Florida Housing Market Predictions 2023

Florida Housing Market Prediction 2023

2023 housing market predictions

What a difference a year makes. In 2021, the market was the hottest I had ever seen. Low mortgage rates coupled with low inventory created a hotbed for competition, which resulted in a 23% average appreciation in home values. So, what can we expect as we head into 2023? What will rates do and where will the prices go? Is it a good time to buy or sell? Let’s see what the experts have to say.

In 2022, the market was moving along. There was still low inventory and prices were on the rise until rates hit 5%. Home buyers didn’t know what to do. Prices were high, and rates were high (although I think 5% sounds pretty good right now). In any case, Affordability became a big issue. Inventory was still low in the Spring and prices were still very high. We saw a significant decline in buyer activity in the late 2nd quarter. Closed sales for Single Family homes dropped 11% from a year ago. In the 3rd quarter we saw a 24% drop and we continued to see a decline in October and November.

In St Johns County, we saw a leveling off of the Median Sale price hovering around $550k for the summer months until a dip in the Median Sale price in November to $523,542 but still an 11% increase from a year ago. Inventory has increased 115% from a year ago but homes are still staying on the market for only a little under 3 months. Homes are taking longer to sell and we saw a 26% increase in time on market, taking 66 days to sell. Since Sept, homes are no longer selling at 100% and as of November homes are selling at 95.8% of the list price, a 4.2% drop.

It is an interesting market since the lack of inventory would suggest a seller’s market but the lack of buyer activity due to rates has resulted in an even playing field and Buyers have gained more leverage as homes sit on the market longer.


Housing Market Crash?

You’ll see lots of headlines that the Florida market is tanking due to the stats for the 4th quarter.  I can only speak for the area that I serve and every location is going to be different. I feel the stats may be showing some declines because we started to see changes in our market at the beginning of hurricane season. Let’s remember Ian and Nicole came through which I’m sure put many buyers and sellers on hold, and then we got into the holiday season. So, I don’t necessarily look at this as the market is tanking. I just know that this time of year things happen that can absolutely affect the market. Add on high rates and it’s no surprise we are seeing a decline in sales.

So, what will happen in 2023? Will we continue to see a lack of inventory and buyer activity or could the market overcorrect, leading to a crash? Here’s what buyers and homeowners can expect in the new year according to the experts.


Housing Market Forecast 2023

The National Association of Realtors predicts that home sales will decline by around 7%, while the national median home price will increase by 1%. The majority of industry experts expect the market to moderate in the new year. And if you think about it, it has to. The housing market cannot and should not continue to increase in value in the same trajectory as it has the past 2 years. This would make the market unaffordable. Most predict a decline in home sales and at least a temporary drop in prices — although the industry is split on whether mortgage rates will rise or fall in 2023.


2023 mortgage rates

Now we all know that the increase in rates affected home buyer activity and we saw many home buyers pull out of the housing market due to this very reason.

Well according to the Fed’s median projection from December, the Fed’s key benchmark borrowing rate is projected to rise another three-quarters of a percentage point in the first half of 2023, hitting a 17-year high of 5-5.25 % from its current 4.25-4.5 % level. Even if the Fed’s highest forecasts come to fruition, it shows that, at most, only 1.25 percentage points of rate hikes are on the table for 2023. That’s nowhere near the 4.25 % points the Fed officials approved in 2022.



Economy Predictions 2023

As for the economy, it’s now expected to eke out positive growth of 0.4 percent in 2022 before entering a modest recession in the new year, according to the December 2022 commentary from the Fannie Mae Economic and Strategic Research Group. This Group forecasts a slight improvement to their 2023 GDP growth from -0.6% to -0.5%, and expect the economy to begin expanding again at a 2.2 % annual growth rate in 2024. (Which is the economy’s happy place).

With a recession predicted to begin in the first quarter of 2023, the ESR Group notes it is plausible that the Federal Reserve will begin once again cutting the federal funds rate in mid-2023 which would bring down mortgage rates. Due to the recent significant pullback in mortgage rates, this group also revised the total single-family home sales projections upward for 2022 and 2023 to 5.72 million and 4.57 million units.

The projection for a decline in home sales in 2023 is due largely to the expected economic slowdown and the fact that most homeowners continue to have rates substantially below current market rates, which has created a disincentive to move. However, experts are expecting home sales to rebound 14.7%. In 2024, to 5.24 million units due to the expectation that economic growth will resume and mortgage rates will stabilize.

Having been through the housing crash of 2008 and the early days of covid, this sounds like a much better scenario than what we experienced back then.


So, the big question, will home prices go down in 2023?

With inventory still low and home equity levels high, experts do not see conditions supporting a major downturn in the market. However, experts are split when it comes to home prices. Some predict a small drop, while others think we could see home prices continue to rise but at a more modest pace than in 2022. So again, there is not a lot of support for a major reduction in pricing. Keep in mind that even if rates stay elevated in 2023, home prices will probably come down. In our area, I expect a correction for overpriced homes and a much slower appreciation. I do feel 2023 will give home buyers a better ability to purchase a home at reasonable prices. While I do feel mortgage rates will remain high especially in the first 1/2 buyers will have more purchasing power because they will have more room for negotiation with sellers.


If you agree that rates will top out in the first half of 2023 and the housing market will be on the mend in the second half going into 2024, then there are mortgage options that would take advantage of that scenario.  If you want to discuss them, I have some great local lenders that could help you out, so just let me know.


In summary, if you are seeking to buy a home, there are more options available now then there were a year ago. No one knows where the prices will be in 12 months. All we can do is look at the market that we are currently in.  I am seeing homes sit a little longer and buyers holding off. Which means less competition for you, and the market is looking to be more affordable than 2022. What do you think? I’d be curious to know what’s happening in your market.


If you have any questions or concerns, I’m always here to help so reach out anytime.

Thank you so much for tuning in and Happy New Year!


About the Author
Kim Devlin
Kim Devlin is Your St Augustine Realtor. A Relocation Specialist serving Northeast Florida, St Johns County and Flagler County. She enjoys sharing real estate tips and local insight on communities and living in St Augustine Florida. Tune in weekly and be sure to subscribe to her monthly newsletter.