if I were a real estate buyer right now I'd be so confused just like many of you probably are
and that's because there's so much talk of a real estate market crash all these negative headlines
they're all around us but the home prices are they really crashing in Florida so in this video we're
going to talk about what's truly happening here in Florida with the real estate market we're going to
talk about supply and demand principles and my projections and device for 2023 and hopefully
this video will give you some guidance and some things to think about so let's jump right into
it real estate prices fluctuate during the year let's start off by reviewing Florida's cyclical
prices here's a chart from Florida Realtors SunStats illustrating the median sales price
over time in Florida our key selling season starts in January and runs up until about may you can see
it very clearly on this map prices increase from the beginning of the year up until about June
when it Peaks and there's a few reasons for it first off snowbirds are usually in town for that
time of the year and many end up purchasing why wouldn't they right Florida is awesome
them the winter time it typically nudges people up north that they've had enough of the cold weather
especially if it's a really bad winter and they're ready to move somewhere warmer such as Florida now
those with children want to make a home purchase in advance of the school year starting right which
is in September so a lot of them will purchase before the summer time and for all those reasons
sales would typically ramp up in Q2 peaking in May and then it starts slowing down in the summertime
and prices typically will come back down but then there's a second I'll be smaller wafer buyers that
are typically in town around October and November right before the holiday season and so then you
typically will see the median prices tick back up again right around December when the home purchase
is close and then the buying cycle resets again in January so what specifically happened this
year though in 2022 medium Prices rose at a very fast pace in the beginning of the year as sellers
and buyers were rushing to to take advantage of what we all knew was going to be a market that
was just about to shift right because of the fast increasing mortgage rates and inflation just to
give you an idea of how extensive appreciation was for the first of this year the median price for a
single family home in Florida from February to June increased by over 10 percent that's
pretty crazy especially when normal historical home price appreciation for the entire year have
been around 3.5 percent and so the median price for single family homes peaked in June and then
started gradually dropping over the summer time and as of October it was a four hundred and one
thousand dollars which is a five percent price drop these price fluctuations from the summer into
Autumn are on par with Florida's seasonality but the price drop of five percent was a bit steeper
than usual because of the buyer pullback due to the increasing mortgage rates and diminishing
by our confidence in the real a state market right because there's so much talk of a market crash and
so people are waiting on the sidelines and you've seen these type of headlines before so I'm going
to give you an example go to home sales Falls nearly 25 in October these types of headlines make
it seem like the housing market is just imploding and for sure the number of home sales when
compared to last year is way way down by double digits which could indicate we're in a housing
crisis but we really have to look at the other side of the equation so if transaction is so much
slower why have we not seen prices crash and to me five percent down during the summer time is not a
market crash the reason why the prices haven't dropped yet is very simple it's due to supply
and demand due to the relationship and so I'm going to show you this very simple illustration
demand is driven by buyers such as yourself and investors supplies driven by inventory
new listings and new construction opportunities but each one of these gets influenced by outside
forced us so for example mortgage rates inflation the job situation income buyer sentiment rental
prices and household formations all of these influences the demand side and so you know this
because mortgage rates have increased so much since the beginning of the year we're dealing
with inflation there's a lot of negative buyer sentiment well guess what demand for homes is
much lower there's far less buyers and investors who are willing to make a purchase right now but
prices for existing homes are still holding strong relatively speaking and that's because sellers for
resale homes are also holding back they're not listing their homes as much as in the beginning
of the year those that wanted to take advantage of the appreciation sold their homes months ago
and so now there are limited reasons to sell a home especially if that means having to rebuy at
much higher mortgage interest rates that would make no Finance actual sense right and so most
sellers are staying put right now prices haven't dropped significantly because there's still enough
demand for the number of homes that are on the market during the height of the market it was
not unrealistic to have had 10 to 30 offers on one home there were so many buyers bidding on the
same home it was insane that's the reason we've had these crazy price appreciations people over
bid on homes to win over the competition which set the new prices in the market these days of a
bidding to that extent are far gone but prices are holding because people are still offering close
to asking price unless of course the asking price is too high versus the fair value of the home and
I'm seeing that quite often where sellers will go in with these crazy prices and then you'll start
seeing all these price reductions now the story is a little bit different with new construction homes
a lot of Builders were literally increasing their prices by tens of thousands of dollars sometimes
twice a month because there was so many buyers looking to purchase in their Community I mean
just imagine stacks of buyers on a waiting list and so home builders increase prices because well
they could first of all but also to eliminate potential buyers because there were just too
many of them to attend to I've seen some prices on new construction homes essentially double over two
years as a matter of fact a lot of those buyers who purchased about two years ago or even a year
