Billee Silva:
Hello, it’s Billee Silva with the Southwest Florida Realty Show.
For those of you who have felt disheartened by the Southwest Florida housing market the last couple of years, you’ll be happy to hear we have shifted to a buyer’s market and the real estate terrain here in Southwest Florida is much more favorable for home buyers.
Let's rewind and acknowledge the rocky road we've traveled. Between 2020 and mid-2022, home prices soared, sending shockwaves through the market. Then, mortgage rates followed suit, peaking at nearly 8% in October 2023 for 30-year fixed-rate loans. With borrowing power eroded by high-interest rates, home buyers faced an uphill battle. And to make matters worse, there wasn’t a lot of inventory! Today, we have twice as much inventory than we did a year ago
On the rental front, escalating rents compounded the issue, making it harder for aspiring buyers to save for a down payment or even find affordable rental accommodations. Renters saw their annual payments spike by 6% in 2022 and another 8% in 2023, a stark departure from the more modest increases seen in previous years.
It's been a tough stretch, no doubt. But there's reason to believe that 2024 could mark a turning point.
Mortgage rates are showing signs of improvement. Since autumn, we've witnessed a downward trend, with the average rate on a 30-year fixed-rate mortgage dropping to 6.64% in January from October's 7.62%. This nearly one-percentage-point decrease translates to significant savings, for example on a $300,000 loan, that decreases your monthly payment by a198 dollars, which is significant folks and gives you more buying power.
Consumer sentiment reflects this optimism, too. According to Fannie Mae's latest survey, 36% of respondents anticipate mortgage rates to decrease over the next year, the highest level of optimism recorded since June 2010.
While home prices may not retreat in 2024, they're expected to rise at a more moderate pace compared to the staggering increases seen in previous years. December 2023 data from the National Association of Realtors shows a 4.4% year-over-year increase in the median resale price of existing homes, signaling a slowdown in price growth.
Construction activity remains robust here in Southwest Florida, further maintaining hopes for an increased housing supply.
Nearly half of homeowners with mortgages are sitting on historically low rates of 3.5% or less, preventing them from selling and facing higher rates on their next home. This rate lock-in phenomenon constrains the supply of homes for sale, intensifying supply and demand imbalance and likely sustaining upward pressure on prices.
While challenges remain, there's reason for optimism. As more sellers dip their toes into the market, and buyers capitalize on expanding options, we’re seeing an easing of inventory constraints, offering home buyers more choices and potentially curbing price hikes.
Each week, I’m seeing more and more sellers testing the market. More buyers are finding their opportunities as well." As inventory levels inch up, buyers stand to benefit from increased selection, potentially tempering the relentless ascent of prices.
So, while the road ahead may still be challenging, there's room for hope. As lifestyles evolve and housing needs change, the market dynamics continue to shift, offering opportunities for both buyers and sellers alike.
As always, thank you for tuning in, and have a wonderful day!