According to the May 2021 Zillow Market Report, Florida’s low housing inventory shows signs of a recovery. However, the housing market is still hot, so it could be a while before home prices decline.
At a national level, inventory has increased 3.9% in the last month. For a market starved of inventory, this is welcome news. But on the other hand, home value appreciation is still at a record high, with time on the market down to six days. These figures speak to the enormous demand that still exists in the market.
Indeed, Florida’s housing market is still one of the most vibrant across the country. Tight housing inventory plus historically low interest rates are still pushing prices upwards. But, if housing inventory continues to rebound, the surge in home values should even out.
Which Florida Metro Areas Have Seen the Biggest Change
Miami-Fort Lauderdale Housing Inventory
Miami-Fort Lauderdale has seen a significant spike in housing inventory. Earlier this year, available homes on the market were declining at rates of around 8%. However, in May 2021, housing inventory increased in Miami-Fort Lauderdale by almost 4%, or nearly 40,000 homes. With home prices rising by 10% year-over-year, it has yet to be determined how the extra inventory will slow down the surge in home prices.
Jacksonville Housing Inventory
In May 2021, housing inventory went up for the first time since March 2020. While this rise was slight (6,393 vs. 6,464), it represents that the trend of available homes dropped by almost 50% year-over-year. Homes in Jacksonville are still increasing in value, up by 13.7% year-over-year. With houses only lasting an average of five days on the market, there is plenty of room for further slowdowns.
Orlando Housing Inventory
Inventory levels in Orlando had a steadier decline over the last year than in surrounding areas. While still down 28% year-over-year, homes on the market dropped by 3.4% in May. These figures significantly improved from April when housing inventory fell more than 8% in a busy market. Like most of the country, Orlando’s year-over-year home prices continue to rise at a rate of around 8%.
Tampa Housing Inventory
The Tampa metro area has seen some of the most significant home appreciation gains year-over-year. Home prices shot up by 17.7% from May 2020 levels as buyers entered the market. This April, housing inventory dropped by 6.7%; however, in May 2021, the rate slowed by an encouraging -2%.
What is Causing the Rise in Inventory?
Low housing inventory is a significant driver in the recent housing market boom. Although the market is still red hot, several factors have seen housing inventory start to track towards levels that could meet demand.
Property developers are rushing to build houses to take advantage of the sharp rise in prices over the last 18 months. Additionally, the success of the vaccine rollout, combined with a recovering economy and job market, has given sellers the confidence to put their homes up for sale.
Of course, if time spent on the market is any indicator, demand is still high. Florida houses spend an average of five or six days on the market, with Miami-Fort Lauderdale bucking the trend by averaging 16 days. While national standards currently stand at six days, this is still an improvement on pre-pandemic levels.
Rental Market
For renters in Florida, there is less good news. Nationally, rents increased sharply with a monthly rise of 5%. Rents have trended upwards in Jacksonville since June 2020, with a year-over-year growth of 13.2% for May. Tampa has seen year-over-year rises of 15%, with Miami-Fort Lauderdale at 11% and Orlando at 8%.
What is Next for Florida’s Housing Market?
While the news of Florida’s housing inventory rebound is very encouraging, it will still need to go some way before reaching levels needed to slow house prices. Nevertheless, rapid home price appreciation is set to continue throughout the year, with Zillow suggesting it will hit 14.9% over the next twelve months.
As long as housing stock is still in short supply, demand will grow. Indeed, this limited supply means that sales activity could slow down this year, especially around lower-priced homes. Additionally, there are bubbling concerns about affordability to contend with in the bottom-tier of the market. That said, with interest rates still below 3% and an economy growing stronger by the day, it seems inevitable the home values surge seen since 2020 will continue.
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