In 2020, the housing market was like the wild, wild west. We experienced a robust increase in buyers but a major dip in sellers. And for obvious reasons: the pandemic forced a lot of individuals to reassess their living situation – more space, a desire to live somewhere more suited to their lifestyle, among many other things. So what is going on in the market now, and what should you know?
The bird’s eye view of what has happened in the housing market since 2020:
Since 2020, we’ve seen a number of happenings in the real estate market. To recap some specifics:
Sellers are becoming a little bit more realistic
Prior to August 2022, sellers called the shots. There were multiple offers on the table and often bidding wars associated as soon as homes hit the market. Now, we’re experiencing more inventory and LESS people fleeing to the South Florida areas. Ultimately, this is creating better opportunities for buyers.
To put this into perspective, there is 46% more inventory in August 2022 vs August 2021 for Broward County, 63% more in Palm Beach, and 26% in Miami-Dade.
Buyers are putting their foot down
Because buyers now have more options, they have the leverage to be pickier. Depending on the property, financial situations, etc, for a lot of buyers this can mean a few things:
- More room for negotiation
- If you have cash, you can come in at a lower offer
- Less money out of pocket
- Less waiving of appraisals, contingencies, etc
The talk of interest rates
Yes, interest rates are higher BUT there are ways to save money. This goes back to there being room for negotiation with things you can ask for in the purchasing process such as seller credits. (Scroll down for more information regarding interest rates).
What purchasing in this housing market means for future resell.
Everyone’s question: even if I buy in this housing market knowing prices are inflated, what does this mean for resell? Your equity will continue to build – real estate of the top wealth builder out there. In our opinion, if short-selling is a concern, you shouldn’t worry because home values are continuing to increase.
How does this information apply specifically to you and the South Florida housing market?
The supply/demand imbalance will continue in South Florida. With three major, booming cities (Fort Lauderdale, West Palm and Miami) there will be no shortage of economical drivers in business and entertainment and the desire to live here will remain high. We are currently, definitely, experiencing a shifting market where sellers aren’t experiencing the insane bidding wars that were seen in 2021 and the beginning of 2022.
Also, note that just because the housing market is shifting doesn’t mean it’s crashing. What we’re experiencing right now is a healthy cooling, and one could look at it as a return to ‘normalcy.’
And by the way, as a buyer, you definitely have more leverage than you did in the beginning of 2022. We think that the younger generations who are entering the purchasing world will have a chance as inventory starts to increase.
The age-old question: what about interest rates?
At this time, mortgage rates are continuing to rise and that will impact the bottom lines of homeowners and borrowers. For current mortgage rate information, please visit this article.
Here’s how interest rates currently affect what you’re paying:
Higher rates are going to mean higher monthly mortgage payments.
Which means your buying power is:
Likely less attainable than earlier this year if you’re looking to go for a larger mortgage.
For every half-percent rise in interest rates, a homebuyer’s buying power drops by about 5%. If a borrower was pre-approved for a $350,000 property and the interest rate went up by a half-percent, a buyer now can expect the buying power to drop by $17,500. That pre-approval will drop to $332,500 [source: Carly Wimer].
And here is how that translates:
If you’re eager to buy a home, buckle down on your finances. Have a very clear picture of what you can afford and start having conversations with lenders, potentially seeking out a pre-approval letter.
Our broker and seasoned real estate advisor Don Ginsburg says that “Interest rates rising will impact the first time homebuyer and first move-up buyers the most. It will also have a cooling effect on the overall residential sales market as well.”
So should you buy, sell or wait?
View your home as a home first and an investment second. You should do what’s best for you and your needs. When you’re ready to have a conversation, we’re here. Look to Freebird as your trusted real estate brokerage to navigate the housing market no matter if you’re looking to buy, sell rent or invest.
When we say we’re different, we mean it. We go beyond the standard practice and know how to use clever, yet ethical and effective, ways to acheive your desired outcome. We’re not afraid to get scrappy and creative in order to do so.