For the first instance in its history, Florida’s median sale price has surpassed the national average and has maintained this lead for several consecutive months.
ORLANDO, Fla. – Each month, Florida Realtors® publishes a bevy of housing statistics, but none are scrutinized as closely as the median sale price of homes. This metric aggregates all closed sales from the previous month, with 50% of homes selling above and the other 50% below the middle price. Using the median instead of the average price helps to eliminate extreme outliers that could distort the overall market picture
Over the years, we have consistently reported on this figure, analyzing trends within our dataset, comparing our current status with our past, and deriving insights into the market’s strength or weakness accordingly. Price, as a metric, provides substantial indications of broader market dynamics. While it does not convey the entire narrative on its own, it certainly communicates a great deal. Similarly, the National Association of Realtors® publishes a national median sale price, which serves as a comparative metric over time, amalgamating data from all states into a singular figure.
However, as Florida’s median sale price surged over recent years, we began comparing Florida’s data against the national dataset, uncovering an intriguing development: For the first time on record, Florida’s median sale price surpassed the national average and has maintained this lead for several consecutive months.
Historically, Florida’s housing market has been quite volatile in terms of pricing, especially in the aftermath of the 2007-2008 financial crisis. Much of this volatility stemmed from speculative lending, which artificially inflated prices, followed by a significant downturn. However, since recovering from this downturn, Florida has witnessed steady and incremental price increases, driven by genuine demand and aligned with actual income levels.
Furthermore, in the years of recovery that followed, Florida did not experience the same level of construction activity as seen prior to the financial crisis. Given that many foreclosed homes were sold at steep discounts, the supply of homes closely matched demand, resulting in modest yet consistent price growth.
Enter 2020, a year that saw remote work becoming commonplace, interest rates plummeting close to zero, and the beginning of what would become one of the most remarkable real estate booms in recent memory. Fueled by accessible capital, significant equity withdrawals, and newfound mobility, a wave of people relocated to Florida. This influx included not just retirees opting for early retirement but also millennials who began their careers in coastal cities and sought the spacious, affordable homes they grew up with. Florida aptly fit the bill for many younger individuals looking to leverage the evolving landscape of work, housing, and communication simultaneously.
With limited housing inventory, both new construction and existing homes saw prices gradually rise, a trend mirrored across various regions. However, lower interest rates (resulting in higher mortgage payments) helped mitigate the impact of these price increases, enabling consumers to absorb the higher costs.
This phenomenon wasn’t exclusive to Florida but was observed across many regions.
What set Florida apart, however, was its starting point in terms of pricing. Historically, Florida homes have been more affordable compared to many other parts of the country.
While certain areas like Miami and parts of Southwest Florida have seen higher prices, even these locales remained relatively affordable compared to markets outside Florida.
For Floridians, the affordability of housing began eroding more significantly in the 2010s, as home prices started outpacing income growth. This trend accelerated dramatically in 2020 when prices began soaring. Those who benefited most were new Florida residents with substantial equity, retirees living off investments rather than wages, and professionals whose income aligned with high-cost states like California or New York but who could work remotely from Florida. For these groups, the median sale price was less of a concern than for those reliant on typical Florida wages.
Today, Florida finds itself in uncharted territory. The median price of a home in Florida now exceeds the national median sale price, a discrepancy that has persisted for several months. Several factors contribute to this development:
- Adjustment in Scale: Home prices in Florida are now approaching levels seen elsewhere in the country.
- Shift in Wealth: Higher-income earners are flocking to Florida, supporting higher price tags.
- Seasonal Influence: Prices typically rise at the start of the year and adjust downward towards year-end.
Could Florida’s reputation for affordability be at risk? Perhaps.
As mentioned earlier, Florida’s pricing landscape has shown volatility, but the underlying fundamentals supporting current trends appear robust. Nonetheless, there are indications suggesting that the pace of price growth may soon stabilize.
Typically, price corrections occur due to a decline in demand or an increase in supply. Recent economic indicators hint at such developments:
- Sustained high interest rates have tempered buyer demand, particularly among those seeking lower-priced homes. This trend has been noticeable in certain markets over recent months, evident in the volume of closed sales across different price segments.
- Active inventory has also started to increase, though levels remain at or below historical averages statewide.
These two factors may signal a potential moderation in price appreciation in the coming year.
