A few things going on in the last couple of weeks that will impact housing prices going forward and a report on the current housing market. First thing is the courts just put the permitting process for federally protected wetlands on hold when he ruled that the FDEP assumption of the Army Corps permitting process. This puts the development of hundreds of thousands of building lots across Florida on hold and likely delayed for 12 - 36 months depending on what happens with the court case. Remove all that anticipated inventory from the market and those buyers will be buying into currently permitted lots (which should go up in value) or existing houses. Same demand, drastic reduction in supply, price goes up. Second thing is the state is changing water quality rules wrt nutrient loading to replace a pre vs post analysis with a 95% reduction requirement. I am fairly certain that is going to end up in court as it is pushing a disproportionate burden onto new development. If it stands, the land required to do the nutrient removal will significantly increase which will also drive up costs to develop new lots. Here is a recent market report. Read elsewhere that condo prices ahve dropped but SF prices in SE Florida are up. Home Prices Hit a High in 2023. Limited Supply Continues to Fuel Gains. - MarketWatch Home prices grew more quickly than usual at the end of 2023 to finish at an all-time high. It’s a side effect of the market for existing homes that dried up as mortgage rates rose. Prices rose 6.1% from year-ago levels in the S&P CoreLogic Case Shiller Home Price Indices, which tracks prices in 20 of the nation’s largest cities, up from 5.4% in November, and beating FactSet consensus estimates that called for a 5.9% increase. Prices nationally rose 5.5%. National home prices on a seasonally-adjusted basis reached a record level in December, Brian D. Luke, S&P Dow Jones Indices’ Head of Commodities, Real & Digital Assets, said in a statement. “Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years,” he said, adding that “with trend growth at the national level of 4.7%, a 5.5% return demonstrates solid, steady growth.” The 5.5% home price gain was the strongest since last December, historic data show. Prices cooled at the beginning of 2023 as high mortgage rates sent buyers to the sidelines, and dipped below year-ago levels in April and May. While December’s annual gain was faster than normal, it fell short of the turbo-charged pandemic price gains. Prices ended 2021 up 19%, and 2020 up 10%.
Florida Condo Prices Drop as Insurance Crisis Deepens (newsweek.com) Sales of condos in Florida have plummeted in January even as prices fall amid high costs of home insurance, according to real estate platform Redfin. Owners are looking to offload these properties as evidenced by a jump in listings. But the homes are proving difficult to sell, with insurance costs skyrocketing in Florida, making buyers more reluctant to invest in condos in the Sunshine State. Some of the major metros are seeing a plunge in the sale of homes. Jacksonville, for example, saw the median sale price fall by 6.5 percent compared to a year ago, as the number of sales took a nose-dive by more than 27 percent. Miami, meanwhile, saw the median sale price year-over-year slide in January by 2.5 percent amid sales declines of nearly 9 percent. Some parts of the state like Cape Coral and North Port are statistically doing well, as they started at a low base after being hit by Hurricane Ian, Redfin pointed out. .................................... Buyers are turning to single-family homes and eschewing condos as a result. In Miami, for instance, the average cost of single-family units has risen, while sales have also jumped 9 percent and listings are up 13 percent, Redfin data shows. "Condos are sitting on the market much longer than they used to, with less interest from buyers," Jacksonville Redfin Premier agent Heather Kruayai said in a statement. "Sky-high HOA costs are pushing buyers out of their monthly budget."
Home prices are unaffordable and cannot continue to rise into even more unaffordabilility. I see a lot of price drops in Florida, it’s just that the starting list prices are so aspirational that even $100-300k price cuts are not enough. Very strange times we are living in.
It's spreading ..... the malady is spreading to discussions of housing costs!! Amazing. Housing costs are outrageous.
I mentioned condo insurance costs a few months back, as I work with a lot of property manages for condo associations. Long story short is they're screwed. They're having to double and triple monthly dues. COA boards can vote to waive collecting reserves to save costs. So now most of these locations have no reserves and everyone just gets knocked with assessments.
Florida’s prices aren’t sustainable. The median family income is around 67k and the median home price is north of 400k. That is 6-1, here’s what happened last time it got even close to that Hugh nationally. And Florida has the additional problem of Insurance costs, which drives up the total monthly cost even higher. At some point the correction is coming, just a question of when.
Not my area of knowledge, but I would ask, should we be permitting federally protected wetlands to build homes or any other construction on?
