How Will the Build Out Impact Florida Keys Real Estate? - Part 1

As the 2023 moratorium on building permits nears closer investors, landowners, homeowners and buyers are all wondering, “How will this affect me?” While much remains illusive about what the implications will be, one thing is clear - the 2023 building permit ban will change the landscape of the Florida Keys real estate market for the foreseeable future.

One of the most significant impacts is already being felt, even with the build out still two years away. Combined with other factors, and in anticipation of the ending of new development due to the ban, home prices are already on the rise. In 2020, median home list prices in the Florida Keys went up by nearly 9% in comparison with prices in 2019, with final sale prices also increasing by over 6%. This shows a clear and steady increase in home values in the Keys. With more than half of 2021 in the books, the home value increases have been even more impressive with a consistent uptick in sale prices as the year progresses. According to the Florida Keys MLS, the close of the first quarter of 2021 saw average home sale prices increase by 43.6% over the first quarter of 2020! This trend shows no signs of slowing down, and as the building permit ban approaches, supply will be even more limited which will only raise prices higher. The inevitable question is, how high can prices climb?

After 2023, there will be no new building permits, but some areas have already run out of their allotments. This means that we are seeing less and less availability of supply of new properties on the Florida Keys MLS. Q1 of 2021 had nearly 3% fewer new listings, and a staggering 62.7% drop in active listings compared to Q1 of 2020! As more and more areas run out of permits, and no new ones allowed, supply will continue to tighten creating an even more competitive and difficult market for buyers.