2021 South Florida Real Estate Forecast
Was 2020's historically hot housing market a result of the pandemic that will correct itself in 2021? Not according to a new report from FirstAmerican Title which shows that a lot of the underlying factors behind the record breaking year will stay solid through 2021. Usually November through February is the "slow season" for real estate but so far, this winter season hasn't showed any sign of slowing down. After falling to a near 10 year low in May due to the pandemic, home sales hit a 14 year high in October. The housing market rebound has been nothing short of amazing but make no mistake, the factors driving the rebound existed before the pandemic.
Looking into the future, these fundamental factors are likely to remain strong in 2021. Two of the biggest drivers of demand is the increase in buying power and low interest rates. Forecasts estimate that fixed mortgage rates will range from 2.8% to 3.3% in 2021, influencing strong buying power.
Other than low interest rates, rapid price appreciation is giving homeowners even more buying power. Homeowners are gaining equity in their homes and some are deciding to use their equity to purchase a home that better suits their current needs and wants.
Millennial household formation which accounted for an estimated 161,000 sales in 2020 is a trend that is expected to continue through 2021. The home ownership rate has been increasing since 2016, mostly because of millennial household formations. A bulk of millennials are entering their prime home buying years, a demographic that will continue to boost the housing market for years to come.
Low supply is another fundamental factor that will stick around for 2021. Most home owners are staying in their current homes despite their substantial increase in equity. They don't want to sell high and end up buying high afterwards. This puts a lot of pressure on new construction home developers to build more new homes but they are already in a supply deficit. They can't keep up with the demand since it takes about 2 years to deliver a home. Fewer existing home owners selling their homes and a new construction home deficit will likely result in limited supply throughout 2021.
Florida is currently experiencing major growth! Buyers are coming in from New York, New Jersey, Massachuesetts, California, and they are here to stay. A lot of buyers are relocating to Florida for its tax laws, business friendly regulations, home prices, and growth opportunities. Many are bringing their businesses with them and settling in for the long haul. A wave of remote workers are also relocating to Florida, working remotely allows them to leave their more expensive home state while keeping the same pay here. All of the factors mentioned above plus being the #1 state in new residents is a huge hint to Florida's future. In my opinion, Florida's hot real estate market is here to stay.
In conclusion, strong fundamental factors shaped the 2020 market rebound and those same factors are still in play today. There is no telling what the 2021 real estate market has in store but all factors are hinting at another hot year for South Florida real estate.
If you have any interest in buying/selling a home in the near future, feel free to contact me.
Herson Richiez
(954)829-6073
Herson@Bridgestonere.com
Just Sold Hollywood Hills
