Despite the fact there is still some concern about the short to medium term direction the US economy, it seems that investors cannot get enough of Florida real estate with February seeing an increase in activity and prices. While relatively low interest rates have obviously assisted the property market across the US, and across the world, there is no doubt that the Florida real estate market is certainly fast approaching the boom times of 2008.
There are a number of factors which will come into play in the short to medium term which could slow down the growth in Florida real estate prices, but then again many experts did not predict the current strength.
February was another great month
When we tell you that single homes increased in value by $8,000 between January and February and townhouse condo properties increased by $1,500 you will begin to get a flavour of the activity. The average townhouse condo is now changing hands at $132,500 with single family homes approaching $165,000. This equates to a 15.2% year-on-year increase in condo townhouse prices and a 10% year-on-year increase in single family homes. These really are exceptional figures and while many investors are now rubbing their hands in anticipation of more short to medium term gains, how far can the market go before it takes a breather?
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In years gone by, since the 2008 property market collapse, many house prices across the world have been squeezed higher because of limited inventory. There has been enormous demand for relatively few properties which has obviously pushed prices higher and allowed many property owners to hold back while the market pushed ahead. However, this is certainly not the situation in Florida with a year-on-year increase of 13.3% in the number of single family homes for sale. The figure stands at 31,268 property listings in February which was an increase of over 300 from the previous month.
Demand continues to grow
At this moment in time there are very few properties which are not attracting the interest of investors across Florida and indeed many are snapped up as soon as they are listed. This has obviously caught the attention of luxury property developers and Florida will account for one in 10 new homes built across the US during 2014 – a figure which will stand at around 110,000. What next?
There is no doubt that the increase in the number of new properties coming to the market will at least give investors more choice and indeed more opportunity to negotiate “fairer” prices. It will probably take some froth off the short to medium-term outlook but at this moment in time it is difficult to see a significant drop-off in demand.
While the US economy is still not performing as many had expected, in light of various fiscal changes by the government, there are a number of real estate markets across the US which are performing admirably. The ongoing increase in Florida real estate prices look set to continue in the short to medium term and perhaps the only fly in the ointment is the introduction of over 100,000 new homes during 2014. What will happen when investors have digested the new inventory?