Buying in Florida: Knowing the Market

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Florida's large cities are at the leading edge of the current surge in real estate values nationwide. Professionals, first-time buyers and retirees are watching a lot of new homes come onto the market—priced at $500K and up.

It's no mean feat buying a home in the Sunshine State today. What do successful buyers know about this market?

Florida Taxes Go Down in 2020

For some buyers, Florida's tax advantages offset their purchase costs. For one, there's a delightful lack of personal income tax. And tax news in Florida just keeps getting better. As the Tax Foundation notes:

• This year, Florida reduces corporate income and franchise tax from 5.5% to 4.458%.
• Florida's commercial lease tax, which tenants of commercial properties must pay, goes down to 5.5% from 5.7%.

Florida's attractive tax treatment for residents and businesses is notable. Granted, it's also a two-edged sword. It's a big reason Florida continues to draw new buyers, and, in turn, home prices rise. On the bright side is the good outlook for mortgage rates in the year ahead.

Cheerful Outlook for Mortgage Rates in 2020

If you're wondering whether you can afford to buy a home or condo in Florida, this year's mortgage rate forecasts may strengthen your resolve. Among the hurdles buyers face, soaring mortgages isn't one of them. Greg McBride, a Bankrate analyst, told the Sun-Sentinel to expect rates to hover at or around 4% for much of 2020. 

The refreshingly low mortgage rates spurred 2019 Florida home sales to unexpected highs. With demand surging, home prices rose all year in various markets around Florida. The state's inventory of homes will stay low as builders focus on more expensive homes with higher profit margins. So, Bankrate predicts, the buyer's challenges will be the shortage of homes at the price point they want. 

Finding Workarounds

Here are some routes to success in this market:

• Find a city where supply matches demand. Sarasota is an example: the supply and demand for homes is even.
• Live on the outskirts. The tightest markets are in larger cities. Retirees and professionals on a budget are looking, for example, at affordable Kissimmee rather than pricey Orlando.
• Consider an FHA mortgage. FHA loans can be obtained for very low down payments. Bonus: In the future, when the mortgage rates are likely to rise, your low-rate loan will be assumable by your buyer—if you sell to a buyer who qualifies, as you did.
• Consider Florida's co-housing trend. Young professionals and retirees alike are buying or renting where they want, living with like-minded, supportive communities and aging in place with shared housing.

Have more questions? Contact us for more information on specific Florida home markets. We're here to help.