FLORIDA ECONOMIC AND REAL ESTATE NEWS 

 FLORIDA ECONOMIC AND REAL ESTATE NEWS 

As we do at the beginning of each month, we're meeting for the investi.us report to discuss current events and real estate in the United States. This report includes a review of the year just ended, as well as a look at economic trend forecasts. These trends will undoubtedly also impact the ever-dynamic real estate markets in the United States.

news in the United States and Florida real estate

The American economy 

A number of polls suggest that consumer sentiment is not looking up. And this perception of a poor economy is clearly weighing on President Biden's approval rating. Which raises the question: Are consumers right? Is this a bad economy despite the data showing it to be very good? So why is there such a paradox?

Let's start with the obvious culprit: inflation, which is indeed higher than ever, as it hasn't been for decades. This transatlantic inflation is now impacting Europe and all closely linked markets. Rising prices are reducing the wage gains of many workers, although real personal income per capita is still above its pre-pandemic level. Even if the government is no longer handing out much money. It's clear that inflation gives a sense of out-of-control and a kind of inevitability.

Another reason for U.S. consumer resentment is the rapidly spreading Omicron variant, which has begun to take its toll on parts of the U.S. economy. Events are being canceled or postponed, consumers are cutting back on dining out, and understaffed businesses are closing in some of the hardest-hit areas, such as New York City.

Economists warn it's too early to assess the impact this iteration of the virus will have. Consumers are also reducing their restaurant visits as the virus spreads. The number of diners seated at U.S. restaurants was down 10% for the week ending December 23 compared to the same week in 2019, according to the restaurant reservation site OpenTable. That's less than on November 25, when restaurant activity was comparable to 2019 levels. A key geographic factor to understand in the United States is the difference between northern and southern states. Residents of the south and northern states are experiencing very different behaviors in the face of this omicron variant.

The number of Americans filing new claims for unemployment benefits remained below pre-pandemic levels. And while workplace activity declined slightly, it was in line with the decline seen around the holidays in 2019 and sharper compared to the same period last year. Some economists are lowering their forecasts for US economic and labor market growth in early 2022 amid rising infections and declining fiscal support.

US Real Estate Market Review and Forecast

The available housing stock hit a historic low at the beginning of the year, and competition was extremely fierce. Many potential buyers left the market due to lack of success in their search. As a result, rental demand surged, and rents rose across the country.

"It's been a crazy year," is what many real estate agents and other investors in the United States are saying.

There's no doubt that the housing market was on a wild ride in 2021. This is also linked to a year with the lowest interest rates on record, with average rates for a 30-year fixed-rate mortgage at 2.65%. But they didn't last long. As of April 1, it had reached a 2021 high of 3.18%. Rates have fluctuated since then, with the 30-year fixed-rate mortgage set at 3.05% last week, according to Freddie Mac. And we can expect rates to rise even more in the new year.

The Federal Reserve confirms this and has given several signals that its pandemic monetary policy will end as it strives to curb inflation. Ultimately, this will push interest rates higher. Rising mortgage rates, coupled with savings-eroding inflation, will undoubtedly have a negative impact on buyers. Moreover, it will affect all types of buyers.

If there's one thing that will remain unchanged, it's the inventory of available properties. Even as more properties became available, there were also more people looking to buy, creating fierce competition and pushing prices up. Inventory was tightest at the lower end of the market. Homes priced under $200,000 were hard to come by, with the number of available properties falling 19% this year compared to last. While the inventory situation is expected to improve in 2022, it's not expected to improve by much. Inventory will remain limited and will only increase by 0.3% in 2022, according to a forecast from Realtor.com.

Florida and its real estate market

Florida was a prime location for relocation in 2021, with significant in-migration throughout the past year, driving up rents and home prices. According to many experts, millennials and other homebuyers in 2022 will focus on affordability, especially after the double-digit appreciation in home prices last year. As a result, fierce competition for homes continues. Nationwide home prices will continue to rise.

The Covid-19 pandemic has reshuffled the landscape and the geography of workers. It has led to new ways of living and working. Among them: remote work, which has allowed some buyers to turn to new, perhaps more distant, real estate markets. It's not uncommon today to find that employees now require the ability to work from home and remotely. Florida is benefiting greatly from this new trend.

What we're seeing more closely is that the broad indicators are being confirmed on the ground. Buyers continue to face strong competition. Florida's markets remain dynamic.