October is already kicking off a great first month for Q4! SOOOO many interesting “happenings” right now. First and foremost its election season, and I am sure everyone is being bombarded by ads, possible polling phone calls, and participating in robust political debates…. No? Well you should, it makes for great family get togethers, hahaha. Besides the political environment, my wife and I had a great month. In Sept we traveled to Portland OR, to attend a fund managers retreat, and networking event. We meet up with several fund managers (over 60) investing in all different types of assets, on both sides of the capital stack. We had fund managers investing in gas and oil, hotels, industrial properties, medical startups and businesses, multifamily and SFR fix and flips. Truly an incredible meeting. Below are some photos from our event.

Now one of the things Carolina and I enjoy doing is visiting other locations where ever I am attending a conference. In this case we stayed an extra week and visited beautiful Oregon and Washington. We were able to visit my fathers sister and her husband and family. I have not seen them in DECADES, so it was great to reconnect.

We then went due West and visited Cannon Beach. Different than the Gulf Coast for sure, though the sand felt nice between the toes, and the water was much cooler than the warm waters of the Gulf. We stayed in an AirBnB at a local farm. They grow all types of fruits and nuts, and he offer us the privilege of walking the farm and picking whatever we wanted to eat. Fresh, vine rippened tomatoes and pears and apples right off the branch. Truly an incredible experience.

Oregon also is known for its Pinot Noirs and we stopped at several vineyards to taste a kind of wine that we don’t naturally gravitate toward. Personally I am a bigger fan of Cab’s, but it was nice to try a different grape.

We then traveled East to visit Mt. Hood, beautiful! We hiked around and received quite the work out. We wrapped up our trip traveling down the Columbia River, dividing Washington and Oregon, and visited Multnomah Falls. We almost hiked up to the top, but time was not on our side. We headed back to Portland and, my wife being the incredible gift that she is, found one of the very few cigars lounges in Portland for us to enjoy a stick together before heading back to FL.

Glad to be back, but it was a pleasure visiting another state in this incredible union. I hope that you and your family are bale to travel the US and experience the vast beauty and wonder that god has made. It makes you thankful and stand in awe to be alive and living in this great country.

So, how did the last month of Q3 hold up? Well, let's dive in, and I promise you will continue to see a cooling trend, but it is definitely not as strong as cooling as it was earlier in the year. Remember, even though this report was released in October, all the data that I have access to is from September. We also have Q2 2024 data that we are able to review and release; that quarterly data will be at the bottom.

OCTOBER 2024 FLORIDA SINGLE FAMILY MLS REPORT

FLORIDA SINGLE-FAMILY RESIDENCE MONTHLY INVENTORY

MONTHLY INVENTORY

This data is based on spot data for a specific time period and market.  It is a measure for Active Listings for current month divided by Sold + Expired listings from prior month.  This data is a RAW Score report, reflecting the actual numerical value for that particular Metropolitan Statistical Area "MSA". Raw scores do not rank or compare a market’s score against any other market; multiple markets could have the same or similar raw scores.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red equals very few months of inventory, <1, while pink equals the most months of inventory, >8.
    

Florida continues to see a slow but increasing market supply of SFR listed for sale. There are obvious reasons why: increased housing prices and high interest rates - which result in sellers hesitating to list their properties for sale. Also, due to higher rates, buyers are staying put and holding off seeking a new home. However, in Florida, there could be other reasons, which are more cyclical and geographically driven. With the winter months approaching home sales have always historically decreased, resulting in both longer DOM and an increase in market supply. We are also wrapping up the tale of the end of the hurricane season, having already been hit by Hurricane Helene and another hurricane forming in the gulf. This will, of course, cause any new transplantees to give pause until the season is past us.

The Tallahassee MSA leads the charge again this month but for the reasons that are opposite to last month. We saw the largest jump in market supply (as a percentage based on the overall average movement across all 24 MSAs,) going from 1.4 months to 2.9 months. Even with a near 51% increase in market supply, Tallahassee still leads the state as the MSA with the lowest market supply. Interesting enough, the Crestview/ Fort Walton Beach/ Destin MSA has the highest monthly supply topping out at 5.6 months. This means that if NO NEW listings hit the market and the current trend of purchasing homes continues MSA would finally sell all inventory by March 2025. Of course, it is not that simple, as inventory moves on and off the market for various reasons.

