Decrease in Summer Home Sales in Florida Due to Low Housing Inventory and Rate Hikes
The real estate market on the Treasure Coast has experienced a slowdown in recent months, with summer home sales seeing a decrease, except for a slight uptick in St. Lucie County in June.
The limited housing supply has contributed to higher median home sale prices, while increased interest and home insurance rates have deterred both buyers and sellers, resulting in higher monthly mortgage payments.
This situation has created a psychological barrier, preventing people from engaging in real estate transactions, according to Dan Carmody, president of Martin County Realtors of the Treasure Coast.
Carmody stated, “The summer sales season has been slower than usual, even though summer is typically a busy time for moving, as schools are out.”
The Federal Reserve has raised interest rates 10 times since March 2022, with the current rate ranging from 5% to 5.25%.
Chris Krzemien, president of the Broward, Palm Beaches & St. Lucie Realtors, concurred that the interest rate hikes have cooled down the previously active housing market.
Closed sales in Martin and Indian River counties were lower in June compared to May, while active listings and median home sale prices remained steady. On the other hand, St. Lucie County experienced a slight increase in closed sales month-over-month. The median sale price in St. Lucie has decreased by 2.3% since last June, holding steady at $390,000 as of June.
Despite these trends, the real estate market in the area remains active, with many attracted to Florida’s favorable weather, growing economy, comparatively lower cost of living, and absence of state income tax. However, the influx of retirees and people from other states has disadvantages for young individuals who are priced out of the market, according to Carmody.
Home prices in Port St. Lucie, particularly in the burgeoning neighborhood of Tradition, have outpaced the national trend since 2020. A report by CoreLogic, a California-based financial services company, predicts a 4.5% price growth in the next 12 months.
Molly Boesel, the chief economist at CoreLogic, clarified that this projection does not necessarily indicate a decline in prices, though affordability concerns may lead to some softening.
One indicator of buyer hesitation is the time it takes to sign a contract, which in June averaged 44 days in Indian River, 29 days in St. Lucie, and 22 days in Martin. Although this is shorter than in May, it is significantly longer—nearly 179%—compared to June 2022.
According to Kyle Von Kohorn, President of the Realtor’s Association of Indian River County, this development may indicate a shift towards market stability. Von Kohorn notes that current contract timelines align with historical trends observed prior to the pandemic.
During the COVID-19 period, the housing market experienced significant growth, peaking in March 2022. Cash sales, which witnessed a remarkable increase of over 170% from May 2020 to May 2021, contributed to a reduction in available housing inventory.
The Southern region has observed a decline in home sales, with Lawrence Yan, Chief Economist at the National Association of Realtors, emphasizing that the limited housing supply remains a hindrance to fulfilling the full potential of housing demand.