Florida is well known for being a vacation hot spot, thanks to the state's gorgeous beaches, year-round warmth and residents' friendly disposition. But there's another reason why Florida is being hailed as 2016's go-to destination: it's real estate scene.
The Sunshine State is poised to be one of the country's most popular locales to buy a house over the course of the coming year, according to a newly released forecast from Florida Realtors.
At its annual Mid-Winter Business Meetings in Orlando, roughly 400 Realtors recently met to discuss what the state's residential homebuying scene will look like as 2016 gets underway. After an encouraging 2015, there's every reason to believe that the next 12 months will be just as sizzling as the year that was, noted Jonathan Smoke, Realtor.com chief economist.
"Florida is positioned to become one of the hottest spots in the country with rising demand, positive gains in recovery, really good fundamentals and positive momentum," Smoke forecasted at the Mid-Winter Business Meetings.
Smoke echoed what seems to be happening throughout most of the country, as many markets are experiencing a shortage in housing supply – a reality that Florida mortgage owners understand all too well.
"Fundamentally, we are experiencing a market with not enough to sell," Smoke explained. "We are forecasting slightly better growth for construction and new home growth, but still not to the usual supply, which is putting pressure on the existing home supply and existing home prices."
Listings progressively fell in 2015
Proof positive of this trend were listings at Realtor.com. Smoke pointed out how every single month in 2015 had fewer properties up for sale than the immediately previous one. This year is shaping to be a carbon copy.
It's with this backdrop in mind that asking prices in 2016 are expected to push higher, Smoke predicted. Citing estimates forecast by Realtor.com, he said existing-home prices are expected to appreciate by 3 percent from the previous year, with existing-home sales also moving higher to 5.4 million, up 3 percent.
The same goes for new-home sales. Thanks in part to affordable mortgage rates, Realtor.com's chief economist projected 580,000 new homes will be bought and sold in 2016, which would be an increase of 16 percent. If Florida's economy continues to perform well, housing starts should also grow by double digits, perhaps as high as 12 percent.
Supply dearth, rate hikes to likely slow sales nationally
Meanwhile, the National Association of Realtors has made similar prognostications about what to expect for real estate across the country. Lawrence Yun, NAR chief economist, explained in a web video that sales should climb, but at a more tepid clip of between 1 percent and 3 percent. Limited inventory will likely be one of the reasons for this, with other factors playing a role as well, like the possibility of short-term interest rates rising. This may have a chilling effect on mortgage application activity.
"This year, the housing market may only squeak out 1 to 3 percent growth in sales because of slower economic expansion and rising mortgage rates," Yun forecasted in the seven-minute web video. "Furthermore, the continued rise in home prices will occur due to the fact that we will again encounter housing shortages in many markets because of the cumulative effect of home builders under producing for multiple years."