FLORIDA SINGLE-FAMILY RESIDENCE DAYS ON MARKET

DAYS ON MARKET

This data is based on spot data for a specific time period and market. The Days On Market metric is the median number of days between a property’s listing and when it is noted as ‘sold’ or ‘off the market'. This data is a RAW Score report, reflecting the actual numerical value for that particular Metropolitan Statistical Area "MSA". Raw scores do not rank or compare a market’s score against any other market; multiple markets could have the same or similar raw scores.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red equals very few days on the market, <45, while pink equals the most days on the market, >180.
    

The average Days On Market continue to creep up, not as much of a jump from July to Aug, but still increasing. However, the longest DOM was at 96, so it is still below our historical average. Remember to consider both the DOM and the market supply when working out, at a high level, how long an asset may stay on the market listed for sale. The longer the DOM and the faster an investor wants to sell, the higher the probability they will have to reduce their asking price to move the asset quickly.

You can see in the graph below, that the average has been increasing, but at a slower pace. In July, the average increase in DOM was 7.84% for the state; by Sept, it had dropped to increasing only by 1.30% across the state.

The next interesting trend is the reversal of the South Florida MSA’s, which is probably more geared toward the fact we are coming into the winter months, and more aging transplantees desire to be in warmer climates. From Port St. Lucie, on the East coast, and Punta Gorda, on the West coast, and all other MSA’s South of these two, all saw decreases in DOM. with Cape Coral/ Ft. Myers taking the lead in decreased DOM by 6.02%.

FLORIDA SINGLE-FAMILY RESIDENCE AVERAGE LISTING PRICE

AVERAGE LIST PRICE

This data is based on spot data for a specific time period and market. The Average List Price metric is the average price of all properties listed during the month. This data is a RAW Score report, reflecting the actual numerical value for that particular Metropolitan Statistical Area "MSA". Raw scores do not rank or compare a market’s score against any other market; multiple markets could have the same or similar raw scores.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red equals very inexpensive properties, <$200K, while pink equals luxury properties, >$800K.
    

We all know that Florida skyrocketed into the unaffordable range during COVID. Take a look at the heat map below. This was Florida in Sept of 2019. Incredible! Our average was closer to $350K, with many MSA’s seeing a significant jump. The Naples/ Marco Island, Miami/ Miami Beach/ Kendall, and the West Palm Beach/ Boca Raton/ Boynton Beach MSA’s have always historically been priced high, as they were favorites for retirees, looking to move to warmer climates and splurge life savings on a nicer retirement home. Even so look at the Naples/ Marco Island average listing price in 2019… $920K. However, the average listing price by 2024, just 5 years later, was upwards of $1,800K! This MSA saw the largest jump in average listings, but all the average listings have increased substantially here in FL. While many commentators and analysts may point to factors other than what is acceptable to speak of, we all know that the major driving force was the strong stance of our elected governor, who protected Floridians from drastic federal overreach during the pandemic. The flood of registered republicans is astronomical. As we approach the 2024 Presidential elections we are seeing the results of this clearly. Florida has gained over +1,000,000 new Republican voters and lost a substantial amount of democrat voters. Local and state political decisions have vast and costly/ or beneficial results. This is personally why Blue Bay Fund does not and will not invest in Democrat-run cities inside Democrat-run states. Even with Democrat-run cities, i.e., Saint Petersburg, Tampa, and Miami, the ability for those politicians to run off the rails is somewhat hampered by a strong Republican-run state. I would offer that a Republican-run city has some ability to enact policies in a Democrat-run state, but ultimately, Democrat state-controlled legislatures and senates can pass and enforce anti-friendly investment and business laws that the Republican mayors must comply with.

The Crestview/ Fort Walton Beach/ Destin MSA saw the greatest decrease in average list pricing from $1,300 down to $1,200, yet overall the entire state seems to be closer to finding equilibrium in Listing Prices.

FLORIDA SINGLE-FAMILY RESIDENCE PRICE DROP PER 10K Pop.

