Florida Realtors’ Chief Economist, Dr. Brad O’Connor (pictured above), said that now that the ratio of buyers to sellers seems to be falling, home price growth should begin to “cool down.”
O’Connor notes that the home-buying demand depends “on whether interest rates start to trend higher again.”
He also believes another factor that reflects the transition into a buyers’ market is the increase in “active inventory” of single-family homes, condominiums, and townhomes. According to O’Connor, since the onset of the pandemic in March 2020 and into the first half of 2021, the active inventory in the market decreased every month until June, which showed an 8% increase from May.
Regarding the increase in June, O’Connor said, “It was still over 47% below where it was one year ago at this time of course, but still all current signs point to us having reached the peak of the sellers’ market.”
He added, “That doesn’t mean we’re going to swing right back into a buyer’s market though. Remember, we were already in a sellers’ market for single-family homes before the pandemic. All this means is that market conditions for today’s prospective buyers have finished worsening.”
O’Connor’s report also notes that, although the number of new listings throughout the pandemic has been relatively “typical” compared to pre-pandemic numbers from 2019, the supply needed was not enough to keep up with the surge in demand. Therefore, according to O’Connor, “it’s the greater amount of prospective buyers that have eaten away our inventory, not fewer listings than usual” and is a driving force behind the market surge.
As a result of the surge – compared to Q2 of 2020 – the sales price for a single-family home in Q2 of 2021 increased by 24.3%, while the median sales price for condominiums and townhouses was up 20.8%. Q2 of 2021 shows the median sales price in Florida for a single-family home was $345,000, while the median sales price for condominiums and townhouses was $250,000.
“The housing market recovery in the second half of 2020 was a market on steroids, fueled by pent-up demand from the postponed spring buying season and falling interest rates. So, there’s never been any expectation that we’d come close to that level of performance in the second half of 2021,” said O’Connor.
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Casey Owens is a contributing writer for The Florida Capital Star. Follow him on Twitter at @cowensreports. Email tips to [email protected]
Photo “Florida Real Estate Trends 2018” by Brad O’Connor. Background Photo “Home for sale at Florida, USA” by Paul Brennan.