If property values and real estate sales are bedrock indicators of economic health, Florida should weather the long-term implications of the response to the COVID-19 pandemic in relatively good shape.
According to the Florida Realtors’ August report, the Sunshine State’s housing market reported more closed sales, more new pending sales, higher median prices and more new listings in August compared with a year ago, despite the pandemic.
Last month’s closed sales of single-family homes statewide rose 8.8% year-over-year, totaling 29,495. Existing condo-townhouse sales increased 10.3% over August 2019 and totaled 11,100. Closed sales may occur from 30- to 90-plus days after sales contracts are written, according to the report.
“Florida’s housing market continues to gain momentum and provide support for the state’s economy, even as we all remain vigilant in protecting our health, safeguarding our communities and trying to keep businesses going during the ongoing pandemic,” Florida Realtors President Barry Grooms said. “Our homes have become more important than ever over the past few months, as we’ve dealt with stay-at-home orders, working from home, helping children with remote education and more.”
Sales pressure is spurred by low interest rates. According to Freddie Mac, interest rates averaged 2.94% in August, down from August 2019’s 3.62%.
The statewide median sales price increase for single-family homes and condo-townhouse properties rose year-over-year for the 104th consecutive month in August, according to the report.
The statewide median sales price for single-family existing homes was $300,000, up 13.2% from the previous year, the Florida Realtors’ Research Department and local realtor boards/associations reported.
According to Florida Realtors, August’s statewide median price for condo-townhouse units was $217,500, up 14.5% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
The median Florida sales price for a single-family home in July was $295,000, up 10.1% from the previous year, and the median price for condo-townhouse units was $210,000, up 11.7% over July 2019.
In a video accompanying the report, Florida Realtors’ Chief Economist Brad O’Connor said sales of “upper tier” existing single-family homes and condo-townhouse properties paced the August surge.
Sales of single-family homes of $1 million or more were up nearly 82%, and sales in the $600,000-to-$1-million range were up almost 72% year-over-year. Condo/townhouse sales of $1 million and greater increased 63.5%, and those in the $600,000-to-$1-million range rose more than 71% from last August.
“The fact that upper-tier properties are leading the resurgence of the housing market at this early stage shouldn’t really be a surprise to any student of economic history,” O’Connor said. “In most recessions, the stock market is one of the first things to recover, and that’s certainly been the trend this time around, just as it was during the Great Recession.”
While there’s “no guarantee” the stock market will continue to trend upward, stockholders have “recovered a substantial amount of asset wealth lost during the drop earlier this year” and are “now financially in a good position to reallocate assets – including into and out of real estate.”
There’s a fly in the ointment, however.
Inventory, or active listings, of single-family existing homes was estimated at 2.3 months’ supply and 5.3 months for condos/townhomes.
Despite an August increase of 2% for single-family existing homes and 15.1% for condos/townhouses being listed compared with last August, there is a supply deficiency.
August’s increased listings haven’t “been enough to push our inventory growth into positive territory. This is simply an issue that isn’t going to go away overnight,” O’Connor said.