Tag: State of Real estate
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A lot of articles discuss the tight real estate market and strong real estate prices. “How can prices remain so strong in an environment of rising interest rates?”
What is going to bring Florida real estate down?
Rising sea levels for sure. But that is not what is going to initially crush real estate values.
Where I am going with this, has actually helped cause rents to rise precipitously. What are the components of a landlord’s costs? Taxes, insurance, cost of capital, vacancy, maintenance and upkeep.
Insurance. And the cost of insurance is going to destroy real estate demand and values. One property I manage went from $1800 a year in 2022, to $4100 in 2023.
Landlords can pass on this increase, but homeowners have to eat it. And with so many of our seniors on a fixed income, that can be impossible.
Flood insurance. Don’t get me started. There is so much going wrong here, it is scary. Google Alert NFIP. National Flood Insurance Program. This will keep you up at night and give you nightmares.
So, solutions? A good blogger does not just bitch, they provide solutions.
1). Don’t buy in a flood zone unless you are paying cash. (Allows you to self-insure).
2). Recognize not just flood zones, but mandatory evacuation zones. Another whole blog topic.
3). Florida Real Estate will crash. Momentously. Is it 10 years, 30 years, 50 years? 5 years? Every time you hear about a massive Artic or Antarctic glacier or ice island, imagine the impact on sea level.
Be sure to sell your real estate before the tipping point, because there will be NO BUYERS after.
I humorously imagined opening a real estate company and calling it 100 Feet Above Sea Level Realty.
BTW. The answer to the first question is “lack of supply.”
Randy 727-409-4663 (409-home).
Randal Jenkins
Rocket Mortgage NMLS #205-3417
Rent to Own Pasco Inc
Coldwell Banker F I Grey and Son Residential
5636 Grand Blvd
New Port Richey Fl 34652
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Pasco County is an example of what is happening in Central Florida and the statistics and trends sited are a microcosm of the general trends for the area.
As covid started we entered an era, that I call the insanity period. 2.5 years of real estate, that we have never seen. 15-25-30 offers on new listings that appeared to be well priced. Offers $20k-$30k-$50k over the asking prices. Offers not dependent on inspections, not dependent upon appraisals, sight unseen offers. The insanity period.
In Pasco County there were around 3000 residential listings. 2300 or so under contract, leaving sometimes under 700 residential listings to choose from. When interest rates started rising, there were around 100 new net listings per week. This rose to over 2800 active listings. Just under 5000 total listings with around 2000 or so pending listings.
In the last 5 weeks we have seen the number of active listings drop by nearly 100 a week. Today Feb 25, 2023, there are 2223 active listings, 2312 pending listings and the 30-day solds around 1220.
What is happening? Interest rates doubling from 2.75% to 5.5% and now around 6.5% slowed buyer exuberance, more sellers put their homes up for sale, and the market slowed down with transactions falling 40% or so.
Yet prices have not dropped much. Under 5% in most categories and virtually no drop in some, try buying a 3/2/2 pool home, you won’t see any discounts.
WHY?
Why is the Florida market and central Florida in particular so strong?
Why does Florida’s population keep rising? Jobs. Weather. No state income taxes. Politics?
Look at the alternatives. Cold, violently cold winters in the North. Wildfires, earthquakes, high taxes in California. Water shortages in Colorado, Nevada, Arizona, California and throughout the southwest. Devasting tornadoes from Oklahoma to Alabama. Landslides and flooding in the Carolina’s, West Virginia, Tennessee and the mid-eastern states. Extreme weather in the Northwest. Snow in southern California. It’s a mess.
Yes, but Florida has hurricanes. We get at least 2 days’ notice.
What is going to change the attractiveness of Florida real estate?
Home insurance and flood insurance is the Florida real estate markets biggest challenge.
I will talk much more about this in future blogposts.
Thank you for reading this post.
(Randal Jenkins, is a Realtor, Mortgage Loan Officer and president of a Real Estate investment company. After spending 18 years in the financial services industry, Randal has devoted the last 23 years to Real Estate.)
Randal Jenkins Team Blog 