Home sales: a strong sign of a healthy market

A lot of people start with home prices when trying to determine how a real estate market is doing.

And when you own real estate, rising prices are great because your net worth is growing.

But, when you rent, rising prices can keep you out of the game entirely if things get too expensive.

Rather than focusing entirely on home prices, I suggest we should keep an eye on a different metric when measuring the health of a real estate market: transactions (home sales).

As we've discussed before, home sales contribute more to our economy than rising prices do.

This means that it's more beneficial to have plenty of home sales instead of quickly rising prices.

With that in mind, let's take a look at the number of homes that sold throughout Florida in our October 2024 update.

Real estate transactions in Florida fall slightly in October 2024 compared to last year

In October 2024, there were 26,135 residential real estate sales across the Sunshine State.

This is down roughly 10% year-over-year (vs. October 2023). 

One of the big factors impacting the state was Hurricanes Helene and Milton.

It can be difficult to tell how many deals were cancelled or delayed due to the storms, but looking outside the impacted area can give us an idea of how markets outside the hurricanes' path performed.

In general, it was a mixed bag in these places that weren't directly in the path of the storms.

Home sales in the Miami metro area was down 11%, Port St. Lucie was down 13%, and the Crestview/Destin area was down 16%. 

Alternatively, Jacksonville was up 1%, and Pensacola was up 4% compared to October 2023.

Major markets that were impacted by the storms do look depressed.

Tampa was down 16%, Northport/Bradenton was down 16%, and Cape Coral/Ft. Myers was down 17%.

Here's a map of total transactions by metro area across the state:

Adjusting sales for population helps give context

It shouldn't be a surprise the the number of closings line up with populations in each market. 

The big 4 (Miami, Tampa, Orlando, and Jacksonville) take the top spots while the rest of the metros have a relatively small number of sales.

Just looking at the total number of home sales in each area doesn't give us as much insight.

Instead, let's factor in the population of each area and see what we get.

One way to do this is to calculate the number of sales per 10,000 people in each market.

This paints a different picture of which markets were the most active given the number of people that live there:

Interestingly, the most productive real estate markets in Florida in October were Punta Gorda (22), Homosassa Springs (22), Ocala (19), Panama City (19), and Fort Walton/Destin (18). 

As we highlighted last week, these are some of the more affordable areas in the state. All of these areas except Fort Walton/Destin are below the median average home price in Florida.

Further, Miami normally stands out as a market that seems very hot because it's the highest number of sales overall. But when we factor in population, it is actually one of the slowest in the state.

Finding Opportunity: Keeping our eye on the big picture

First, looking across the state helps to provide context.

In this case, you can start by seeing how your market ranks in the state. 

Then, use the per capita sales to see how your market is performing relative to its population.

The numbers suggest that smaller, more affordable markets are holding up better than the major metros.

This matters because there's also fewer real estate agents in these smaller markets and they might be holding up better than agents in the big markets. 

For example, South Florida may have the most sales, but it's also got the most agents competing for the business. 

Lastly, I expect we'll see November numbers to be a bit off as well given the election and continued impact of the hurricanes.

We may get a boost in January as buyers re-enter the market now that the political and actual storms are behind us.

Stay focused and finish the year strong!

Dr. Alex Stewart
Founder

Still have questions? Here are some common questions and answers:

Q: What is the current state of home sales in South Florida for October 2024?

A: The housing market in October 2024 reported a significant decline in home sales across South Florida, particularly in Miami-Dade County, Broward, and Palm Beach County, compared to a year ago.

Q: How have interest rates affected home sales in Florida?

A: The increase in interest rates has led to a decrease in affordability, contributing to a decline in home sales as many potential buyers are deterred by higher mortgage costs. Cash buyers remain active, though, as relocating retirees, military, and work-from-home professionals make Florida their home.

Q: What was the median sale price for single-family homes in October 2024?

A: The median price for single-family homes in October 2024 was $415,000 according to the Florida Association of Realtors. This was 1.2% higher than the same time a year ago.

Q: Are there new listings of homes for sale in Florida's housing market?

A: Yes, October reported 30% higher inventory levels year-over-year. With over 90,000 homes for sale in the Sunshine State, buyers have more options to find a property that meets their needs. Sellers must be aware of inventory levels in their local market to avoid overpricing their home.

Q: What was the trend in closed sales in the Orlando area in October 2024?

A: Closed sales in the Orlando area experienced a noticeable drop - down 8.8% compared to October 2023. It's likely Hurricane Milton disrupted activity as Orlando as the storm crossed through Central Florida.

Q: Who is Brad O’Connor, and what did he say about the housing market in October?

A: Dr. Brad O’Connor is chief economist at the Florida Association of Realtors who noted that while the market in October reported higher inventory levels, the decrease in home sales indicates ongoing challenges within the Florida housing market.

Q: How does the current housing market compare to a year ago?

A: Compared to a year ago, the Florida housing market continues to evolve. In general, the main trends have been more inventory, slowly increasing prices, and fewer closings. The state essentially sold out of homes in 2022 and has been normalizing back to pre-pandemic levels of activity.

Q: What are some factors contributing to the decline in home sales in Florida?

A: Factors contributing to the decline in home sales include rising interest rates, decreasing affordability for locals, higher homeowner insurance premiums, rising homeowners association fees in condo complexes near the coast, and a large number of homes remaining off-market due to the lock-in effect where homeowners have extremely low interest rates and won't sell now that rates are much higher.

Q: What is the outlook for the Florida real estate market moving forward?

A: The outlook for the Florida real estate market will depend on various factors, including interest rates, economic conditions, and buyer demand. Overall, expect a return to trend for growth as the housing market moderates from the pandemic-boom.