Housing Market in Northwest Florida - Is Now a Good Time To Buy?

So, you're thinking about moving out here to Northwest Florida and you're curious about the housing market. Is now a good time to buy? Well, in this video, we're going to go over several key things that you're going to need to know before you can make that decision.

Okay. So, let's talk about it. Let's talk about moving to Northwest Florida. Where is that exactly? Well, if you're looking at a map in the northwest corner, we call it the Panhandle. It kind of looks like a Panhandle, right? Our area is anywhere between Pensacola and Panama City Beach, where you can see right in the center is well, Destin. Destin Fort Walton Beach. And why do people move to this area? It's mainly because of the gorgeous beaches that are out here, absolutely phenomenal. You don't see condo city all around us, you see beaches, you see sand dunes and forest around here. It's just beautiful. And of course, the Emerald Color Waters, that's the Emerald Coast, right? Of course, the community here is awesome. I can't say it enough how awesome this is. You have this area that's just surrounded by five, six military installations. And because of that, a lot of people retire out here or just presume to stay. So, we get a very diverse sort of respectable community from that. Not only that, we're also right below Alabama and Georgia, so we get a bit of that southern hospitality as well. And, all that mix together and of course we're Floridians, really just makes such a great, great community. The atmosphere itself out here is very, very relaxed. That's another reason people go here where you can go out just as a real estate agent, with a polo and shorts and flip flops to go show a property that's 1.2 million. When I was doing this in Ohio or New York, that was just unheard of. So, just in as one small example, everything is very relaxed here. It's not quite beach time or it takes forever to get everything done, but it is very relaxed, open. And most people here are really happy because they're either live here in Paradise or they're on vacation.

Alright. So, let's jump into a few things. We're going to go over the inventories of the condos and home, mortgage interest rates, appreciation norms. We'll go over some investments and things to look at there whether this is a good time for you personally to go, and we'll wrap it up with generally how good, if this is a good time to buy.

INVENTORY OF HOMES

So, let's go into the first part here, the inventory of homes. One thing that we always look at as real estate agents, is the absorption rate, usually measured in months. It's calculated by dividing the number of homes in an allotted time period by the total number of available homes. So, currently, what we've seen in our area, it's been about 3.57 months. Which is longer than I thought it was without fast everything's been moving. But know that the more that we have of this and what that rate is means that houses are flying out the market a lot more, which means that they're going to price more aggressively. What it really means for you too when you're bidding on your home or your condo is that, it's going to be a multiple offer situation. If it's price right or relatively right, and it looks pretty, it's dress right, it's going to go very quickly and typically under multiple offers. So, make sure that your real estate representative is really looking after you and knows the different strategies that are winning in today's market, because they are constantly changing by month, heck by week, as we get into a more busy season.

MORTGAGE INTEREST RATES

So, mortgage interest rates. Well, they're on the move again. We've seen record low interest rates throughout the last couple of years. But, it's been held there and it it's been kind of manipulated to stay low over, especially this COVID time. With that being said, you're going to start seeing and we are seeing that these things are starting to go up again. Now, it's not going to be that big over time, hopefully. However, right now is it going to be really pushing that time to capitalize on those good rates if you can afford it. Now, one thing that's been crazy, is the appreciation forecast. Now, typically what we see in home appreciation is about 3 to 4% that year. So, 3 to 4% or whatever that home was worth, it goes up that each year. Now, nationally, in 2021, it was about 11.4, it was just shy about 12%. In the state of Florida, it was like 20.8%. What? It's ridiculous. In the Destin area, just in case you're curious, was 9.6% last year based on the median rate. So, what's this look like? What's this forecasted based off of realtrends.com? We're looking at from that, we're going to start seeing this year in 2022 that these rates are going to drop. And they're probably going to drop down to somewhere around 5, 6%. They said 5.82. 2023, back down to 3.94, 2024 down to 3.56, and by 2025, 3.55. Again, right around that 3 to 4% ratio. Now, this is just a prediction, we'll see what happens. But still, buying right now, you're going see big uptick in your equity over time. Still going to be really good. Okay.

