Florida Housing Market Predictions for 2022

When coming up with Florida housing market predictions for 2022, there are many factors that need to be considered. There are the regular factors of interest rates and inventory, but we also need to analyze population growth, tax benefits, interest rates, and affordability of housing.

People Continue to Flock to Florida

The U.S. Census Bureau released figures on April 1, 2020, which saw Florida gaining more than 2.7 million residents since 2010.

“Some 1,000 new residents moved to Florida from other states every day in recent years, an overwhelming number of them retirees lured by sunshine, low taxes, and a more relaxed culture,” said Rick Doty with the Bureau of Economic and Business Research at the University of Florida.

Population growth is certainly a driving factor for the Florida housing market. Since the pandemic there has been increased demand from millennial buyers. There was talk about millennials being constant renters, but with jobs becoming more secure and this generation starting families, they are leaving cities and buying homes where dollars go further.

This is a great market for investors to explore when buying properties to flip, especially in Florida. The draw for many millennials leaving big cites such as Chicago, Los Angeles, and New York is that you can live in the Florida suburbs but have easy access to beautiful beaches, some of Florida’s major cities (such as Orlando, Tampa, and Miami), and enjoy wonderful year-round Florida weather.

Now that international travel has just been reopened to the U.S. from overseas, there is the positive trend of the return of international travel. Some buyers have even purchased homes and condos after virtual tour video calls during the pandemic, but there will certainly be more interest from prospects who can now travel to Florida again.

With international travel back on the cards, another 2022 prediction is that the demand for great Airbnbs combined with steady real estate appreciation will bring exciting opportunities to investors. Don’t forget that in markets such as Miami-Dade over 70% of the population rents, so this is a great way to earn passive income on your property portfolio.

Supply Isn’t Increasing Anytime Soon

Supply and demand of inventory has played a big part in the Florida housing market boom in 2021 and could still have a huge effect on 2022 predictions. Inventory remains below the level of demand.

Ken Johnson, a real estate economist at FAU in Boca Raton, states “since the pandemic hit in March 2020, there has been a huge imbalance in housing supply and demand in Florida. Along with strong in-migration, we have an ongoing shortage of inventory. For the last 15 years, the supply of new homes has not kept up with population growth.”

Builders in Florida are ramping up the production of new single-family homes and condos, but shortages of labor and construction materials are hampering their ability to add to the housing supply and demand. Coupled with spiraling timber prices and other increased building costs, investors must consider the ARV of their investments once they put them on the market after renovations.

The positive 2022 prediction for investors is that would-be homebuyers will still likely be paying top dollar for homes. Nicole Bauchad, economic data analyst for Zillow, is predicting prices will rise as much as 12% year over year from July 2021 to July 2022.

She adds, “we still have really strong growth, really high numbers and things are still going up, but they are just starting to slow down a little bit in that progression up.”

Continued high inflation is also a driving factor for Florida housing market predictions for 2022, which presents both upside and downside risks for potential investors. The upside is that nominal home prices are likely to stay high with elevated inflation. The downside is that high inflation will put an upswing on interest rates, which can put a damper on home purchase demand and appreciation.

Interest rates, which have been at record low levels in 2020 and 2021, are slated to rise in 2022. The current 30-year fixed mortgage is around 2.9%. Freddie Mac forecasts rates hovering around 4%. George Raitu, senior economist at Realtor.com, predicts an average of 3.6% for 2022.

The Florida housing market continues to pump out great stats for potential investors. Miami-Dade County home values have gone up by 15.4% over the past year due to supply-demand imbalance, Palm Beach County by 21.3%, and Broward County by 19.7%. Economist Ken Johnson cites homes in the tri-county are overpriced by 20% as there is such a demand.

This means properties are overvalued by the highest level in eight years! Miami-Dade single-family homes are going under contract in 30 days, which is 53.8% faster than a year ago, followed by condos going under contract in 60 days, 24.9% faster than a year ago, according to MIAMI Association of Realtors.

How Upcoming Foreclosures Will Impact the 2022 Housing Market

The Florida housing market may see a cause and effect from the scope of the coming foreclosure spike. This will depend on how lenders choose to treat distressed borrowers who are behind on their mortgage payments.

Based on a recent report from ATTOM Solutions, foreclosure activity has picked up since the moratorium was lifted in July 2021. The report states that default notice, bank repossessions, and scheduled auctions spiked by 34% in this year’s third quarter. This indicates that the uptick will most likely continue into 2022 following 18 months of a foreclosure moratorium.

Todd Teta, chief product officer at ATTOM Solutions, states “Foreclosure stats are very likely to rise over the next six months to a year, with the increase ranging from a tick to a torrent.”

According to Teta, foreclosures will likely show up in poorer areas first, where homeowners are more likely to be in financial distress and less likely to have the money to work out deals with lenders.

In Q3 data, Florida was amongst the states with the highest rates of foreclosure, with one out of every 2,000 properties in the foreclosure process. Florida also had a high rate of completed foreclosures during Q3 of 2021, thus creating great opportunities for investors moving into 2022. It could be argued that more foreclosures will increase inventory, but not compared to the demand that is keeping home prices at record highs in the state.

Danielle Hale, chief economist at realtor.com, predicts that the looming foreclosure surge isn’t shaping up to be the death blow to the industry that economists predicted in 2020. She says “when people hear that, they rightfully think back to the last time we had a bunch of foreclosures, it had an impact on the housing market. I don’t think we are going to see anything like that.”

My crystal ball is still in its rightful place — tucked away in my closet — but every once in a while, I remove its cover and dust it down to give you my view based on current statistics and facts. There are many opinions regarding Florida housing market predictions for 2022, but all things considered I have a promising outlook for investors in 2022.

The inventory shortage will improve a bit, but demand in most large Florida markets will still outpace supply. Additional waves of COVID-19 will only bolster demand for Florida markets, and even inflation will continue to push wealthy investors to park their money in good old real estate. I have no doubt that 2022 will be another banner year for the Florida housing market!

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Gina Stern

Gina Stern

Gina Stern is a property investor who has been flipping homes for the past twenty-five years and has had many years of experience in the Real Estate Arena. She is passionate about passing her knowledge and experience onto other investors whether they be newbies or seasoned. Her other great passion is writing, that is why she is very honored to be part of the Property Onion Educational Team. Her specialty has been in commercial investing, mainly investing in shopping centers and strip malls, but she is now excited to be fixing and flipping in retirement communities.

1 thought on “Florida Housing Market Predictions for 2022”

  1. user nameDaniel Ross says:

    A retired painting and woodworker from nw pa I am excited to be in Sw Florida having refurbished 30 plus homes myself I find I am overwhelmed here with the reality of it all , got my realtor lic and still struggling to get a grip on what it looks like , thanks for your advice it’s all welcomed ,,,dan

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