The U.S economy is doing well, but Florida’s economy is doing better.
That’s the takeaway from the recent 2020 Florida Real Estate Trends summit held during Florida Realtors Mid-Winter Business Meetings.
Addressing a crowd of more than 400 Realtors at the event, Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting, outlined the reasons for optimism.
“We’re in the 11th year of the U.S. economic recovery – the longest economic recovery in U.S. history – and there are no indications that’s going to end any time soon,” said Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting. “The national unemployment rate is 3.5 percent. The labor market is strong by virtually any measure: The number of available jobs exceeds the number of people seeking them and jobs growth is strong.”
According to Snaith, Florida’s economy is not only doing better than the national economy as a whole, it’s been doing better since 2012. “Our unemployment rate is down to 3.3 percent. Florida’s GDP continues to grow faster than the U.S.’s GDP, and our job growth rate is almost twice the national rate. Florida’s population growth is solid – the birth rates are better than the death rates, so we’re making new residents faster than we’re losing them.”
Florida Realtors Chief Economist Dr. Brad O’Connor offered a robust outlook for the state’s housing market as well. According to O’Connor, in-migration from New York, Georgia, Virginia, Pennsylvania and New Jersey not only made up for the drop that occurred when international buyers took a break but has continued to support an upward trend in sales.
“It was exciting to see the almost 6 percent growth (5.9 percent) in closed single-family sales in 2019 from 2018,” said O’Connor. “Florida topped over $100 billion (total of “$101.9 billion) in volume in home sales last year, up 8.3 percent from 2018; for condo-townhouses, we reached $31.6 billion in volume, up 1.8 percent over the 2018 figure.”
“Overall, I think we can expect to see a similar amount of price appreciation over the coming year, at about 4 percent, and I think we’ll see a similar amount of growth in closed sales for 2020 at about 4 percent.”
Addressing the supply side of things, O’Connor noted that Florida’s housing inventory shrunk in 2019, with single-family homes down 11.4 percent and condo-townhouse properties down 9.7 percent compared to 2018.
Labor shortages and increased construction costs have contributed to the problem, but Florida inventory is mostly being held up by lack of land, said panelist Matt Orosz, president and owner of Hanover Family Builders.“Far and away, for us, it’s land – land availability and all the intricacies involved with that,” Orosz said. “From our perspective, especially in Central Florida, what is holding back growth and the market is local land supply, impact fees and land costs.”
While lack of inventory has led to an increase in home prices, historically low mortgage rates are making up for it, said O’Connor. “Looking at what the monthly mortgage payment is, that’s still a lot lower due to current historically low mortgage rates. And that continues to drive sales and makes it a good time to buy.”