In Florida, about 70% of the outstanding mortgages have a mortgage rate below 4%, which means it’s unlikely that many of those homeowners will move if they have to qualify for and accept a much-higher rate. Plus, about 30% of local homeowners don’t have a mortgage.
Who is left? Anyone?
Home Buyers Who Will Keep Looking:
• Out-of-towners
• First timers
• 1031 exchangers
• Parents buying with/for kids.
But with an all-time low inventory of homes for sale expected in 2023, we won’t need the same demand as we’ve had in the past. Let’s look at the annual sales counts.
Destin to Inlet Beach Annual Sales of Detached-Homes
2017: 2,226
2018: 2,195
2019: 2,380
2020: 3,326
2021: 3,325
2022: 2,290 through November 8, 2022.
The impact from higher rates kicked in during the second half of this year. Up until then, the frenzy carried buyers to the finish line even though they were getting rates in the 4s and 5s. Once rates went over 6% in June, the sales started declining, and it looks like there will be approximately 1,163 sales in second half of 2022. Add to the 1,530 sales from the first half, and the total annual sales will be around 2,693 this year.
Higher rates will probably persist, and the annual sales next year will likely be under 2,600 in the Destin to Inlet Beach real estate market – an area of just over 40,000 residents with more than 80,000 housing units
The number of listings in 2022 is running about 27% lower than 2021, and if there is another 27% decline next year (likely), it will leave us with roughly 1,898 homes for sale in 2023. If only 70% of those actually sell, then sales would be 1,320 for our market, which will be roughly 24% fewer than in 2022, and 40% fewer than in 2021.
The only thing that could change the outcome is if we have the Big Capitulation, where both sellers and buyers give enough to make more sales happen.
Before you go, below are 2 graphs showing a comparison of annual sales activity for the last 6 years, isn’t it interesting how the trend lines all follow a similar pattern. It only stands to reason that with fewer listings there are proportionately fewer Pending Sales and fewer Closed Sales.
The reason it is still a “Seller’s Market” is that regardless of how low the inventory is the prices continue to appreciate, the graph below is a comparison between the average vs the median selling prices over the last 6 years.
There’s nothing that price won’t fix!