Here’s a market letter I sent out to my clients yesterday. I thought it was a good time for a market update, with the housing market now in its high season. It’s a brief sketch of the highlights, so if you’d like numbers or more detail, call me at (727) 289-3289.
–Stephanie
Here’s the full article.
The Mid-2017 Housing Market in Florida and Nationally
In Florida, as elsewhere in the nation, the housing market is healthy but not frenzied, straining at the leash with high demand, and constrained by tight inventory.
This is a customized, personalized market, rather than one being driven by any standardized impulse or financial incentive such as we’ve seen in boom times. There are two underlying trends, the likely rise in interest rates over time, and a rise in home values. But these are not shaping the market in the way that demographic trends are, with the boomers aging out of their working years, and the millennials stepping into their careers.
Individuals are restructuring their portfolios, with real property for many people being their most key asset. More and more homeowners have now regained equity in their homes. The aging baby boomers are thinking like investors, and cashing out or parlaying their life earnings into retirement situations.
Millennials meanwhile have an earnest desire to get out of renting and own a home, equal with any generation previously. Their start was simply delayed by the great recession. My reading suggests that the notorious student loans are not as great a restraint as we’ve heard, and certainly as the young ones start new households they want to buy rather than rent. Some believe we will see the impact of millennial entry into the market as early as this year – 2017 may tell this story.
And millennials may not have read my article on how to get started in home ownership, but they should: Why Your First Home Should be an Investment Property.
Lenders are doing what they can for home buyers, with a range of new financing options appearing. Low and No down payment loans are becoming available. Bridging loans are appearing for existing homeowners moving up. Credit scores are at a record high, after years of repair – credit spending was restrained for some years after the crash, and also by now a lot of bad credit has fallen off the records.
It takes a strong economy to have a strong housing market. And while we saw the housing market pull the economy back on its feet over the last few years, now job creation seems to have taken over. In fact, there are labor shortages in the construction industry, holding back new housing starts – we need 1.5 million new homes to fill the gap.
Off topic: there’s a joke that says, if the millennials would all take second jobs in housing construction, they could pay off their student loans AND find somewhere to live. It’s just a joke, kids.
NAR chief economist Lawrence Yun expects interest rates to hit 5% by the end of 2018. Analysts expect home values to increase by 5% in this year. Home sales are at their highest level in a decade, and REALTORS were 16% more busy in 2016 than the year before, even with many new agents entering the industry.
Inventory will remain tight. Rental property remains a prime investment, and aging and distressed property continues to be fix-and-hold rather than fix-and-flip. Affordability is still an issue for many people. Rents are high, and it’s a landlord’s market – it’s becoming very well understood in mainstream culture that it’s far cheaper to buy than to rent, IF you can do it.
The overall trend of moving up is crimped with the boomers downsizing, and the millennials still looking to gain traction. This being the US, relocation continues everywhere among homeowners, from career, family and military reasons, as well as the standard downsizing as family shrinks, and upsizing as family grows.
So it’s not a one-size-fits-all market today, it’s very individualized, but each venture can find its match if prices are realistic.
And Florida remains a top destination to buy a principal or second home.
© Stephanie Passman
