Yet consumer sentiment is high
Surveys show that Florida’s consumer sentiment is at a two-year high, home sales in the Sunshine State drop in 2023 despite more listings and in some areas higher prices, and many people say they are choosing to rent over buying their homes for now. It’s all in this week’s look at Florida economic news.
Consumer Sentiment Still Up: A recent survey conducted by the University of Florida showed that many Floridians have a positive outlook on the state economy and their personal finances, despite warnings of a looming recession for much of 2023. Consumer sentiment rang in at 69.5 in December but was up 3.3 points in January to 72.8 – the highest in two years – and followed a nationwide upwards trend from 108 to 114.8. These trends mean that general economic consensus is positive – there is a robust and growing job market, unemployment is down, and the Federal Reserve looks to cut interest rates following lowered inflation. A growing market has consumers more confident and spending more, something that furthers this positive economic trend according to Hector Sandoval, the Director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research. “We expect further positive shifts in consumer confidence in the months ahead, particularly if the Fed interest-rates cuts materialize” he said, doubling down on Florida’s sunny economic forecast.
Florida Home Sales Falling: 2023 was a rough year for Florida real estate, with actual sales of single-family homes dropping 10.3% statewide even though the number of houses for-sale grew. Condominium and townhouse sales fell 16%. Many economists attribute this fall to rising interest rates that at one point reached almost 9%. The average sales price across the state in 2023 grew only 2.1% for single-family homes (3.9% for condos/townhouses), evidence some agents say of a price equilibrium in many markets between sellers and buyers. However, Miami-Dade and Broward counties saws 2023 single-family and condo sales fall more dramatically (26% and 17%, respectively), yet prices increased. At year-end, the median sales price of a single-family home in Miami-Dade was $610,000 and for a condo was $410,000, about 15% and 9% higher respectively from year-end 2022. Broward County saw sales price increases in both categories of nearly 8%.
Just Keep Renting: Many Americans are starting to question the affordability of homeownership in the face of rising costs in the housing market. Nationwide, 37% of renters said they planned on renting forever and 56% said they didn’t think they would ever be able to afford to own a home, according to a recent home buyer report. The reasons for renting over ownership are myriad. Many surveyed mentioned the upfront fees, commitment, and upkeep among other things. On average, mortgage payments are 37% higher than the average rent in multifamily units and require closing costs and other fees that can amount to thousands – and such an investment requires repair, maintenance, and most importantly – to stay in the same place and settle down. Many potential homebuyers are frightened by the investment in a house without guaranteed returns, and for any in a similar mindset, perhaps renting is the perfect choice.
LMA Newsletter of 2-5-24
