crisis. So now sellers, the few that there were, could list their homes essentially for whatever they wanted… then others jumped onto the bandwagon.
Now what’s really important to note here is that during the housing boom of COVID, everything basically sold with multiple offers… but the only offers that were getting accepted were either cash or only a small amount of financing. So essentially all of the people that have purchased homes in the last 2 and a half years have been cash… so if the market were to “adjust” or our economy goes into a recession… these homes are NOT going to be getting foreclosed on. In 2008, we had short sales and foreclosures, but this time around, I can’t see how that would happen.
When will the housing market slow down in Florida?
So, what’s the secret to knowing when a market shift is about to happen? Well plain and simple, inventory. I think the first sign that we are going to see that this “boom” is coming to an end is going to be when some more inventory comes to the market.
Let’s take inventory a step further and talk about a “healthy market”. The best figure to look at is the month’s supply of inventory. The month’s supply of inventory essentially means that if no new listings were to come on the market, how quickly would everything sell. A balanced market is 6 months. So, in a healthy balanced market it should take about 6 months to sell all the properties that are actively for sale.
In Sarasota, we have had less than 1 month’s supply of inventory for over a year now. So, I expect to see this number increase as we go into the next quarter of this year.
Many people are going to want to panic and freak out when it starts, but just relax, real estate takes time. It takes time for things to adjust and for it to play itself out.
If you have questions on the current real estate market or wanting to come up with a plan that best fits you and your family, please feel free to reach out with a call, text, or email me at info@MattLeicht.com. You can also connect with me over on Instagram as well!
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