It’s November! We are finally in the month where Season (kind of) starts in South Florida. The last few years have been crazy in South Florida, and it finally feels like things are returning to normal. With that being said let’s look at the current market landscape:
Demand Side:
There are three main factors currently limiting demand in our housing market:
- Interest rates are currently just over 6.5% and are seemingly headed to 7%. Money isn’t nearly as cheap as it was. Just to give you an idea of how this effects purchasing power:
Home Purchase Price: $1,000,000
Amount down: 20%
Interest Rate: 3%
Monthly Payment: $4,523
Home Purchase Price: $1,000,000
Amount down: 20%
Interest Rate: 7%
Monthly Payment: $6,472
- The financial markets are down. In South Florida, there are a lot of cash deals. It was easy to pay cash for a house when the stock markets were at all-time highs and people felt confident taking out their gains to put in a solid investment like real estate. Low mortgage rates worked hand in hand with this point, as lots of people felt they could pay cash short term and finance the property once they owned it with low rates.
- The real estate market in South Florida is up roughly 40% since Quarter 1 of 2020. When you take the first two factors and then pair them up with the fact that prices are 40% higher than they were less than 3 years ago, it doesn’t make people jump in line to buy more real estate.
Supply Side:
We are seeing historic low inventory levels in South Florida. People aren’t selling their homes because quite simply there is nowhere to go. If you bought a home pre-covid at a 3% interest rate, then why would you move to a home that is 40% more expensive than pre-covid and at a rate more than double what you are currently paying? It is too expensive to upgrade or even downgrade. So, while interest rates and home prices are hurting demand, they are equally hurting supply and this is holding prices steady.
What this all has led to:
Nice homes that are turnkey ready and require very limited work are still selling fast. There is still healthy enough demand down here to sell a well put together home. Homes that are more of a project (require money and time and effort) are sitting and are very tough to sell. No one wants to buy at this new high price point if they must put money and work into the home.
My Suggestion:
If you can sell and have somewhere else to live that is a good option, I would think about it. The market is still very strong for good product and we are still in record setting landscape.
If you are looking to buy and can handle a project, then throw out some lowball offers and see if any sellers need the money and will bite.
If you are looking for a nice home in Florida that doesn’t need any work and you can enjoy this winter, then be prepared to pay and play on the seller’s terms.
