Agent Report: Florida Keys Real Estate Market 2023
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Navigate change with confidence. Learn everything you need to know about the current state of the Florida Keys Real Estate Market from FastExpert partner and experienced real estate agent, Amy Prumo.
The Florida Keys real estate market is ever-evolving. Similar to the Nation, the market continues its journey toward normalization. Yet, the draw of the Florida Keys and the limited supply of homes for sale will continue to bolster home prices, resulting in a strong market.
We observe several key trends that shape the current landscape of the Florida Keys real estate market.
Overall All Market
Downward Trend in Sales and Prices
We are witnessing a downward trend in both the number of sales and average sale prices, reflecting a shift towards a more balanced market. It is important to note that these adjustments are occurring after reaching peak sales levels in 2021 and 2022.
Sellers are facing the reality of a market with 39% fewer buyers and 27% more properties available, which requires them to recalibrate their expectations in comparison to a year ago.
Reductions in Price and Rises in Days on Market
Sellers are navigating this shifting market by making price reductions of over 4% during the listing period. As a result, properties are ultimately selling for nearly 10% less than the original list price, accompanied by a 25% longer marketing period. These statistics highlight the need for flexibility and patience in achieving successful transactions.
Market Stability and Inventory
Despite the current challenges, it is important to recognize that the Florida Keys real estate market remains historically robust. Average sale prices have experienced a minor decrease of less than 1%. This stability can be attributed, in part, to an inventory of properties for sale that is running at approximately half of the historical average. This relative scarcity contributes to the resilience of property values.
Seller Reluctance and Buyer Motivation
Unlike the previous downturn in 2006, today’s market sees sellers choosing to hold onto their properties rather than making lateral moves. The relatively price-stable environment and low-interest-rate mortgages serve as factors that discourage sellers from entering the market. Additionally, buyers who purchased properties during the peak sales years of 2021 and 2022 are not yet motivated to sell, resulting in limited inventory.
Looking Ahead: Moving forward in 2023
We anticipate the current market dynamics to persist. The combination of low inventories and established higher price points, influenced by the pandemic, is expected to maintain stability. We do not foresee significant declines in property values resulting from the current market conditions or the challenges impacting sales volume.
Challenges on the Horizon
As we progress, it is important to acknowledge potential challenges in the real estate market. Factors such as rising interest rates, aimed at tempering the economy and real estate sales, may impact the market.
Furthermore, the lack of wind insurance coverage over $1 million and increasing premiums, coupled with anticipated changes in Flood Insurance Rate Maps by FEMA, may influence flood insurance premiums. However, history has shown that the allure of the Keys triumphs over obstacles, and demand for real estate in the Florida Keys remains strong.
Florida Keys Luxury Market
The luxury residential market in the Florida Keys, encompassing residential properties listed over $1.3 million, has emerged as a shining beacon, driving sustainable gains amid the pandemic-fueled surge in the overall real estate market.
However, we are now witnessing a gradual normalization of the luxury market, aligning more closely with the trends observed in the Keys’ real estate market over the past year. In fact, the luxury segment is even leading the market’s descent from the unprecedented highs of 2021 and 2022.
Luxury Sales Decline
Comparing year-over-year figures, luxury sales have declined by 28.6%, while the overall market has experienced a 39% downturn. Average sale prices for luxury properties have seen a decline of over 5%, whereas the overall market’s decline is less than 1%.
Marketing Times Have Increased
Marketing times for luxury homes have exceeded those of the overall market, rising by over 30% compared to a 25% increase in the overall market. Furthermore, inventories of unsold luxury homes have surged by almost 65%, while the overall market’s inventory increase stands at 27%.
Despite these evident market indicators, sellers continue to resist the reality by posting increased average list prices for both luxury properties and the overall market.
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Limited Supply Will Buoy Prices
Looking ahead to at least the next quarter, we can glean insights from pending sales at the end of the first quarter, which have declined by over 40% for the overall market and over 29% for luxury properties. This trend is likely to contribute to the ongoing year-over-year declines we have witnessed so far.
One notable aspect that distinguishes the current normalization cycle, which is an inevitable part of the real estate market, is the lack of motivated sellers. Even with the increase in the number of listings in 2023 compared to 2022, current inventories remain approximately half of what would be typical in a normal market, as observed between 2015 and 2020. The scarcity of sellers and their limited motivation, as evidenced by the rising average list prices in a declining market, will act as a support to buoy prices.
It is worth noting that the luxury market is less affected by interest rates, as a higher percentage of transactions occur in cash. Therefore, the declines experienced cannot be solely attributed to the Federal Reserve’s efforts to control inflation. Instead, other subtle and nuanced factors come into play, such as a more cautious “wait-and-see” approach regarding the economy and prices.
Given the low inventories and the substantial equity that sellers hold in their luxury properties, there is currently no sense of urgency to sell.
Find Your Beachfront Home
While the Florida Keys real estate market is experiencing a rebalancing, it remains a hot market. The draw of an oceanfront home, a tight-knit community, and gorgeous weather will continue to bring people to the Florida Keys.
Whether you’re searching for a permanent home or a vacation home, contact a real estate agent who can guide you to the best property. Beachfront living in the Florida Keys could be your best!
