Prior to the pandemic, Florida’s housing market had high demand from buyers seeking home-ownership, however the market was slowed by way of a not having enough listings. As a result of lessons learned throughout the Great Recession, more owners hunkered down with the uncertainty with the economy. But in most cases, they also had a low mortgage rate secured years earlier that they would have to give up if they bought another home.
Will Housing Protect the Economy?
Both of those have changed. Some hunkering-down renters and homeowners now want more room. Additionally, the average 30-year mortgage rate hit a record low the week of April 30, as outlined by Freddie Mac, so current homeowners could trade their current rate for one that’s even lower – or at least the same – if they opt to move up or downsize soon.
In a National Association of Realtors® (NAR) survey released May 7, 77% of Realtors said their potential sellers intend to list their homes once COVID-19 stay-at-home orders are lifted – and over half said their clients are completing do-it-yourself home improvement projects while isolating.
“After a pause, home sellers are gearing up,” says Lawrence Yun, NAR’s chief economist. “Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”
Impact on Florida’s economy
The return of buyers and sellers to the housing market could offer a major boost to the state’s economy, which has been hit by a drop in sales tax revenues as tourists stayed home.
As outlined by NAR’s research department, every home sale in Florida pumps $77,291 into the economy – money beyond the sale itself. The average income for real estate professionals associated with a transaction is $21,132, and $4,650 goes to expenditures related to the purchase. NAR estimates the ripple effect for those amounts – the higher value to the economy as one person’s expenditures become a second worker’s income – is $12,375. In addition, new-home sales have a total impact of $39,133.
Nationwide, every home sale adds from $54,741 to $184,763 to their local economics.
“Real estate has been, and remains, the foundation for wealth building for the middle class and a critical link in the flow of goods, services, and income for millions of Americans,” says Nadia Evangelou, a research economist with NAR. Real estate makes up almost 18% of the U.S. GDP.
Limited income from tourism
The advantages of a strong housing market are particularly important in Florida. On Thursday, state officials said Florida’s phased-in “rebound effort” could still take several years before full tourism returns.
“We know that this rebound is going to take a while, and we have to make sure that Florida continues to be a top travel destination,” according to Visit Florida Chief Marketing Officer Staci Mellman during a conference call with the state-backed agency’s Executive Committee.
Mellman said Visit Florida has witnessed an uptick in interest for the fall, however the usually busy summer season isn’t likely to perform well.
Florida had a record 36.4 million visitors in the first quarter of 2019 and a record 133.7 million travelers for the year, as reported by the News Service of Florida’s quote of state figures.
While Visit Florida has started to run targeted ads to bring tourism back, it says it’s approaching the rebound methodically. The first step is to see how eager Floridians are to travel outside their homes and beyond, a change that is associated with the unpredictable future of the COVID-19 pandemic.
Have a questions or concern about the housing market? Nick, Cindy & Nicholas Davis with RE/MAX Premier Group are here to assist you with all your Real Estate Needs. We are always available at 813-300-7116 to answer your questions or you can simply click here and we will be in touch with you shortly.
Need to get started with your mortgage process? You can contact Kyle Edwards with Iberia Bank at 813-495-5131, or simply click here to start your online application.
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