Real Estate

Homeowners are slashing prices in this popular area — is there a golden opportunity for investors?

For years, buyers and investors have lamented the shortage of U.S. housing inventory, which has kept prices artificially high despite rising interest rates. That is why a recent report Redfin The revelation of rising inventory in parts of Florida’s Gulf Coast has surprised many.

Most of Florida has seen inventory increase and prices decrease.

West Florida’s Gulf Coast, including Cape Coral and Northport, has seen a staggering 50 percent increase in inventory from last year’s level, more than any other U.S. state, according to the report, which is a breath of fresh air for buyers. Provides some much-needed room for the taking. Investor

Other areas of the state also saw increases: Northport-Sarasota saw a 48 percent increase, while prized West Palm Beach, often home to snowbirds from New York’s tri-state area, also saw a 20 percent increase in inventory.

However, more listings haven’t resulted in more sales—the opposite seems to be happening. Redfin The data shows a drop in sales early in the year (typically when residents flock to the Sunshine State) in areas like Jacksonville, where sales fell by a whopping 27%. And even Miami, where they were down about 9 percent.

More Recent data Backs up these numbers from March:

  • The number of homes sold in the state was down 11.3 percent year over year.
  • Days on market are increasing to 8.
  • Inventory has increased by 28%.
  • The supply is doubling in two to four months.

So what’s the deal?

Redfin cited 10 cities across the country where sellers are most likely to lower their prices. Florida had five of them:

  • Northport-Sarasota
  • Tampa
  • Cape Coral
  • Orlando
  • Jacksonville

Why the price cut?

The reasons for the decline seem to be manifold.

Overpriced

“Two years ago, the Northport metro was one of the most competitive housing markets in the country because it was affordable for remote workers and there was a shortage of homes for sale, but none of those things are true today. ” said Eric Ausillo, a local Redfin sales manager Statement. “Sarasota, in particular, has had more value for decades, and finally the hens have come to roost. The Tampa metro has fared a little better.

Release remote workers.

As the pandemic winds down, more employers are demanding office attendance, at least on a hybrid basis, if not full-time. CNBC reported. Eight out of 10 companies will track employee attendance by 2024, and 95% of companies surveyed said employees who don’t comply will face the consequences of being fired and possibly losing bonuses or pay. .

With a warm climate and no state income tax, Florida was a favorite destination for remote workers during the pandemic. High transfer percentage There from other states. If they are being recalled to office now, the percentage may decrease.

High insurance costs

With Florida hit by some of the most damaging hurricanes in recent years, the result is an increase in insurance costs, as well as property taxes and the overall cost of living, resulting in the perfect amount of unaffordability. There is a storm (sorry).

“The tax savings from a state income tax cut only benefit the highest earners because other lifestyle factors are so important,” said Erin Sykes, chief economist at Nest Seekers International. told good fortune About the Florida market. “Like this, most of all [are] Other advantages—political, business-friendly—motivated him to move to Florida at the time. Despite stable list prices, it is a buyer’s market due to low transaction volume. Now is the time to make a deal.”

Rising HOA fees

The Florida real estate market is divided into two segments: single-family homes and condos. Condo sales are particularly affected by rising HOA fees, driven by high inflation.

gave Pensacola News Journal reported that in Altamonte Springs, residents of Lakewood Park Condos told WESH 2 their HOA fees have increased by nearly 100%. For example, owners of a 649-square-foot condo now pay $712.93 a month in HOA fees. Wekiwa Country Club Villas Homeowners Association in Longwood similarly increased their HOA fees, as their annual insurance premium increased from $91,000 in 2023 to $233,000 in 2024.

In addition, the June 2021 collapse of the Champlain Towers in Surfside, Florida led to changes in high-rise building regulations that further increased HOA fees. Passage of Bill SB 4-D requires condominium and cooperative association buildings three stories or taller to undergo milestone structural inspections with new requirements for future long-term maintenance costs. Reserve funds for payments, and more.

An online insurance agency report to insure Premiums are projected to increase 7 percent for 2024, bringing the average annual cost to Florida residents to about $11,759.

Competition from other regions

New Yorkers have historically favored Florida as a place to visit and escape the Northeast winter. The U.S. Census Bureau named Florida the fastest-growing state in 2022. 1.9% increase in population This is the first time since 1957 that Florida’s population grew faster than anywhere else in the United States. Recently, however, other states in the South have attracted new residents due to job opportunities and low cost of living.

Final thoughts

If inventory continues to pile up along Florida’s Gulf Coast, there will be a tipping point where it makes financial sense to buy a home in the area, despite rising insurance and HOA fees.

This point may have already been reached for many cash buyers, who can negotiate great deals and only have to come out of pocket for taxes, insurance, and HOAs. It can also be very beneficial for snowbirds or vacation home owners who still have one foot in another city and can offer their Florida home as a short- or medium-term rental. . By generating enough cash flow to cover cost increases, they can take advantage of deep discounts, depreciation, and equity in the purchase of a great place to escape during snowy winters in the northern states.

Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; Ask questions and get answers from our community of +2 million members. connect with investor-friendly agents; and much more.

Note via BiggerPockets: These are the opinions expressed by the author and do not necessarily represent the opinions of BiggerPockets.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button