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As a local real estate expert and member of the Master Brokers Forum, I often am asked ‘How’s the market?’ Rather than the quick response, I wanted to give my readers a deeper dive answer.
First, closed sales during the 2024 calendar year hit their lowest level in 30 years. This, coupled with the fact that there are 70 million more Americans today than in 1995 should tell you that the market is incredibly SLOW.
Slow, however, does not mean bad. It simply means that buyers are now driving the market and sellers need to be aware of how to market their home properly and be prepared for negotiation. Gone are the COVID-fueled contracts that had no inspection contingencies and over-asking price offers.
I recently was the guest speaker at the American Society of Appraisers South Florida Atlantic Chapter meeting and addressed their questions about the recent struggles of the residential real estate market and what to expect for the remainder of the year.
I began by speaking about our low inventory levels. National reports will tell you that inventory is growing, but our hyper-local view is a bit different. In Pinecrest and our neighboring areas, inventory levels are very much dependent on the home’s price. Low-priced homes (under $650,000) have less available inventory today than one year ago. The mid-priced homes ($650,000-$999,000) are at about the same inventory levels as last year. And, the $1M+ homes have a jump of 35% more active inventory today compared to February 2024. Sellers in each of these three price strata need to set an appropriate expectation to be successful.
Home insurance rates and its availability are impeding home sales. Every year it is getting more expensive to insure a home. Many buyers also found that insurance companies are getting very picky as to what home they will write a policy for. Even if completely leak-free and never patched, insurance companies are sometimes citing age of the roof as a reason to deny a policy. Last year was also filled with news about how Citizens was depopulating their policy count and not paying on many of the claims they received. Thankfully, recent legislation has allowed new insurers to come into Florida. Still, obtaining insurance is a downward pressure on our real estate market. My recent guest on The MiamiHal Real Estate Show helped explore the state of the insurance industry in detail miamihal.com/the-miamihal-real-estate-show/greatflorida-insurance-broker-tamara-mourino-episode-149.
One large and looming factor to today’s slow real estate market is the Interest Rate Lock-In Syndrome. Owners who got COVID-era mortgages at 2.5 to 3% are mostly going to hunker down and stay put, unless absolutely forced to move. It comes down to simple math. If they move, their new mortgage payment will skyrocket. So, in an odd twist, the ‘free money’ mortgage they received a few years ago is actually ‘locking them up’ and making them ‘prisoners’ to their homes, all due to the never-to-be-had-again mortgage rate.
But I conjecture that in addition to all of the above, there is another large psychological factor that no one will admit to or discuss that is contributing to our slow real estate market. *DRUMROLL PLEASE* In the eyes of buyers, hiring a Realtor is no longer ‘free’.
Until now, buyers believed their agents were working for FREE since they never had to pay them directly. Now, it feels ‘expensive’ to hire a professional. Instead of the commission essentially coming from the proceeds of a 30-year mortgage, they are paid in full at closing. Coupled with the now required documentation for a legally-binding partnership between buyer and their broker/agent, the market is seeing buyer hesitation, confusion, fear…or worse.
As a result, some buyers are now trying to make home purchases without the professional guidance of a Realtor. This is dangerous to the public and the market in general because mistakes are made and buyers are overlooking important deadlines and safeguards.
The goal of the Nation Association of Realtors and real estate law in this country is to create a fair, balanced, and professionally-guided transaction. I believe the NAR settlement has shaken this goal and the reaction has negatively affected the residential real estate market.
When this all went down, media outlets wrote ‘interesting’ headlines. CNN stated “real estate commissions have been baked into a home’s listing price, inflating home prices for years.” And our former President used the case against NAR in one of his speeches saying, “I’m calling on Realtors® to follow through on lowering their commissions to protect homebuyers.” Total political theater. In real estate deals, good Realtors are the protection!
THIS IS THE WILD WEST! We have Realtors who are working without buyer agreements.
We have attorneys who do are not fully up-to-speed on the proper paperwork and our agreements and contract addenda have had several revisions since this all changed.
Most important, both Buyers and Sellers are confused. So, yes, there are several factors that are weighing on our real estate markets. They will work themselves out over time, as everyone gets used to the changes. But for now, I suggest that the use of a real estate agent remains prudent and critical to your success. Contact me for a free consultation about your specific needs. As always, I’m here to help.
Real Estate Update
If you made a move or changed your deed this year, NOW is the time to file your Homestead Exemption paperwork to save on all future real estate taxes! Contact me if you need help!
As of 2/12/25, there were 159 properties for sale in Pinecrest, 15 homes pending sale and 13.25 months of inventory (buyer’s market). If you’re ready to move, contact me to 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
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