I say no we should not. There are already to many development's in flood lands. As soon as the homes go under water they will scream for the tax payers to bail them out. Of course the developers will be long gone. Wetlands serve a purpose and that water is going to go somewhere. Florida is and has been over developed. People are fleeing South Florida for N Central Florida and turning it into the same traffic nightmare that South Florida is.
Along with home prices getting out of reach so is rental property. Last I saw a one bedroom apartment in Gainesville is North of 1k. High taxes and home insurance are just adding to the cost. A 300k house in Ocala or Gainesville comes with a insurance premium these days that will add more than $200. a month to a month escrow payment in most cases. New homes will run a little less and homes over 30 years old will cost even more. There is no sign of that getting any better and more than likely will get worse. If the home is located in a flood zone then that will just add to the cost of course s flood insurance will be required.
that last spike was driven by speculation buying on margin, the current buyer is end user or investment companies buying for rental. This spike is driven by lack of inventory as the US, much like Britain, isn't building enough houses to meet demand even with demand stifled with gen z living at home still. interesting though that Buffett just sold his housing stock investments after a very short hold for his business plan. Warren Buffett Sells Off Housing Market Stock Shares (newsweek.com) Warren Buffett, one of the most successful investors of all time, walked back on the bet he had made on the U.S. housing market last year, selling off recently bought stocks in major U.S. homebuilders. In August 2023, Buffett's company Berkshire Hathaway informed the U.S. Securities and Exchange Commission (SEC) that it had invested in D.R. Horton, Lennar and NVR in the quarter ending June 30. The firm bought respectively 5,969,714, 152,572 and 11,112 shares of each company. These were reportedly worth over $800 million together, with the investment in D.R. Horton—considered the largest homebuilder in the country—alone accounting for more than $700 million of that entire sum. Home supplies have remained historically low across the country in the past few years. This has contributed to keep prices up, even when demand dropped modestly during the housing market correction of late summer 2022 to spring 2023. Berkshire Hathaway's move suggested that Buffett, known as the Oracle of Omaha, was betting on the long-term inventory shortage in the U.S. housing market to drive up these companies' stocks.
I dont know guys. Home prices arent out of reach until people wont pay it. More than 1 out of 3 homes are being purchased with cash these days - maybe higher in Florida. Seems like a long runway of increasing prices from well financed buyers in a short supply industry. Just an opinion. 1 in 3 U.S. Homebuyers Are Paying All Cash, the Highest Share in Nearly a Decade.
Why houses are so expensive, explained in one chart (axios.com) America is short around 3.2 million homes, a big reason why prices are still high. That's 2.5% of existing U.S. inventory as of 2022, according to figures that Hines, a global real estate developer and investment company, shared with Axios. Why it matters: There aren't enough homes to keep up with the increase in households. Other estimates also put the size of the country's housing shortage in the millions. What they're saying: "We're not going to overcome this deficit anytime soon just building single-family housing," Hines managing director Ryan McCullough tells Axios.
permitting involves mitigation for impacts. Impact 100 acres and restore 1000 from heavily infested low value wetland to no infestation, high value, with an entity responsible for keeping them exotic free. Net impact is positive as a heavily infested wetland provides little to no value while a high quality, exotic free wetland provides lots of value.
a wetland is the same as a floodway and permitted projects are designed such that the structures will not flood.
there is a housing shortage, that drives up rental prices so equity is buying homes for rent. i have clients that can't build them quick enough to satisfy equity demand for apartment complexes.
Not the only reason for sky rocketing prices of homes but definitely a factor. How is Joe responsible? Just asking. Report: 44% of all Single-Family Home Purchases were from Private Investors in 2023 Wall Street has purchased hundreds of thousands of single-family homes since the Great Recession. Here’s what that means for rental price
This is actually the world I work in. Buffett knows what he’s doing. As for the idea that “people will pay it until they can’t pay more”. All that needs to happen is for the economy to finally turn. When it does, many of the people who are barely making their rent or mortgage and have now used up their Covid savings will default, and market forces will take care of the rest. Not 2008 level, but not tiny either. Or the lack of disposable income being all spent on housing hurts the larger economy to the point housing costs cause a downturn. And oh by the way, if Wall Street sees it coming before the average consumer and starts to get out, guess who gets left holding the bag again? People always want to make the argument about a new normal, but new normals often only last until traditional forces knock them over. And yes, I said a recession was the most likely path this year, and that hasn’t happened yet (happy to be wrong to this point though to be fair I didn’t say it with a high level of confidence), but I will continue to bet on fundamentals and historical trends eventually winning out. They almost always do. Just sometimes takes longer than other times.
