11 Opportunities to Expand Your Business for 2023 in Florida Real Estate
After the COVID-19 pandemic hit, interest rates dropped, and people sought new homes in the Sunshine State, Florida real estate set new records in 2021. At its peak in May 2021, home prices had increased 23% year-over-year. Home shoppers found themselves in bidding wars while property owners, investors, and landlords enjoyed record profits.
While 2022 saw similar competition, the Florida housing market experienced the same inflation slowdown as the rest of the United States, especially as the FED raised interest rates. As of December 14th, 2022, the Federal Reserve unanimously voted to raise the interest rate paid on reserve balances to 4.4%, and this decision marks the highest benchmark interest rate in 15 years.
With the slowdown in the Florida real estate market, the lasting impacts of hurricane Ian, and the potential for an oncoming recession, many investors are left wondering what to expect in 2023.
Mix the desire to live in the state that gave us Micky Mouse, Miami Vice, and key lime pie with a robust economy, and it’s clear why more people want to hang their hats in Florida than ever before.
Realtors and investors have incredible possibilities in the new year. Still, it will take some work to focus on their clients’ financial concerns and position themselves to take advantage of opportunities.
Read on to learn more about what’s in store for Florida real estate and how you can expand your business in 2023.
A Case for Optimism
Most real estate professionals and economists believe that Florida will continue to attract new residents. Mix the desire to live in the state that gave us Micky Mouse, Miami Vice, and key lime pie with a robust economy, and it’s clear why more people want to hang their hats in Florida than ever before.
Experts expect the highest demand in 2023 will be single-resident residential homes.
Experts agree that home prices in Florida won’t come down soon. While they may not see the fast growth that we saw during the height of the pandemic, the median price of a single-family home in Florida as of November 2022 was $400k, up 10% from a year earlier ($365k). Condos and townhomes saw a 12% increase during the same time.
There are several predictions on how the market will continue to grow over the next year. Realtor.com suggests there will be 3.4% growth, while Zillow believes there will only be 1% growth. Unlike other parts of the country getting ready for a decline, Florida is still a popular destination. Single-family homes will continue to appreciate through the year because a ton of people are moving to Florida, fighting over a limited number of available properties.
Homeowners, who took advantage of low-interest rates to refinance their mortgages, aren’t putting their homes for sale anytime soon; their new interest rate will be astronomically higher. Home-building companies are also still fighting for available land and materials to keep up with the demand for new homes. High demand and low supply should help keep prices moving upward but not nearly as fast and high as they did during the bulk of the pandemic. In the past few years, Florida gained about 1,000 new residents per day, and that number is expected to slow to 800 a day, or 300,000, in the next year. Many of these buyers will look toward Central Florida as prices tend to be more affordable the further you get from the coast.
Luckily, the downward trend of home values after a hurricane typically doesn’t last for extended periods. Hurricane Ian certainly damaged the west coast of Florida, but the demand for housing is keeping the market stable, especially for homes near the Gulf.
Even though the current market may feel unpredictable, there are numerous opportunities for investors and agents to expand their portfolios and grow their businesses.
New Opportunities for Real Estate Investors and Agents
Investors looking for ways to generate new business or expand into new markets in 2023 have plenty of things they can do to get ahead.
- Return to the basics: Experts expect the highest demand in 2023 will be single-resident residential homes. Transplants from massive cities are excited about finding a house with a yard and a little bit of space, especially for families with pets or young families.
- Expand your offerings: Investors already know the power and safety of diversification; the same approach can work for real estate agents as well. If you only deal in commercial properties, it might be time to explore residential properties. It might be time to offer property management services if you typically serve buyers and sellers. This kind of expansion might cost a little time and money upfront, but any new income streams will make up for it in no time.
- Understand flood risks: After Hurricane Ian devastated parts of western Florida, new buyers will have concerns about future tropical storms and hurricanes. Study how to read federal flood zone maps, building elevations, and drainage plans on various properties. You must help buyers understand what to expect, especially if they are looking at water-front properties.
- Read up on residential construction: The more you can understand and explain safety-related construction features, the more confident you’ll be when exploring housing opportunities. Buyers are worried about windstorm risks and flooding, etc. The more you can explain a home’s safety features, the more at ease your buyers will feel about making the purchase.
- Befriend local builders and developers: There aren’t as many existing homes for sale today as there were several years ago. New construction sites provide a great way to grow your business or portfolio. Get to know the various projects in your market and become an expert.
- Become a teacher: First-time buyers are often lost when buying a new home and securing a mortgage, etc. They only know that they no longer want to pay their colossal rent fees. Learn and educate buyers about local, state, and federal programs that can help. For example, Florida’s Hometown Heroes plan can help with down payments and closing costs, while the PACE program can make home improvements more affordable.
- Provide options for power buyers: Buyers looking at new homes will appreciate the various power-buying financing options. Learn more about bridge loans and guaranteed purchase programs. Understanding these options could lead to acquiring more listings and better financial arrangements.
- Expand into investing: Individual property investors and real estate partnerships are still actively buying vacation properties and other rentals. The competition and higher prices in Florida may deflect interest, but the demand for homes is high enough that the market will continue to grow.
- Recognize new areas of growth: Thanks to the growth of remote work and hybrid schedules, homeowners can live farther away from their places of employment. Buyers are looking at homes in more distant suburban areas, especially if the schools get good ratings and the communities offer great amenities.
- Help others relocate: Keep an eye on any companies in your area that are expanding their workforce. As businesses grow (or relocate entirely) to Florida, executives, professionals, and other workers will come. There may be a spike in housing needs in an area that isn’t seeing overall growth.
- Help those who changed their minds: While several hundred thousand people moved to Florida over the past few years, not all of them will stay here. Now that the pandemic is slowing down, some residents might move back to their old neighborhoods out of state, thus creating new inventory.
While no one has a crystal ball that can perfectly predict the future of the Florida real estate market, things are looking good across the board. Interest rates will continue to rise, which might limit opportunities, but intense competition and a lack of housing inventory will help housing prices rise. Increased housing prices will help balance the lower number of expected sales over the next year. For example, the Tampa area is expected to see sales down by 15.6% with a price increase of 3.9%. In Miami, sales are only expected to drop by 2%, while prices will rise by 3.4%.
Even though the current market may feel unpredictable, there are numerous opportunities for investors and agents to expand their portfolios and grow their businesses. A great deal of these opportunities will require some homework, but the return on that investment will definitely be worth it.