South Florida’s Real Estate Market is Challenging for First-Time Buyers
On October 4, 2021 by Eric Klein
South Florida’s temperatures haven’t been the only thing to skyrocket this summer.
Ask anyone even remotely connected with the Sunshine State’s “Sky’s-The-Limit” real estate market and they’ll tell you it’s like nothing they’ve seen before. Record interest and record closings have been beautiful music to the ears of realtors, developers, and real estate investors – while sounding a tinged “clank” to many prospective home buyers.
Many of these first-timers or ex-patriated northerners looking to move to warmer climates have watched ever-escalating home prices and a diminishing amount of inventory challenge their dreams of ownership.
An ode to the elementary principle of supply and demand, I suppose.
“Oh, inventory was tight. Once the market started rising people started selling more and more,” says South Florida realtor Brett Waldman, whose areas of concentration also include the Jacksonville and Orlando markets. “The lack of supply and high demand helped drive prices up.
“I had a buyer in Melbourne in the $800,000-to-$1 million range,” Waldman said. “And every property, we faced ten-to-15 offers. (The) competition lies within 1-to-2 days of hitting the market.”
Roofstock.com, for instance, writes that single-family homes sales have risen 24 percent, with median sales prices also climbing another 18 percent compared to a year ago. According to another analysis of real estate trends from Kaufman/Rossin, the realty trade association, Florida Realtors, reported skyrocketing condominium sales of 24.6 percent among an overall increase of sales in the tri-county (Miami-Dade, Broward, and Palm Beach) area of 10.8 percent this past January, compared to the same period for 2020.
But somewhere on those sales charts demand must deal with supply, – which affects price, right? The folks at K/R also report that while luxury home sales – unsurprisingly – held steady, the real impact was felt in single-family homes with only 2.8 months’ supply remaining in February, 2021. A normal, balanced market, they claim, would have yielded a six-and-a-half-month supply.
Nor should first-timers expect relief anytime soon. Noted lender, Vastar Capital, predicts demand will continue to outpace supply into the next year driven by the continued influx of migrating northerners from “tax-burden” outposts like New York, New Jersey, and Connecticut. Then there’s the COVID-19 pandemic which this past season hastened the usual fall-winter seasonal migration of northerners, mid-westerners, and west coasters.
And let’s not forget to mention the impact of an estimated 72 million millennials. Vastar analysts expect millennials to enter the housing market for the first time, having saved enough (they believe) to put a down-payment on a home while hoping to take advantage of low interest rates.
Just don’t forget your billfold. In South Florida, the sun isn’t the only thing that’s “king” – cash is. And lots of it. All through the region, more liquid buyers are said to be undercutting more traditional financed buyers – who often face longer waiting periods or risk “paperwork” or other time constraints while sellers or agents open to secondary bidders – literally “cash in.”
“If you look at what New York and the neighboring states have endured with high taxes, state income taxes, and property costs, coming down here you are getting so much more for your money,” Waldman says. “And they are cashing out, making a lot of money coming down here with cash. Most of my transactions on the listing side this year, the buyer has put at least 30 to 40 or 50 percent down in cash.”
For a moment let’s all travel – each in our own mind’s eye; taking “our own talents” to South Beach – where Forbes reported on the fairly recent closing of “The Beach House” – a 6,000 square-foot, two story, multi-million dollar property which the magazine reported sold for more than $15M – all cash OVER asking price – and one that reportedly beat out two other all-cash deals as well.
Now, if you’ve ascended to the ranks of hobnobbing with Jared & Ivanka or Tom & Giselle then I salute you, believe me. But for those of us in the “Let’s Doordash some Little Caesar’s and find out what’s playing on Hulu-Plus”-crowd, it’s perceptions like that – of bags on top of bags on top of bags of cash necessary to close even the most pedestrian of deals much less those of the boutique upper strata – leaves little hope for the rest of us.
And yet, here we are.
And why shouldn’t they? We know perceptions help drive the stock market. They help drive World markets. Why wouldn’t perceptions of a scorching-hot market help drive prices in the perception-is-reality world of South Florida?
And let’s not forget – South Florida IS a great place to live and work. And people want to come here. Again, Roofstock.com reminds us how the GDP in South Florida has climbed to over $377 Billion – an increase of 59 percent over the last 10 years. The Florida Department of Economic Opportunity expects South Florida’s job market to expand by 7.5 percent, with most of that increase coming from construction, retail, hospitality, and the financial services sector.
Not to mention great weather, the nights, the music, the people. Great sights, schools, the “U,” FIU, FAU, and Nova. The Miami Dolphins, Miami Marlins, Miami Heat, Florida Panthers & Inter Miami CF. Disney is just a four-hour drive, and some of the world’s greatest beaches are five-to-ten minutes away.
That’s how you feed perceptions.
South Florida is hot. You don’t need a thermometer to tell you that.
Photo credit: Ken Fox
When I first moved to South Florida from Boston, Massachusetts, my head was spinning. Forget just dealing with the geography of a new town. Selling my apartment, closing on the new house – I was lucky not only to have one but two crackerjack legal teams working for me.
They allowed me to step back, separate perception from reality. Make the right moves that were right for me.
Klein Law Group is here and set up to listen, allowing you to step back and make the moves right for your situation and for your family. Schedule a visit and see what they can do, today.