Hello, investors. I trust your summer is wrapping up well. My wife and I had a relaxing end to the summer, and now my boys are back in school, with my oldest in his senior year and my youngest just starting high school. It is amazing how fast time flies, and it's a great reminder that we should spend our time enjoying those we love and building long-lasting friendships and relationships that will stand the test of time.

My wife, Carolina, and I enjoyed hosting a friend and her daughter with us for a month. During that time, their family visited, and we had a great time playing Mexican Train. It's a dominoe game and fun. That particular game lasted well over 3 hours, and at least one bottle of tequila and even a cigar during a break!

So, I’d like to go on a little bit of a business rant before we get into the business of Florida real estate. I had a good friend shoot me a text message (screenshot below), and they were complaining about Spirit Airlines. While I appreciate being as frugal as possible, their complaint was that Spirit had already canceled one of their flights and had just canceled another. Yet they were also very pleased with the extreme discount they were getting on the costs of tickets. Airlines are businesses, too, and if what my friend explained to me is a standard practice of Spirit, then no wonder they are going out of business! For five seats from Louisville, KY, to Orlando, FL, for only $200?? All I can say is you get what you pay for, and don’t be upset when what you're purchasing is “cheap.” The resulting satisfaction will be cheap, too.

Last, I’d like to announce here that twice a year, one of my board of advisors and I host an event called Beans and Bullets. We host the event on his property North of Tampa, in the country. I have a bunch of former SOF and tactical officers come out and train and provide safety for the makeshift range. We have every type of gun present, every age present, and all types of experience; from no experience, even anti-gun people, to professional range shooters and real live operators in special operations! PLUS, my company, Blue Bay Capital Management, caters to Mexican food for all attendees, and all of this is for FREE! If you have any interest let me know. We do not advertise it, and it's been growing, grassroots style, and by word of mouth. This will be our 6th event in 7 years, and we will have room for 100 adult shooters and unlimited room for minors from 17 years old down to 3 or 4 years old! Let me know if you're in the area on Oct 26th and you want to shoot and eat Mexican!

Alright lets get into the Florida Single Family Residence market and see where the market is trending! As a high level over view, and this should be no surprise to my readers, the market continues to trend down. Slower and longer are the words of the month. Though for some investors this will come as a surprise, this is why you read my monthly Florida Market Update Reports. So that you stay on top of the trend and can make wiser more informed decisions right? Lets dive in.

SEPTEMBER 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.

As explained in previous market reports, I do believe that the Florida SFR market has started to find its equilibrium and settle into a more normal valuation.

I would like to point out that while the average monthly inventory throughout the state had stayed consistent with 3.6-7 months of inventory, in August we saw a SHARP decline in inventory (a combination of fewer than normal homes being listed for sale, as well as existing inventory being bought) the Tallahassee MSA has shone through as leading the state. This will not be the last metric that the Tallahassee MSA leads the pack here in FL. Tallahassee and its residents and investors are proving to be quite a sturdy bunch of Floridians.

For our real estate investors who are looking for investment opportunities, it would make sense that you have multiple funnels for potential leads. If you are relying strictly on the MLS and your chosen real estate agent to find you deals, you may be only able to complete a few deals every year. Be sure to build out and flex your off-market branding, and networking.

For the Blue Bay Fund I capital investors, Tallahassee has been a strong MSA offering solid investment opportunities. We currently have several loans that some of you are invested in, and I am working to generate more investment opportunities there as well.

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 Days On Market is always a fascinating metric especially when compared to the Market Inventory metric above. As you may already know, the Day On Market is a numerical expression for the average number of days it takes for a property to be listed for sale and finally sold. During the heydays of the pandemic the DOM for much of Florida was sub 30 days. Well gone are those days as we continue our trend of leveling off and finding our equilibrium. Just so that cooler heads prevail, for those who have become used to those pandemic DOM numbers, just know that historically speaking, even here in FL, the average DOM was between 90 - 120. For our microwave society, that may seem like an eternity, but in reality, this month, with DOM averaging now up to 74, we are still well below the historical average.

