What a year for real estate! 2015 is being touted as the best year for housing since 2005 and judging by current real estate forecasts; the market will get even brighter in 2016.
In recent years many of the areas hit hardest by the housing recession began to experience big gains. That correction is now held in check by mortgage laws enacted to rectify problems that led to the bust. NW Florida is well known for its beach condos, investment homes and has a strong second home market. As such, we tend to feel recessions but are also blessed by economic booms. 2015 was a year of solid economic gains and this trend is expected to continue well into 2016. The latest Multi-Indicator Market Index released by Freddie Mac shows that the real estate rebound in Florida led the nation. The housing report released by Florida Realtors in October of 2015 shows that home prices rose 12.4% year-to-year for single family homes.
For the past few years, investors have been attracted to the area by an abundance of bargains and the high demand for rental and vacation properties. Demand for homes continues to rise from investors and prospective homeowners, but we now see a shortage of inventory. Buyers just cannot find enough homes for sale. Florida's inventory of homes last year was below the six-month supply economists consider a balanced market, but the number of homes for sale is expected to be even smaller this year.
Experts tell us that buyers planning to live in the homes they purchase will need to pick up where investors left off for there to be real growth. In the local housing market, the transition from one phase of recovery to the next has already begun.
The chart below condo sales in 2015 for the Pensacola area is one of the best years ever, and we expect 2016 to exceed this.
Condominiums are popular in our communities for beach goers and those that want to offset the cost of owning a second home at the beach by putting that home on a vacation rental market. You will find that many families looking to downsize and first-time buyers show a preference for condominiums as well. Much of 2015 showed a disconnect between first-time buyers purchasing a condo and their ability to qualify for a Federal Housing Administration (FHA) product. FHA rules on the operation of condo complexes have been somewhat prohibitive in recent years. In a fortuitous turn around FHA announced in November that it would relax its condo board rules, giving buyers more affordable options for condominium purchases. FHA is currently the most popular first-time buyers' mortgage product.
Employment continued to be a positive sign of growth last year, and it appears to be one of the main drivers behind the positive 2016 projections. The U.S. gained about three million jobs in 2014. The Chief Economist at Freddie Mac estimated that we were on track to add another two million in 2015 and expert forecasts show that employment will continue to grow in the coming year. Consumers will be in a better position to purchase their first home or sell their current home and upgrade to a new one. Consumer confidence in real estate has returned and is growing. This means there are more people in a position to buy a home.
We are starting 2016 with even greater housing demand. As we move into the new year, we have an abundance of positive predictions from many different sources. Realtor.com tells us to expect a healthy growth in home sales and pricing. New-home construction is expected to continue to grow but will focus more on affordable homes meant to cater to entry-level buyers.
In 2015, we exceeded projections and completed our best year here at Emerald Coast Realty. Our expert team of real estate agents worked hard with both buyers and sellers to create the best experience possible and hope to do the same with you in 2016.
See more detailed home sales data and information about the Destin and Pensacola real estate markets.
Written by Emerald Coast Realty