As rising mortgage rates are beginning to cool other markets, Florida’s increasing population is likely to keep our housing market in a relative status quo for a while, state-based researchers say.
Conversely, Moody’s Analytics chief economist Mark Zandi cautions that “overvalued” housing markets could see home prices slip 5% to 10% over the next 12 months. Six of the nation’s top 25 most overvalued housing markets are in Florida.
Fort Myers led the state as the most “overvalued” market in April with homebuyers paying 51% more than they should based on historic pricing trends, according to a study by Florida Atlantic University and Florida International University. Lakeland was runner-up, with homes overvalued by 50%, followed by Tampa (49%), Melbourne (44.5%), Sarasota (44%) and Daytona Beach (44%).
Related, MarketWatch published an interactive map showing how housing inventory has changed, county by county across the U.S.
While our market is fueled by in-migration, it’s likely younger Floridians, who feel squeezed out, contributed to a record low homebuyer sentiment last month. According to Fannie Mae, only 19% of Americans say it’s a good time to buy a home. A larger share of 18 to 34-year-olds say it’s a bad time to buy a home.
“The current lack of entry-level supply and the rapid uptick in mortgage rates appear to be adversely impacting potential first-time homebuyers in particular,” said Fannie Mae Chief Economist Doug Duncan, in a statement.
Also factoring into decisions about major purchases are record inflation and now record high gasoline prices. Concerns are growing about electricity shortages amid a move to greener forms of energy as well. The impact on housing will depend on how long those economic pressures last.
Mortgage companies are riding their own rollercoaster. Purchase loan rate locks were on par with last April, but the highly profitable refinancing business has largely dried up. Some of the biggest players, including Rocket, are offering buyouts and pink slips to thousands of employees, despite coming off a profitable year.
Rocket CEO Jay Farner said the company is intent on “protecting our margin and profitability while continuing to invest in strategic areas such as technology, partnerships and performance marketing to grow share and expand our business for the long term.”
In another example of the environment accelerating change, we move from Rocket to robots, which increasingly are filling gaps in the labor market by replacing repetitive tasks and/or allowing people to move into more advanced or meaningful roles. The number of robots sold in North America rose 28% in 2021, to 39,708 units, at a value of $2 billion.
Finally, in a reflection of what we are seeing in Florida, the decisions of retirees are affecting local economies. Increasingly people are traveling the country with an eye toward their eventual retirement location. The choices are often smaller locations with a moderate climate and outdoor attractions. The popularity of certain rural areas has significantly shifted the local economies as demand increases for construction, schools, hospitals and hospitality services.