Real Estate Trends: What’s the 2023 Florida Outlook?

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What should consumers, Realtors® and policymakers expect when it comes to Florida real estate over the next year? After the unexpectedly strong years of 2020 and 2021 despite an ongoing pandemic, Florida’s housing sector in 2022 was affected by rapidly rising inflation and higher mortgage interest rates, Florida Realtors® Chief Economist Dr. Brad O’Connor told nearly 500 Realtors during the 2023 Florida Real Estate Trends summit last Thursday.

“Now, we expect the state’s residential real estate market to return to a more typical pace,” he said. “I believe 2023 will look more like the ‘traditional’ housing market years of 2018-2019 in Florida as supply and demand become more balanced.”

One major question currently on the minds of real estate professionals, homebuyers, home sellers and others: Is a price correction on the way?

“Prices are determined by both demand and supply,” O’Connor said. “Falling demand is only one ingredient needed for a large correction; we also need a flood of supply. In the last housing cycle, this came from overbuilding and foreclosures. And it’s unlikely that we’re going to see a flood of newly built homes on the market for several reasons. First, fewer homebuilders currently exist than in years past; builders are more conservative when it comes to taking on new builds; and home builds are taking longer to complete. Supply is also being affected by homeowners who don’t want to list their house and buy a different one because they’re likely to have to pay more on the next home due to higher mortgage interest rates.

“So it’s true some owners are feeling ‘locked-in’ to their current home and current mortgage rate, but it’s not all homeowners. We are seeing gains in inventory (active listings) and closed sales are continuing. And we are going to see some relaxing or easing in prices – but we’re not going to see a great drop unless or until we see more supply available.”

According to O’Connor, inflation will continue to be a factor in 2023, though recent economic news shows the Federal Reserve’s action to fight inflation appears to be having a positive effect. Buyer demand in Florida in the coming months will continue to be challenged by insurance costs, mortgage rates – especially if rates start rising again to 7% or higher – and ongoing economic uncertainty that erodes consumer confidence.

“Mortgage rates will come down, but it’s all dependent on different factors,” he said. “All of the current forecasts on existing home sales in 2023 rely on where the 30-year mortgage rate is going to be, and that’s in flux.

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  • Andrew Oliver, M.B.E., M.B.A.
    Real Estate Advisor
    Andrew.Oliver@Compass.com

m 617.834.8205