The Naples/ Marco Island MSA beat out the pack, claiming the longest DOM, as it just now settles into the historically normal DOM for Florida. All MSAs had increased DOM except one that is the Sebring/ Avalon Park MSA. And again Tallahassee beat out the pack for the “least longest” days on the market, coming in at 50.

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.
    

This one metric is a great metric for real estate investors. If your finished real estate product is BELOW the average listing price in that particular MSA, the likelihood that you will have a shorter DOM, as well as a faster path to profitability, is higher. As we continue to witness this trend of property values finding their equilibrium for market inventory and DOM, the resulting metric will be the decreasing of average listing prices throughout the state. I personally think the state-level average is too broad, and since I am able to provide more MSA-specific data, it is my opinion to focus on the specific MSA you are investing in (whether as a real estate investor or a private lender).

Again, the Tallahassee MSA beats out the competition this month by increasing the average listing price from $382K to $385K. Not a significant increase, and honestly this is good news. Drastic and fast increases in listing price for an MSA indicate a rush to buy properties not based on facts but based on emotions, namely FOMO. In every case, a sweeping desire to buy properties, en-masse, for a particular MSA will result in a cooling off event, and typically quite drastically. I like to see slow and steady increases in property valuations. However, this is not to say that in the future, Tallahassee will not see or experience a sharp decline in property values. Simply stated, the trend right now is encouraging and sustainable.

The biggest losers of Average Listing Prices will be the North Port/ Sarasota/ Bradenton MSA, Naples/ Marco Island MSA, and the Miami/ Miami Beach/ Kendall MSA’s, having lost an average of 5%+/- from their previous months average listing price.

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.

This metric is a great side-by-side metric to look at when comparing your Average List Price to let you know what’s actually happening. The Average Listing Price metric simply lets you know the initial sentiment of the market as it concerns their property. As more and more home sellers are confident in the market and their ability to sell their property for top dollar, the initial listing price will excuse confidence. As market sentiment wanes and home sellers have to sell out of desperation or even rising costs (likely what is coming in the years ahead for Floridians) you will see a lower initial listing price, thus a reduction to the average. However, this metric is a tale-tell sign of how right or wrong the home seller was in their estimation (or the realtor’s estimation) of the market. This is one of the reasons I say that we are finding our equilibrium in property values. This metric measures the number of listings that had a price drop. This means the property was listed for $750K, and then it dropped to $700. Of course, this metric is not absolutely nor microscopic in detail and breadth. We will gather enough information about the market and, more importantly, the trend. If an MSA has experienced a reduction in price drops, then it is colored green (this is a good thing as property values, when initially listed, are more in line with what the market demands). If there is an increase in price reductions, then that is colored in red, and it’s a bed thing. This means the market is still overestimating the value of their property. No matter what you will always have price reductions and price increases, in any MSA, in any market. What we want to look at is the trend. Right now, the trend is stating there are few listings with price reductions from July to August, which would indicate a leveling off of the overall market correction that has been taking place since 2023.

SEPTEMBER 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+ MSA’s 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.

With all these metrics so far, one may think that it’s the end of their investing career. Well, first, don’t let the emotional train, fed by sensational news clippings, derail you. Second, our Market Outlook metric is increasingly encouraging. Our national average, when compared to all other MSAs (there are over 400 in the United States), hovers in the bottom quarter of all MSAs. Not exactly a strong point. But remember, our market here in FL experienced one of the most robust appreciation and performance periods in recent history from 2020 to 2023. Most of our MSAs experienced 25%+ annual appreciation rates for almost 3 straight years. There were a lot of reasons why, but I’ll tell you the most obvious reason that no one in the corporate media wants to discuss is the policies of the state of Florida being advocated and pushed by our Governor, Ron DeSantis. In my humble opinion, these policies had direct and impactful results in the influx of relocating families from predominately Democrat-run areas. I know this because I have spoken at length with dozens of relocated families, and all of them stated they came down here due to the policies of Gov Ron DeSantis and his stance on resisting the medical community overreach via fiat government dictates.

