2023, compared to the record year of 2021 and all-time highs of 2022, was an off year and signaled an adjustment to a Keys real estate market full of paradoxes.
While the Dollar Volume of sales in 2023 was the third highest in Keys history - higher than any year prior to 2021 - the number of sales was the lowest in the past 10 years .
The continued influence of an historically low inventory has led to the highest average sale prices ever recorded which we believe will continue to be sustained as the market continues to adjust to a post-pandemic world.
While the 2023 market is now committed to history, which is chronicled in this Newsletter, the bigger question is what will 2024 bring?
Based on current trends we expect inventories of properties for sale will continue to increase over 2023 levels. The year-end 2023 inventory of 1,748 listings is almost one-third lower than pre-pandemic averages and will continue to increase throughout 2024 providing more choice for buyers but not necessarily a negotiating wedge that will serve to create a buyers’ market with resultant price declines.
The number of sales in 2024 is nationally slated to increase over 2023 with interest rates stabilizing in the low 6’s%. While the Keys market has not traditionally been as subject to interest rate swings we expect more sales here as well.
Marketing time in 2024 will increase with more listings, returning to over 100 days from the year end 79 days. We believe that sellers will continue to test the market in terms of asking price and will continue to have to adjust their expectations of price in 2024, with average price reductions during the listing term of over 5% from the original asking price, and negotiating margins over 10% from the original List price, and over 5% from the final list price.
The Luxury Market (which is defined as residential properties over $1.5 Million) will continue to lead the market in 2024. We will fully report on that market segment in our Spring Newsletter.
The limitation on the development of new homes in the Keys will continue to significantly influence the Keys real estate market in 2024. The Village of Islands has no more Building Rights to award while the City of Marathon’s supply will run out this summer. Monroe County has allocations for new permits into 2026 while the Cities of Key West, Key Colony Beach and Layton have remaining supplies. Discussions about Hurricane evacuation times which restrict building permits will ultimately be determined by the Florida legislature in the 2025 legislative season based on inputs from the County and Cities.
These discussions will determine the future of the Keys for decades to come and will have profound impacts on the real estate market in the short and long term.