Here’s a brief snapshot of the housing market in South Florida that I sent to my clients this morning. I hope you find it useful…
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In general the market here is very bouyant – the bottom line hindrance is still an acute shortage of inventory. It’s very much a seller’s market, and good properties priced correctly get snapped up fast. I’m not seeing bidding wars out of control, but we have a lot of seller requests for buyers to bring their highest and best offers up front, as homes are getting multiple offers.
There’s a sense of financial prudence and caution with both buyers and sellers, and this is a national thing as well, but it works to dampen any giddiness that might occur. Prices are rising and closings are up as of June, so homeowners are bringing their homes to market and selling them – but not if they’re overvalued. So this is good market stability, but everyone yearns for more inventory. It’s coming, slowly.
Florida’s economy is growing, and the housing market has now cleared a lot of its former distressed ownership. You can still buy a lot of home here for the dollar, and the state remains among the most attractive in the country. The fundamentals are sound, but homeowners can only put their homes on the market if they think they can move somewhere else, and inventory is tight all over.
The move-up effect caused by first-time owners remains stalled, but is trying to start back up. First time buyers are trying to come into the market, and lending practices are trying to loosen up. We’re getting there slowly. Investors are still holding the properties they bought, rather than selling them. The single family home seems to be the gold standard investment for rental investors. Rents everywhere are going up almost to a breaking point – buyers are already surging to markets, and rents are now adding to the incentive to buy.
Nationally, job recovery seems well underway, but I don’t see that wage levels are going up yet, so we still have a lot of caution about the future in terms of spending. Money velocity in the US is still slow – this means money is getting spent, but slowly and cautiously, with fewer net transactions. So no booms are starting, but no catastrophes either.
The Fed promises to raise interest rates – we’ve heard that one before, but the only way they can go is up. Small increments in mortgage rates do price large swaths of people out of the market, rates do have significant impact. There’s no doubt this is a great time to buy and a perfect time to sell.
A lot of the move-up dynamic that always fueled housing nationally, in my personal world has been replaced by the move down, as empty-nesters downsize (and bring strong cash equity to deals). Florida was always a hot spot for this trend of course.
So what does all this mean? I think everyone will agree that business in the US yields a slightly harder dollar nowadays, and life itself is lived at a very busy pace. Lots of people yearn for the beach and a slowdown. Fundamentals here are strong, the market is very efficient, and every day is a chance to move to the perfect next home.
