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In the Pandemic years, we have “enjoyed” meteoric and unprecedented rises in home prices. In 2020 alone, South Florida real estate saw impressive growth:
● June 2021 vs June 2020 saw a 40.8 percent increase in number of homes sold.
● June 2021 vs June 2020 saw a 116 percent increase in cash purchases.
● June 2021 vs June 2020 saw a 113.8 percent increase in overall dollar volume for residential sales.
● June 2021 showed a very strong Seller’s Market with only 1.8 months of inventory.
South Florida saw an influx of buyers from the New York City metro area and California, producing an incredible 27 percent increase in home values. For every person who left Florida seven people moved in! Florida gained more residents than all but four states between 2013 and 2020.
This is great news for homeowners in South Florida, but it is a rough ride for those trying to buy.
The real question is where do we go from here and this is an article that you won’t read anywhere else. It is written by me and, as a Realtor, I can often sense things months in advance of the stories you read in the newspaper or online.
The simple fact is that what goes up, must come down. We have flown too high on borrowed wings. If something seems too good to be true, it probably is too good to be true. There are sayings like this for a reason. So why do some believe that this time is different?
We had a very unsettling period of time called a Pandemic (actually still going). It literally stopped the world! Animals bred differently, our atmosphere cleared, the seas were healthier, factories stopped and 600,000+ Americans died. How in the heck did the real estate market explode higher? I believe it was a combination of the government trying desperately to keep the economic lifeblood from collapse (in the form of historically low interest rates) and consumer gluttony. People simply didn’t have the ability to spend their money normally and when they were stuck at home unable to fill their homes with stuff, they went to find a better home for this ‘new normal.’
Now, although we are still in the long tail of the Pandemic, ‘normalcy’ is slowly returning and demand for homes is waning. Yes, we still have a housing supply shortage, but that soon will pass.
I have been feeling this shift to a more normal market since the beginning of July. The long lines of people waiting to get into open houses has passed. The calls I used to receive from frantic buyer has turned to even more frantic calls from renters. The mortgage companies I speak to regularly tell me that refinancing is nearly 90 percent of their business. Inspection companies are available again with just a day or two of notice. And, most importantly, I am getting the calls from SELLERS who feel the end of the good times is near.
The near-term future I see is that more inventory will come into the market and there are fewer buyers who are capable of buying these overpriced homes. This is what sets up my next medium-term prediction. Prices will come down. The question is how much. I believe, given current global conditions, we should see a 10 percent slide in the average home’s sale price.
These trends are not equal across all strata of our market, by either geography or size of home. For more information, please contact me so we can review your personal scenario.
Finally, I will point out another sea change that is in the winds. As of July 31, 2021, the moratorium on evictions for renters ended. Miami-Dade County has an estimated 72,123 (16.7 percent) of rental households behind in paying rent. More than 6 million households nationwide are behind on rent, owing a total of $23 billion. Landlords need that money to return to ‘normal’ business. This could lead to a dangerous path of homelessness in the near term for lots of families.
Yes, we are on the long tail of Coronavirus, but it’s not over yet. Stay tuned, and stay informed.
Real Estate Update
The Seller’s market continues (for now) in Pinecrest with just 2.2 months of inventory available (as of 8/6/2021). If you’re ready to move, get the best local expertise, truthful guidance and realistic expectations. It’s easy to get started at miamihal.com/getstarted.
I invite you to view past episodes of my The MiamiHal Real Estate Show at miamihal.com/the-miamihal-real-estate-show to hear from experts and get the latest real estate news.
Hal Feldman (MiamiHal) is a Realtor with RE/MAX Advance Realty. You can contact him with your story ideas or real estate questions at www.MiamiHal.com, Hal@MiamiHal.com or www.facebook.com/MiamiHal