PRICE DROPS

The number of properties with the list price lowered per 10,000 people. This is simply a metric that tries to provide insight into how many listing for every 10K residents dropped their listing price. Large MSAs, such as Miami and Ft. Lauderdale, may naturally have a higher amount of list price adjustments, while your smaller MSAs, such as Ocala, Sebring/ Avalon Park, will generally have smaller price drops simply because they do not have that many residents.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red equals equal or less than two price drops per 10,000 residents, a good indicator of a strong seller’s market. Pink indicates a weak market, where the buyers are able to set the price, and sellers have to adjust their listing prices. Higher than 18 indicates a very strong buyers' market, and more than likely, real estate investors will not be able to sell their assets at the value they thought they could 6 - 9 months ago.

The more listings that have price drops, the more of an indication that MSA is still softening, correcting, or crashing, just depending on the number of increased price drops. Fortunately, for the month of September, all but 2 MSAs either saw a decrease in listed property drive drops or were maintained. Sebastian and Miami Beach were the only two MSAs that saw an increase in listing price drops, and that was only an average of 1 per 10,000 residents. So, it's not that bad. However, the MSA’s that led the charge in decreasing the number of listing price drops were concentrated in the panhandle, with Homosassa Springs, Sebring/ Avalon Park, and Cape Coral/ Fort Myers MSA’s also improving their list price drops ratios. Our three-month trend also continues to improve by having an average of 5 less price drops per 10K in residents from 3 months ago. All good signs point to the fact the Florida housing market is finding its equilibrium.

OCTOBER 2024 FLORIDA SFR MARKET REPORT

FLORIDA RESIDENTIAL MARKET OUTLOOK

MARKET OUTLOOK

The anticipated future health and vitality score for each individual State, Metro, County, and Zip Code market is based on recent (shorter-term) transactions.

Generally, scores below 30 anticipate new or continued weakness. Scores between 30 - 70, if stable over the last several years, anticipate a continuation of current market conditions. If the score is TRENDING up within this 30 - 70 range, it may indicate an improving market; if trending down, a weakening market. A score above 70 anticipates a strong or strengthening market.

The past performance of any indicator, score, or algorithm is not indicative of future results. Do your own analysis before entering or exiting any market.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red, >90, means a very strong MSA when compared to all 400+ MSAs across the United States. The opposite is pink <10, which means it is one of the weakest MSAs when compared to all other MSAs across the United States.

So how is the overall Florida market when compared to over 400+ other MSAs throughout the entire United States? Our national average is in the 24th percentile, so it's fairly weak, but this is not a perfect metric. Let’s focus more on the MSA-level metrics. The Tallahassee MSA and the Sebring/ Avalon Park MSA have performed well, at least keeping themselves in the top-bottom half of all MSAs in the country. Surprisingly enough, some MSAs continue to show a strong trend of improvement, one of them being the Miami/ Miami Beach/ Kendall MSA, from a very weak metric in strength back in July to having consistent gains, placing it at the 29th percentile in the nation. As a matter of fact, from earlier in the year, when it seemed the South Florida markets were getting hammered, the past two months have shown what seems to be a trend of turning their positions from weakness to strength. Of course, Tallahassee was showing off last month, and they have come back down closer to earth, yet it still stands: the Tallahassee MSA is a strong market and one that investors should keep a continued eye on.

FLORIDA REAL ESTATE INVESTOR WEALTH PHASE

WEALTH PHASE

Simply put, Real Estate "Wealth Phases" are when you can make the most money with the least amount of effort, capital, and risk.

This is because:

1. Real Estate values/prices are appreciating.

2. Appreciating markets are VIBRANT; there are more buyers and sellers, deals are easier to do, real estate is (temporarily) more 'liquid'.

Real Estate is Cyclical. All real estate prices rise and fall over time. These cycles occur at the LOCAL (city) level. EVERY local market is different. (There is no such thing as a 'National' real estate market, only an average of hundreds of divergent local markets.).

Note: the 'Law of Small Numbers' can produce very large 'percent increase' stated results if the prior period starting value was very small. While this large stated percent increase is accurate, it can easily be misinterpreted.

Simply put, this is a binary metric. Either the MSA is currently in a wealth phase or it is not. This metric SHOULD NOT be read and interpreted in isolation. This should be used in comparison with all other metrics presented. Keep in mind this metric does not let you know whether the MSA in question is at the beginning of a Wealth Phase, in the Middle, or near the tale end.

