Florida's frenzied home sales and lack of supply to keep up with demand reminds 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 Central Florida home sales, 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 housing boom will last, but Snaith said the drop in the supply of homes in the region is the factor that could most immediately reduce sales.
Stock problem 'even worse'
The shortage stems from several events. Some people hesitated to list their homes during the early days of the pandemic. Meanwhile, slowing construction and rising material costs got in the way of home construction. At the same time, 60,000 new residents moved into the Orlando metropolitan area in 2020.
"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 the lack of stock."
This problem is not getting any better. In February, the existing housing stock in Metro Orlando dropped 50% year over year, to 1.14 month, from according to the Orlando Regional Realtor Association. In the same period, the average sales price jumped 12%.
As home prices rise at a double-digit rate, potential buyers will be shut out of the local market, Snaith said. That can 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 housing 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 not likely to change much in the next 12 months."
'I don't foresee' a real estate slowdown
Snaith is not 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 housing market, says the president of the Orlando Regional Realtor Association. Natalie Arrowsmith,.
"You start to look at the trend of supply and demand. You can see where you will start to see a slowdown in the industry, but right now I don't foresee that happening in the near future because of the influx of people we are 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 housing market is often considered a reflection of the overall health of the local economy.
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