An early season surge in the housing market here that started in mid-January has island and mainland real estate agents feeling upbeat after a tough 2023, when high interest rates and low housing inventory damped down the historic pandemic property boom.

“I have been on roller skates the past two weeks,” said Douglas Elliman broker associate Sally Daley. “Communities that had been soft now [are suddenly busy]. Sellers and buyers are back with a vengeance.”

“It has definitely picked up in terms of interested buyers,” said Berkshire Hathaway HomeServices Florida Realty agent Chip Landers. “We are talking about it around the office. Normally you have a lot of people this time of year looking, but now they are actually buying,” especially on the mainland, where homes are moving almost twice as fast as on the island.

“The market is starting to loosen up with the lower interest rates,” said Scott Reynolds, leader of the Reynolds Team at Compass.

Starting at the end of October, 30-year mortgage interest rates dropped nearly 20 percent, from close to 8 percent to 6.6 percent, before leveling off in late December, according to Freddie Mac, with some mortgage companies offering rates below 6.5 percent.

Landers said he has heard of buyers securing rates as low as 6.25 percent – more than 1.5 percent below the October highs.

That makes a big difference in buyers’ bottom lines.   Meanwhile, the S&P 500 index has gone up by 21 percent during the same timeframe, climbing from 4,117 on Oct. 27 to 4,895 on Monday, with homebuyer confidence rising apace.

“Buyer activity and purchase offers have increased dramatically over the fourth quarter of last year,” said Daley.

Generally, lower interest rates are having a bigger impact on the mainland, where more buyers get mortgages than on the island where over 70 percent of deals are all cash.

“The increase in activity on the island represents an increase in overall confidence in investing in the Vero Beach market as consumer confidence and S&P performance have improved,” Daley said. “Interest rates are less a factor for island buyers.”

Other economic forces bringing buoyancy to the Vero Beach housing market include a big reduction in inflation – which has dropped from a scary high of 9.1 percent in June 2022 to 3.4 percent today – and continued economic growth.

Inventory is another bright factor in the Vero market. There were about 350 single-family houses and condos for sale in 32963 this week, up from fewer than 100 at the low point in the summer of 2022, according to data provided by Daley.

Countywide, there were approximately 1,250 buying opportunities, including 548 condos and 698 houses, up from a rock-bottom low of only 270.

So, agents have more listings and buyers have more choices. At the same time, inventory is still tight enough to keep prices stable or moving up at a sustainable rate.

“I’m anticipating appreciation in the market to be anywhere from 3 to 5 percent this year overall on the island, with higher appreciation likely in the ultra-luxury waterfront segment,” said Reynolds.

“We still seem to have sufficient demand to absorb the increased supply, so I would characterize our market as balanced or leaning towards sellers,” said Daley.

The island market still faces headwinds. Inventory remains well below pre-pandemic numbers and high home insurance costs, along with an uncertain insurance market continue to cause serious headaches for sellers, buyers and agents, and giving some buyers pause.

Even serious, qualified buyers who are reconciled to post-pandemic home prices and higher borrowing costs can falter in the face of what seem like crazy insurance rates and requirements.

“It can be the straw that breaks the camel’s back,” Daley said.

Another problem is that inventory is still well below pre-pandemic numbers and continues to be restricted by homeowners who are restrained by what longtime Vero Beach mortgage broker Clay Collins calls “golden handcuffs.

“People who have (mortgage interest) rates in the low threes or high twos are not going to make a move until rates come down further,” he said. Despite these challenges, island agents foresee a good 2024.

“We are expecting an increase in our business,” Reynolds said. “I think our transaction numbers will be similar to 2023 but dollar volume will be up because of higher prices.”

Reynolds based his expectation partly on a flurry of mortgage applications, a leading indicator of home sales.

He has a branch of Contour Mortgage inside his office, with a dedicated loan officer who works with his agents and their buyers to craft doable deals.

“Mortgage applications are up 30 to 35 percent compared to the end of last year,” Reynolds said.

“It is a promising market, all the way around,” said Landers. “Prices have stabilized, and interest rates and inflation are coming down. There seems to be a general perception that the economy is doing pretty well. All the indicators point to a good year for real estate in 2024.”