The market has definitely shifted from an extreme seller's market to a market that now has more sellers than active buyers. The markets I’m seeing soften the most are 2nd home purchases, and there aren’t many people financing vacant land at current rates. Investment home buyers are only buying when the numbers make sense vs hoping for continued rent increases. Primary home markets are the strongest segment. There’s a large number of potential 2nd home/vacant lot buyers that have pushed the pause button hoping/thinking that either or both interest rates and/or prices will come down in '23. Buyers a year ago felt they had to buy or prices would be higher the next month if they didn't act quickly. Today many buyers aren't confident in the market and are worried prices may fall. When you combine fewer buyers and more sellers that see the market/economy softening, the number of properties on the market starts to rise. The total number of homes on the market from Mexico Beach to Cape San Blas has increased from 70 in March to 195 today. Vacant lot inventory has increased from 123 in March to 200. Even though much higher than 9 months ago, these are not historically high or alarming numbers. The market is usually slowest here in the winter and busiest in the spring and summer. 2022 was the first year in my career that demand peaked in spring and not summer. Sellers that tried for higher prices in summer than in the spring were most often left disappointed and either still own or made reductions. It was still an active summer, but the bidding wars had stopped and prices were holding, but not continuing to increase. Summer has the most people here and a percentage are looking to buy during their vacation which leads to summer usually seeing the most sales. I heard countless Realtors complaining about how "slow it was for summer." In reality, I think we'd been spoiled for the previous year and a half. We ended with 533 sales in the first half of the year and 379 in the 2nd half; for 912 sales from MB to CSB. For comparison, there were 808 sales in 2019, 1030 in 2020, and 1328 in 2021. (All of these statistics are from the RAFGC MLS and there are additional sales like FSBO not included.) The demand and number of people wanting to move here full time is still solid. With all the negative economic news, the market is far from dead with 44 sales in December, and there are also 58 properties under contract as of today! These are pretty solid numbers, just not the craziness seen early last year. Cash buyers remained a dominant force in 2022 with 52% or 476 sales reported as cash purchases. Cash 1031 buyers facing tax deadlines made some of the high watermark sales for the year. Cash buyers haven't gotten a discount in years with such a competitive market and are starting to once again become more desirable with discounts considered as we move into '23. I spend a great deal of time trying to figure out what the market will do moving forward. I’m curious about how others think the market will perform in 2023 and do a fair amount of reading online. The economists at the National Association of Realtors have the most bullish forecast from a group that I follow with a projected increase of 5.4% in 2023. Most other “experts” are projecting a slow and flat market or slight decreases. “Zillow expects national home values to remain relatively flat next year, and even fall in the most affordability-challenged markets.” Fannie Mae predicts a 1.5% decrease, Redfin predicts a decrease of 4%, and the largest predicted decrease nationally, I found with Morgan Stanley suggesting a 10% decrease in home values. I've said for years and will say again: as long as the vacation rental market holds, I can't see big decreases in home values. Enough owners count on this income to support their purchases that a substantial downturn in the rental market would be a big problem and start forcing sales. The best news I've heard for 2023 might be from talking to multiple rental management company owners. All have said their 2023 bookings are either up or at least in line with recent years. 2022 was a very good year for vacation rentals. For most owners/rental companies, it was either their best year ever or the 2nd best followed by 2021 when so many people were working from home and out of school due to Covid and vacationing during times that typically weren't busy with vacationers. A couple of large vacation rental companies are telling me they are up considerably for Summer bookings compared to last year at this time, and I think that's a great sign. I've heard positive news from owners that rent as well and some that were hoping to sell have already pulled off the market and are happy with renting until market conditions change back to a seller's market. A number of potential buyers believe there will be a considerable number of foreclosures. Most purchasers that purchased in years past can still sell for considerable profits or at least have equity which all but eliminates foreclosure risk. I read the national headlines about all the foreclosures that have started in the US, but we haven't seen any signs of that locally. These same past purchasers that financed are also in on much lower mortgage rates than they could get today. This is leading to some sellers pulling off the market that were hoping to sell and then make another purchase. Our local area and Florida in general is also trending in a much more positive direction than many parts of the country for both full time residents and vacationers. I don't think a flat market and slower market is necessarily a bad thing, even for investors when factoring in the huge gains in recent years. It will create a more balanced market vs the extreme seller’s market that existed in '21 and early '22. We're trending towards buyers having some negotiating power and opportunities and still a moderate market for sellers willing to price competitively. Market numbers suggest that the vacant land market is not as strong as the housing market, particularly in our beach areas. I agree with some outside investors watching our market that describe it as a bit of stalemate in recent months. The Mexico Beach to WindMark vacant land market is a good example with 86 properties for sale and only 3 purchases in December. That's about 30 months worth of inventory compared to the frenzy in March where we averaged 32 lots on the market and 28 sales that month. Buyers are now wanting more of a discount than sellers will give. Many sellers are waiting on the typical large run of Spring buyers. I don't think anybody will have a real idea of how 2023 is going to play out until we see how the Spring market plays out. If it remains slow, there will be some segments strained where sellers will have to reduce to sell. On the flip side, if spring is busy with buyers, we could see prices rising in the Summer as they do most years. What happens with interest rates will undoubtedly be a large factor. | 
