The supply of Ocala area homes continues to be very tight. However, local sellers and buyers are caught in the teeth of a dilemma. We read stories about inflationary forces rearing their ugly heads. Therefore, some are beginning to talk of interest rates soon rising. As a result, we are beginning to see articles written about the wisdom of renting. Several recommend being patient and waiting for “inevitable” price reductions before buying. Others speculate that home prices in the Florida market are as much as 32% above economic value. But most believe that our housing shortage will take years to overcome. So what does the future hold?
Ocala Area Homes Are Selling Quickly. Will That last?
Two opposing forces may impact the Ocala area real estate market. In response to inflation. the FED may begin to raise interest rates. If they do, homes will become less affordable and downward pressure on prices will result. But is this likely? Probably not.
Economists have almost universally concluded that the rise in prices we are seeing is not sustainable long term. They present the case that the restarting of our economy is causing a transitional rise in demand and some shortages. Rising prices are primarily seen in the energy sector where production has lagged over the last eighteen months. Additionally, production of consumer products was curtailed as well. Not surprisingly, as the economy recovers, there are shortages in this sector too. Because of these factors, economists view the rise in prices to be a short term fluctuation. They expect inflation to remain elevated for a few months and then return to subdued levels. Since economists are unconcerned with the prospect of sustained inflation, it seems unlikely that they will champion aggressively increasing interest rates.
But what of inventories? Will the supply and demand for Ocala area homes move towards an equilibrium?
To address this question, we will examine two forces. Firstly, we will examine supply and demand as they exist today. Then we will explore what forces will impact them in the future.
Recently writers have taken a look at a force driving the national historic shortages in homes listed for sale. Stories have been publish by Forbes Magazine, The Wall Street Journal, Florida Realtors Magazine and other reputable publications. All focused on a FNMA study which recently reported a decline in home building over the past decade. They have presented evidence that this has left our country with a shortage of nearly four million homes. Additionally, the construction industry is currently experiencing a critical shortage of construction materials, further slowing the building of desperately needed new homes. These circumstances suggest that we are unlikely to overcome such a massive shortage quickly. Therefore, I expect that we will see a tight inventory of homes for sale for some time.
The Future Of The Ocala Economy Is Bright
But what of demand for greater Ocala area homes? We have already written several times about the impact of the newly opened World Equestrian Center our economy. However, I think it appropriate to repeat a few statistics here. Of course, the focal point of the Ocala area economy is the equestrian industry. This industry alone contributes nearly $3 billion in revue to our economy annually. But that just scratches the surface of what is to come. Analysts predict that the advent of the World Equestrian Center will stimulate our economy to an extraordinary extent. As a result, it is expected to increase this annual contribution to over $10 billion over the next few years. Such growth is bound to cause job creation and spur demand for all forms of real estate.
Therefore, we believe that the forces of both supply and demand will unite to push prices higher. They will also cause demand to outstrip supply. In fact, they will create a vigorous real estate market in Ocala for years to come.
Here you we present a few articles which expand on the information we have introduced in this week’s blog. Enjoy reading:
It’s a question on the minds of thousands of Floridians searching for a home this summer. Continue reading on WJXT | TARIK MINOR.
The housing market is at a competitive edge for sellers causing bidding wars and few property choices for active homebuyers. North central Florida Realtors say the area has seen influx of people moving to Florida. They have migrated here at an alarming rate in the past year. According to the National Association of Realtors, …Continue reading of WUFT NEWS.
Why is the inventory of for-sale homes so tight? A new analysis by Freddie Mac found that supply will meet demand only if the U.S. adds 3.8M new homes. The housing need now is 52% greater than it was in 2018. Over the last three it has impacted all homes, but particularly entry-level ones. Continue reading on FLORIDA REALTORS.
“Don’t wait to buy real estate. Buy real estate and wait.” – Will Rogers
The forces that govern a real estate market are of course supply and demand. We are living with a dwindling supply and demand accelerated by low interest rates and economic growth that is likely to expand. Therefore, this is an excellent time to invest in real estate. The best time to upsize, downsize or become a first time homeowner is yesterday. The second best is today!
Andrew Kruglanski, Broker