Not much has changed from last month. The two MSA’s that have fallen outside the wealth-building range, did not recover

FLORIDA REAL ESTATE CASH FLOW MARKET OUTLOOK

MARKET OUTLOOK + CASH FLOW

This indicator attempts to identify markets with both relatively higher cash flow potential AND a relatively higher potential for appreciation.

The combined score is expressed as a Percentile from "0" (weakest) to "99" (strongest). For example, a score of "93" means THAT micro market scored higher (stronger) than 93% of all similar U.S. micro markets. The score is based on all markets nationwide. This allows you to see how your market(s) compare relative to ALL markets in the U.S.

NOTE: This COMBINED score is subjective in that it gives equal weight to Gross Rent Ratio and Hot Market Score. Use it as a 'shortcut' to filter through thousands of micro markets with likely above average cash flow AND appreciation.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red, >90, means a very strong MSA for Cash flow Investing when compared to all 400+ MSA’s across the United States. The opposite is pink <10, which means it is one of the weakest MSAs for Cash flow Investing when compared to all other MSAs across the United States.

This metric has always proven useful to investors looking to shore up their rental property holdings. While rental properties holdings definitely need more of a horizon look than just the past three months, we consider the past three months as a way to gauge the general movement of the Florida MSA’s.

Overall, our average MSA ranking hovered around 21 this past month. Our strongest cash-flowing MSA would still be Tallahassee, which is close to 300% of the state's average, so it's not too bad if you want to invest in cash-flowing properties in FL. While the Tallahassee MSA saw quite the jump in August, September saw a readjustment downward, but not by as much as would have indicated that the August increase was a fluke. In August, Tallahassee saw an 182% increase, and in Sept, it saw a 37.94% decrease but still held a 60% strength on a national comparison. Other big movers this past month, Jacksonville, Ocala, and Sebring/ Avalon Park MSA’s, all saw a -18.97% adjustment. We also saw two MSAs increase in their strength: Tampa/ St. Petersburg/ Clearwater MSA by +18.97% and the North Port/ Sarasota/ Bradenton MSA by +14.23%.

FLORIDA REAL ESTATE VALUE MARKET OUTLOOK

MARKET OUTLOOK + HOUSE VALUE

This indicator combines each market's relative house value with its relative "Market Outlook Score" to help identify potential markets with both lower-priced properties AND a relatively higher potential for appreciation.

NOTE: This COMBINED score is subjective in that it gives equal weight to House Values and Hot Market Score. Use it as a 'shortcut' to filter through thousands of micro markets when searching for low property values AND some likelihood of above average appreciation.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red, >90, means a very strong MSA for Cash flow Investing when compared to all 400+ MSA’s across the United States. The opposite is pink <10, which means it is one of the weakest MSAs for Cash flow Investing when compared to all other MSAs across the United States.

The Housing Value Market has remained suppressed, largely due to the massive influx of relocatees during the pandemic, which as a result have pushed prices much higher than their historic norms. In the Average List Price section I dove into what this has looked like, but in this heat map we are gauging the average strength of the housing market property value here in Florida.

The Tallahassee MSA, shines forth this past month in this metric as well. With quite the incredible increase of 305.45% in August and only a 72.45% correction in Sept, it is safe to say that the bang for your buck, especially for house flippers and new builders, will continue to be the Tallahassee markets. We also saw this past month several markets that adjusted lower as well; Jacksonville MSA by -36.23%, Ocala MSA by -36.23%, Sebring/ Avalon Park MSA by -27.17%, and the Villages, and Pensacola/ Ferry Pass/ Brent MSA’s by -18.11%. Yet we also saw four MSA’s increase by +18.11%; Palm Bay/ Melbourne/ Titusville, Lakeland/ Winterhaven, Tampa/ St. Petersburg/ Clearwater, and Cape Coral/ Fort Myers. Needless to say our overall strength in the FL market for housing is relatively low, with our statewide average being in the 11th percentile nationally. Make sure you are investing in off-market deals, and that the lender knows you have skin in the game to get the best rates.