INVESTMENTS

Let's talk about your investments. We have short term, long term and flips is what I'm going to primarily talk about. Your short term rentals are going to be your vacation rentals.Okay? And those are ones that you're going to be renting out here on the Emerald Coast. Now, these have been really good. Been really good because you're getting a lower interest rate if you're financing it. And the demand because of COVID, for people coming down to escape the restrictions has been astronomical. So, that means that those rents have been jacked up quite a bit because of there's so much of a high demand. So, whatever we got back in 2020 and 2019, I mean, it's so much more now. Of course, the money's inflated a liittle bit, but with so much more now because of the high demand for people trying to come down here. Now even long term rentals are kind of the same. Those are your single family homes, your town homes, and heck, you could even do a long term rental for a condo. But know that this area specifically, I told you there's six bases in this area. So, we constantly have people moving in and out for six months, a couple years, whatever. So, there's still a very high demand for rentals. And, with the interest rates being as low as they are, again, you're seeing a good return on investment for your long term rentals, if that is what your financial strategy is. Now the other thing are flips where you find something a dirt cheap and then go in and renovate it and then sell it at the top of the market. Now, we haven't seen too many. Is it still happening? Absolutely. But, it's going to have to be based upon the short term value. Which means, you either need to find a unicorn in the market, or you're going to have to mitigate those extra costs to keep your profit margins larger or accept a smaller profit margin. If you haven't done these flips before, of course, you can talk to any of us here on a team and we'd be happy to walk you through it. But there's plenty of resources out there to give you more information.

IS THIS A GOOD TIME BUY?

So, another big question I want to, you should probably ask yourself, is this a good time for you personally to purchase? So yeah, you may have the money, you may have some urgency behind it, but are you emotionally ready? Can you do this? Is your family ready for it? So, the big thing you should look at is,can your future budget afford this house, this condo payment even with the maintenance cost. So, even if you're purchasing as an investment, can you afford that budget just in case there's vacancies. Right? Other things too are your support structure, is your family on board with what you're doing. Right? And having that support structure is going to be a big thing.

Another thing to think about, if you're working this area and you're trying to get a loan, a lot of the times you need to secure a job here. Right? So, maybe you can't find some job that your specific be doing there here, that's going to impede your ability to move here. However, if you got one of those jobs that you've been able to telework and you haven't had to go to the office. A lot of people have been negotiating with their business, with their boss, to telework. And, maybe go back once every six months or never and just telework indefinitely. That being said, you can now live and work in the place that you vacation. So, we've seen a lot of that, and that's actually pretty cool that they've been able to do that. And of course, if you're an investor and there's another shutdown, there's another whatever virus variant that comes out and then shuts the entire place down again. Can you afford to carry those additional mortgage payments if that does happen? So, you want to think about these different things before you decide to move. That being said, is now generally a good time to buy? I'm going to have to say yes, I'm also a real estate agent. But, honestly, I do think that it is a good time to go. If I was in that scenario, I would definitely pull the trigger. The appreciation should cover the top of the market prices that you'd be paying because next year, it's going to be another top of the market. But, it's still going to be more than what you would have paid this year. Interest rates still remain relatively low. So, as they're starting to build back up, let's take advantage of these low interest rates. Over the years, it's going to save you a ton of money. More people are moving to Florida, and as COVID restrictions continue, more people are moving, which will create a higher demand for you and for your assets if and when you decide to actually sell. So, Florida isn't the big thing for you or you found another place, in South Florida, you want to go. You already bought an asset at a lower time. And here in the next three, five years, you're going to go, man, I can sell this and make a big load of cash and go somewhere else if that's the case. And investments for vacations, vacationers, they're going to continue to rise. So, for your vacation rentals, that demand is going to continue to go, especially in the current environment that we're in. You're going to see raising rents as far as long term rentals as well as short term rentals, and your ROIs should exceed or meet the current market prices.

So, all in all, it could be good to go. But again, it's personally going to be on you. If you want to sit down for a consultation, whether this is to purchase or to invest, my team and I here would love to chat with you. Give us a call/text at 850.320.7757 or email us at Admin@WhittemoreGroupRE.com