Florida's frenetic home sales and the lack of supply to keep up with demand remind University of Central Florida economist Sean Snaith of another coveted resource during the pandemic: toilet paper. 

"We know why the demand for housing is increasing and I still don't understand why toilet paper has increased."

said Snaith, director of UCF's Economic Forecasting Institute.

The Home sales in Central Florida, already healthy before the pandemic, exploded last year and have remained strong amid historically low interest rates and a migration of new residents from other states. It is not known how long this real estate boom will last, but Snaith said that the drop in the supply of homes in the region is the factor that could most immediately reduce sales.

Stock problem 'even worse'

The lack of stock stems from several events. Some people hesitated to list their homes during the early days of the pandemic. Meanwhile, the slowdown in construction and the rising costs of materials have hindered home building. At the same time, 60,000 new residents moved to the Orlando metropolitan area in 2020.

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"We have the same problem in the real estate market today that we had before the pandemic, maybe even worse"

said Snaith.

"That problem was a lack of stock."

This problem is not getting any better. In February, the existing housing stock in metropolitan Orlando fell 50% year on year, to 1.14 months, from according to the Orlando Regional Realtor Association. In the same period, the average sale price jumped 12%.

As house prices rise at a double-digit pace, potential buyers will be priced out of the local market, Snaith said. That could be fixed if a wave of homes hits the market this year, and Snaith said the shortage of materials in the residential construction industry probably won't affect the real estate market for more than six months. In the meantime, those who can afford their homes will still want them, he said. 

"The underlying drivers of demand are unlikely to change much over the next 12 months."

'I don't foresee' real estate slowdown

Snaith isn't the only one keeping an eye on the region's housing supply. Inventory, along with interest rates, is one of the most important indicators for the future of Central Florida's real estate market, said the president of the Orlando Regional Realtor Association. Natalie Arrowsmith,

"You start to see the trend of supply and demand. You can see where you'll start to see a slowdown in the sector, but right now I don't foresee that happening in the near future because of the influx of people we're moving to Florida, along with the low interest rates. "

Trends in the residential real estate market are important, as each home sale in the state has an estimated local economic impact of $$ 90,300, according to the National Association of Realtors. In addition, the real estate market is often considered a reflection of the overall health of the local economy.

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