The Indian Shores Real Estate Market in 2022
At the same time, the number of closed sales was down over 44% year-over-year in November. November also had the lowest number of closed sales since any month prior to January 2018. However, median and average home prices did appear to stabilize at the end of the year. That trend is expected to carry forward into 2023.
Coming down from pandemic highs
As sales slowed near the end of 2022, housing inventory grew significantly. Inventory had fallen to approximately half a month's supply in January and February. By November, it rose to more than two months. To put that trend in context, a 6-month supply is considered a balanced housing market. As such, the local housing inventory is still well short of what experts consider to be ideal.
National trends are impacting local markets
At the same time, many current homeowners hold mortgages with much lower fixed rates. Two-thirds of homeowners have a fixed-rate mortgage with less than 4% interest. Those homeowners are unlikely to sell as they would have to secure higher rates if they did. This adds downward pressure on the housing inventory.
Many are also avoiding major financial decisions due to inflation and recession fears. As such, the reduction of homes on the market is being met by even fewer buyers, resulting in reduced competition for homes.
Florida still has a housing shortage
The median home price peaked at $420,000 in May and June, then declined to $400,000 by November. This was still a 10% year-over-year increase, but prices declined more slowly than they rose. Florida's median home price began in 2022 at $374,000.
New residents moving into Florida during the pandemic increased demand for real estate, and that outside demand has not declined despite slowing sales. The average wait time for newly built homes across the state is currently a year or more compared to a normal average wait time is seven to nine months. This has placed further pressure on the market for existing homes and is unlikely to be relieved any time soon. Recession fears and supply chain issues continue to hinder new home construction.
Florida's housing supply has increased significantly in recent months. However, 2023 is unlikely to see any similar increases in supply. Florida home buyers can expect below-normal housing supply into the foreseeable future.
Sale prices are stable and unlikely to fall
Single-family home cash sales as a percentage of all sales were also up as interest rates grew at the end of the year. However, they were down 5% year-over-year, accounting for only 36% of closed sales in November. In contrast, cash sales accounted for almost 57% of condo and townhome sales in November, which was more than a 9% year-over-year increase.
Many Pinellas County home sellers received less than their listing price in November, something that has happened rarely since 2020. The median percent of original list price received for townhomes and condos was 96%, and single-family homes fetched just over 95%. This is likely due to sellers' expectations lagging behind falling prices.
Heading into 2023, sellers are expected to adjust their expectations though home prices are unlikely to drop significantly across the board. As a result, the housing market is likely to revert to pre-pandemic pricing trends. Indian Shores properties will gain value, but at a more moderate rate than in recent years.