Q2 2024 FLORIDA SFR MOMENTUM ALERT

FLORIDA RESIDENTIAL MARKET MOMENTUM ALERT

MOMENTUM ALERT

Like canaries used as early warning indicators to detect poisonous gas in coal mines, this score attempts to provide early warning of potentially weak, weakening, or even crashing Metro and State markets. Real estate markets tend to appreciate in a stair-step-up fashion, but take an elevator down when depreciating!

Entering markets with Canary scores below 20% should be done with extreme caution, if at all. Scores below 40% require caution and can often indicate or precede loss of home values. Proper underwriting and thorough due diligence are required.

Scores above 70% can indicate a strong, upward MOMENTUM, but not necessarily an entry point into this market or adding to your position. Use the other indicators’ scores and tools for better entry point timing signals.

The past performance of any indicator, score, or algorithm is not indicative of future results. Do your analysis before entering or exiting any market. You can see more details about that month’s snapshot by clicking on the heat map.

    The Heat Map Key to the left indicates what the corresponding MSA colors mean.  Red equals very a trend towards a strong quarterly outlook. Pink equals a trend to a very weak outlook. This is a quarterly report, so I will not have this in every Florida Market Report Update. However, it will be useful in the coming months as I will be presenting the Cash Flow outlook and House Values outlook, which will correspond to this heat map. This heat map is NOT to be taken as the sole indicator of where an MSA is definitively headed, but it is a key indicator.

My Momentum Metric can be taken in conjunction with all other metrics and give you a really solid picture of where the market is heading. This is NOT a prediction; this is simply a metric that reflects what all other metrics are saying cohesively. Invest at your own risk. With that being said, where are we headed?

Well, based on the numbers and our heat map… Florida is definitely struggling. From a solid seating in Q3 2023, we have cut our momentum in half three quarters later. We won't know Q3 2024 numbers until late November or early December, so I’ll report those as soon as possible. Several MSA’s have completely flatlined; Panama City, Jacksonville, Deltona/ Daytona Beach/ Ormond Beach, Palm Bay/ Melbourne/ Titusville, Lakeland/ Winterhaven, North Port/ Sarasota/ Bradenton, Punta Gorda, Cape Coral/ Fort Myers, and Naples/ Marco Island are all sitting below 10% on our momentum score. If you are investing in these MSA, be sure you are being conservative with your acquisition numbers as well as with your rental figures if holding rental properties. It’s not looking like it could be getting any better. MAS’s that are holding their own and weathering the storm if you will; Pensacola/ Ferry Pass/ Brent, Tallahassee, Homosassa Springs, Sebring/ Avalon Park, and (interestingly enough) Miami/ Miami Beach/ Kendall MSA’s.

There were some surprises in Q2 2024, as far as movements, four MSA’s dropped at least 30%+ in their momentum score; Palm Bay/ Melbourne/ Titusville, North Port/ Sarasota/ Bradenton, West Palm Beach/ Boca Raton/ Boynton Beach, and Naples Marco Island. Of these, there is only one with a relatively strong momentum score, and that would be the West Palm Beach/ Boca Raton/ Boynton Beach MSA.

There were some MSA’s that did see some improvement, and I’m sure you have noticed based on the prior couple of months in reporting. Remember this Momentum Metric is all the way through the end of June 2024. The MSA’s that I’ve been writing about are the four mentioned below; Pensacola/ Ferry Pass/ Brent, Tallahassee, Ocala, and The Villages MSA’s (though I have to be honest, I did not see The Villages appearing as improving their momentum). The key here is to identify several MSA’s that have a really low momentum score and begin to notice when the momentum begins to pick up. This month's report is four months past the Q2 2024 numbers, so we have already been tracking where some of these MSAs are headed.

Now that you have a solid idea of what is happening in the Florida SFR real estate space, you can invest confidently whether you are a fix and flipper or a wholesaler. Whether you are a new construction investor or a buy-and-hold investor here in Florida, you now have sound market metrics to make wiser, more informed decisions. Should you need any guidance or investing consideration, please feel free to reach out and schedule a call with me, and I’ll be more than happy to discuss the market and where we are putting our capital towards.

With Honor,

Edwin D Epperson III,
Manager& CEO
- Soli Deo Gloria

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