Ok, now that I have that off my chest, what is the continued market outlook for Florida? On the national scale, we are not performing as well as most other MSAs (remember, though, we have quite the height of property appreciation to cool off from). However, looking at the Florida Market just as itself, we have a 53% favorable outlook. Again, Tallahassee is taking point… and WAY out front than all other MSAs, that MSA and Miami/ Miami Beach/ Kendall MSA seem to be carrying the rest of Florida in the favorable outlook category.

For our real estate investors, my recommendation is the Central Florida MSA’s; Orlando/ Kissimmee/ Sanford, Palm Bay/ Melbourne/ Titusville, Lakeland/ Winter Haven, and the North port/ Sarasota/ Bradenton, have a pretty strong trendline downwards, so be sure to be ultra-conservative in your offers to purchase and your ARV. I would highly recommend that you not source potential deals from the MLS in these MSA’s but rely on our off-market sources if at all possible.

For our fund investors, seek more loan participation opportunities in the panhandle and even South Florida. Miami has had solid growth, and while they have not seen any serious cooling down of late, it could happen. We will see. Either way, we are making loans all over the state as well as other states. If you're not a member yet of my Investor Club and getting weekly emails updating you on the Fund and deals we are doing, then sign up at the bottom of this article.

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.

Our Wealth Phase metric has been unchanged for most of 2024…. until August. We saw Sebring/ Avalon Park and Port St. Lucie MSA’s turn off their wealth-building stage indicator. Again, all other MSAs remain unchanged, and there are plenty of opportunities in FL to build long-term wealth, both with appreciation and cash flow.

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.

So this metric is really for those real estate investors and private lenders who are investing/ lending on rental properties. Knowing where the most profitable cash-flowing properties are located is critical. Again, Tallahassee really just came out of left field with this metric. For them to go from a 28 to 68 strength in one month is …bizarre to be honest. Now, this could be exacerbated by a lack of inventory, which we saw in the first two metrics looking at the MLS data. But even then, unless the majority of existing leases all expired and the landlords all dramatically increased their rents… this metric smells of some bad underlying data from the Census Bureau, Case Shiller HPI, FRED, Zillow, or Relator.com. We will have to see. Besides Tallahassee, the rest of the state is on track as far as a preference for cash-flowing rentals. We can see a decrease in the central Florida MSA, as mentioned in the previous two metrics, which would contribute to the declining Market outlook. Our star performers have always been Tallahassee, Sebring/ Avalon Park, and the Ocala MSAs, so there are solid investment opportunities there for those seeking cashing assets when taking into consideration the costs of those assets for what you can rent them out for.

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.

Well, what I say… Tallahassee is just pulling out all the stops this month. They went from 15th in strength and sot for the moon with a 50 strength index, increasing over 300% in one month… that seems suspect to me, as it should to you as well. I’m beginning to think that there are some employees of the data aggregate companies I use that live in Tallahassee.

As for all other MSAs, the rest are in line with all the previous metrics. Central Florida MSAs continue to decline while the panhandle seems to be making headway. South Florida doesn’t seem to know what it wants to do right now, so we will wait and see. All things being equal, it's safe to say if you're investing in real estate as either a fix & flipper or a new construction investor if you're investing outside of Central Florida, you will probably do well, and the future value of your asset, once complete, should yield a nice result.

For the Blue Bay Fund I investors, we are always focused on and committed to making risk-reduced loans, secured in 1st position, and borrowers who are willing to put their money where their mouth is. If you are interested in learning how you can diversify your investments into these loans and partner with me and the great real estate investors I am loaning to, then l’s talk. Sign up for my Investor Club below, and we can schedule a time to talk.

Well this wraps up my September report covering the month of August 2024. Clearly we have seen the cooling off of much of the market, albeit the occasional anomalies such as Tallahassee popup but those metrics should work themselves out next month. Invest wisely, never rush, but when your ready don’t hesitate to pull the trigger. Make sure that you have wisdom in your corner and the ability to reach out to a mentor or someone you trust to help you make the best decision for your investment portfolio. I look forward to helping you make wiser and more informed decisions to better your families generational wealth.

With Honor,

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

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