and a half ago realized the price appreciation that they were able to get if they were to resell
their home and so that's what a lot of them are actually doing you'll see a lot of resales or new
construction homes that literally just close and now it's back on the market Builders were
also having a party but nothing is truly forever the builders were very optimistic and they built
a lot of spec homes in anticipation of buyer demand which is now obviously diminishing as
a matter of fact it diminished very quickly it was almost like overnight keeping these spec
home so moving ready homes and the books is very expensive for these Builders right and so a lot of
them are running really great incentives such as offering rate buy Downs or providing money
towards closing costs and some Builders are even dropping prices which typically they don't like
to do to unload very quickly these move-in ready homes before the end of the year their goal is
to increase top line sales numbers in lower costs even if that means sacrificing margin
and that's especially true for publicly traded companies such as Taylor Morrison for example
you can pet that they're really interested in pulling in additional sales numbers towards the
end of the year in order to satisfy well they're investors and Builders are also getting ready for
a recession which is expected to hit sometime next year and so if you're in the market for
a new construction home now is the time to ask for all sorts of incentives you have absolutely
nothing to lose but only to gain because they're motivated to sell but why do most economists not
predict a market crash so by market crash let's just Define it as a minus 24 price
drop just on average which is actually how much prices dropped during the 2008 recession was 20
for one Builders are slowing new construction projects in anticipation of a recession which
will negatively impact the shortage of housing Supply we already have right now as we're moving
into a recession mortgage rates are expected to come back down again there's some projections
out there right now that are placing the mortgage interest rates at about 5.4 percent towards late
of next year a price drop in Market trades is going to open up new opportunities for
additional buyers especially as rental prices which are insane right now as well are expected
to rise and in many cases a higher than mortgage payments would be if you were to purchase a home
during recession stock markets are typically hit really hard and so a lot of investors will ship
gears and will put money towards the real estate market which is a much safer investment and then
lastly the number of household formations which are going to be driven by the largest demographic
group called Millennials who are now on average about 30 to 32 years old performing households
by living together having children wanting their own home and building Equity versus renting so I
personally don't believe that the real estate market is going to crash next year in Florida
because of the supply and demand situation that we just talked about we will have far less buyers
in the market so you're going to see transactions going down but we're also going to have far less
sellers who are going to be willing to sell their home and so when it comes to supply and demand
it's going to balance out where we will have very slight appreciation if any going into next year
if we average it out of course the Q2 time period leading up to the summer time I do expect prices
to go up slightly now could it end up being wrong of course this is just the best guess prediction
based on the current data that's available and kind of the environment we're in right so if
the economic and political situation evolves so could the prediction now you may say okay well
prices aren't Fair they're gonna have to come down people cannot afford buying a home in Florida I
believe everyone deserves a nice place to call their home but prices are dictated by supply
and demand and here in Florida approximately 30 percent of purchases are still cash purchases and
many buyers are moving from places where real estate prices are way more expensive so just
think New York City San Diego and San Francisco and Canada and so they come here where it's a
lot more affordable for them to purchase a home and they can come here now because remote work
has really opened up many opportunities to those people who would have never been able to consider
Florida as a move to destination and remote work for the most part is here to stay as a matter of
fact it's going to increase in the future and unless you work for certain companies such as
Twitter here's my advice for you if you believe the market is going to crash then absolutely don't
do anything because it's got to feel right that is purchasing a home now I would suggest that you
continue to follow the data very carefully if you already know of a location that you're interested
in purchasing somewhere here in Florida make sure that you connect with a local real estate agent
they can pull Market data information for you because each placement floor is going to be a
have no idea you don't know if it's going to crash you don't know if it's going to hold maybe talk
to a financial advisor somebody that's really focused on the real estate market and owes it
really well gain their perspective active as well if you enjoyed this video If you learned something
new even if you don't agree with everything I'm saying if it was still insightful to you please
do me a favor like this video it does help out the video also helps out this Channel and let us know
what you think do you believe that the market is going to hold is it going to crash next year
leave us a comment below if you're somebody that's interested in purchasing a home in Manatee County
in Sarasota County I would love to connect with you I work with both new construction and also
resale homes if you're sorry it's not sure if you want to buy now or maybe sometime next year
you're just looking for information also call me I'd be more than happy to provide you with
insights and some guidance now the real estate market has changed tremendously since mid of
this year especially with hurricane Ian brushing through so if you haven't seen my previous video
where we talk about the home insurance market and the mortgage Market please watch this video
over here I think it's going to be very insightful to you and thank you so much for tuning in today
especially watch until very end I always appreciate it when you guys do take care