Motivated seller: Ron DeSantis can’t rule out ‘correction in the real estate market’

Image via AP.

When it comes to housing prices, the principle of “what goes up must come down” historically applies.

And to that end, Gov. Ron DeSantis says that a dip in home values can’t be ruled out.

“Maybe there will be a correction in the real estate market. Although I’ll tell you, I think that there was more authentic demand in Florida this time than in 2000 and 2007. There was a lot of speculation then, I’m not saying there’s none now, but … a lot of people have wanted to come here,” DeSantis said, suggesting that the “authentic demand” existed but is now in the past tense.

The idea that a correction is underway tracks with a recent analysis by Realtor.com that suggests a lot of stale listings linger on the market.

Florida’s inventory of homes for sale as of February was at a record high, up 40% year over year and more than 7% over January’s number. The average home price is down more than $100,000 year over year in Bradenton and Sarasota.

Other regions show the same problems. The Elliman Report, which tracks closed home sales monthly, showed Miami-Dade and Broward sales were down more than 45% year over year in January. And the Northeast Florida Association of Realtors (NEFAR) shows a 39% year over year decline in Jacksonville and surrounding counties.

DeSantis made the comments to illustrate his desire to reduce or even eliminate property taxes, which would pass a burden to local governments reliant on millage rates.

He believes market flux is one reason property tax punishes homeowners who may have bought at the top of the market, suggesting that property appraisers won’t take into account a decline in market value.

“Say there is a correction. So you bought it at a rate, they assess it much higher, there’s a correction and they’re going to say, ‘I keep that assessment up there.’ They’re not going to lower the assessment. That’s really, really hard,” DeSantis said Thursday in Miami.

If a crash similar to what longtime Floridians have seen before happens, homeownership rates likely will decline and loan defaults likely will increase, based on historical data.

Regardless of whether a “correction” happens or not, high interest rates clearly have cooled a market that was red hot in the early years of the pandemic, with remote workers, retirees, and others flocking to the “Free State of Florida” to find better values than in other areas and to escape COVID restrictions.

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Drew Dixon of Florida Politics contributed to this report.