The demand for Florida real estate has been exceedingly strong over the past few years, but now in early December of 2023 the Florida market is undergoing a healthy rebalancing with the higher interest rates and increased cost of borrowing.
As Florida’s home prices are still hovering near all-time highs, combined with higher rates and rising home insurance costs, some buyers are now becoming more challenged with overall home affordability.
At the end of October 2023, the median single family Florida home price was $410K and this represents a 2% year-over-year price increase. Concerning the operational areas of Bahia Property Management (Miami, Orlando and Tampa) the variations in the median homes prices of single family homes, according to Florida Realtors, are as follows:
According to U.S. Census Florida ranks #1 in domestic migration. With over 1,000 people per day moving to Florida in recent years, this has caused housing prices to rise significantly in a relatively short period of time. This strong demand has also caused the amount of homes for sale, often referred to as available inventory, to remain relatively low at a 3.5 month’s supply (a six month’s supply is standard in a normal market).
Rent Growth Slowdown
After experiencing double-digit rent increases in 2022, rent growth in Florida has slowed considerably in 2023. According to Rent.com’s November 2023 Rent Report, the average rent in Florida increased by 1.5% year-over-year, down from 5.3% in November 2022. This slowdown is expected to continue in 2024, with experts predicting rent growth to be in the low single-digits.
Inventory Increase
Another notable trend in Florida’s rental market is the increase in inventory. According to the National Association of Realtors, the number of active rental listings in Florida increased by 14% year-over-year in September 2023. This increase in inventory is providing more options for renters and putting downward pressure on rent prices.
Outlook for 2024
While forecasting market trends always include a little speculation, here are some of what we expect for the year 2024:
• Inflation is expected to slow down in 2024, and with it the interest rate should go down as well. For real estate market this likely means increased activity, as home prices remain stable and mortgage rates improve.
• The number of rental listings is expected to continue to increase in 2024.
• With inflation slowing and inventory increasing, the rent growth will likely continue to slow down in 2024. We still have strong demand for rental properties, so we see this as a healthy rebalancing of the market.
Operational Improvement During 2023, and What to Expect for 2024
At Bahia Property Management, our team is constantly working to improve the way we work. Here are some highlights from the operational improvements we’ve made during 2023:
• Rent Collection: The rent collection team improved the process of sending rent payment announcements and reminders. Right now, 96% of tenants pay rent on time, and 99% of tenants are current with their payment.
• Maintenance: We made some internal changes so that the “make ready” process after a tenant vacates is shortened. We’re averaging 3 weeks of turnaround time, but sometimes this is shortened to less than 2 weeks.
• Evictions: Thanks to the rent collection team’s efforts, we’ve seen very few evictions across all 3 markets. Our Orlando team reports that there have been zero evictions for the past 6 years in the properties we manage!
• Communications: Our team started using text messages in addition to email/phone for tenant communications, and this improved the response rate a great deal. For our clients we’ve started to issue more communications regarding legal and market news that might have an impact on their portfolio. We plan to continue this effort in 2024.
• Accounting: We’re working on enabling credit card payment for clients that prefer to make their contributions through that method. There is an additional fee due to the credit card company’s processing fees, but some owners requested to have this option anyway, so we’ll be making it available. We’ll be rolling this feature out in early 2024, and will inform you about this when ready.
We’re very excited about working together in 2024 to bring you excellent property management experience. If you have any feedback or questions, please feel free to let us know by replying to this email or contacting your property manager.
We thank you for your trust and wish you a happy holiday season.