After nearly a year and a half of intense demand for homes, the property market in South Florida is showing no signs of calming.
Most experts assume that the market will continue to boil for at least another year, either well into 2022 or even 2023. Some believe that with the perfect storm of low interest rates, ongoing migration to Florida, and the shortage of homes for sale, the demand could continue much longer.
The National Association of Realtors expects property prices to rise about 9% through 2021, but will rise a little more slowly and 3% through 2022 as more homes come on the market, according to Nadia Evangelou, senior economist and director of Association forecast.
The South Florida Sun Sentinel reached out to real estate attorneys, brokers, mortgage lenders, property developers, home builders, economists, and appraisers to answer Question # 1: Is this the right time to buy or sell, or should I wait?
When will the South Florida market slow down?
Ron Pietkewicz, Bank of America Area Lending Manager for Palm Beach & The Treasure Coast: With states moving to South Florida expected to continue, demand will continue to challenge supply regardless of rising interest rates. While we can see some cooling off in certain areas, I believe the market in South Florida will remain heated well into 2022.
Karen Johnson, President of Broward Palm Beaches and St. Lucie Realtors: A stable inventory market is considered 5.5 months. We have 1.4 months of supply in April 2021. Due to the demand, we do not expect any slowdown in the next year or 18 months due to the supply shortage. We don't see any slowdown anytime soon.
Bonnie Heatzig, Executive Director of Luxury Sales at real estate company Douglas Elliman: It doesn't look like the slowdown will be anytime soon. All of our markers will cause our housing market to trend upwards in the foreseeable future. I think now that the successful vaccination rollout and lockdown barriers are wearing off, buyers are confidently heading to South Florida.
When will prices go down?
Ken H Johnson, Florida Atlantic University real estate economist: We're going to see the 30-year (mortgage) rate spike in six to twelve months, by which time real estate prices should weaken. With the coming slowdown in the real estate market, the price increase should slow, perhaps even decline slightly. However, we shouldn't see a drop in magnitude since the last crash, largely due to the local housing shortage.
Eli Beracha, Real Estate Professor at Florida International University: I don't expect real estate prices to rise as fast as they did last year. The good thing is that this is something that gradually comes and levels off. I think it depends on what part of the market you're looking at: Broward is different from Miami Dade, and the condominium market is different from single-family homes.
Dan Mackler, Co-Chair of the Real Property Practice at the Gunster law firm: If interest rates are rising significantly, which is likely being driven by high inflation, or if the number of people moving to Florida is falling significantly, then I would go with one Cooling of the housing market expect down. Right now, with interest rates so low, buyers can afford to buy homes they couldn't otherwise. I don't think moves to Florida will decrease that much either. So I wouldn't expect a significant drop in prices until the end of next year or early 2023. Will new homes ease the pressure on the market?
Jeff Grant, REMAX Real Estate: Prices could start to level off in the next six months or so. I think home builders will have a little more inventory because right now they are really limited to what they can do due to shortages and supplies.
Michael Wohl, Director of Coral Rock Development Group: There is a lot of inventory in the high-end rental market, but there is no inventory in the retail market, and I think this will continue until builders can catch up. Right now there are labor and delivery problems so it is not easy for developers up for sale to keep up with demand. The market corrects itself when it is no longer affordable. In South Florida, affordability is a huge concern and concern.
Jerome Hollo, executive vice president of Florida East Coast Realty: Inventory will play a significant role in pricing. In general, compared to other markets, there are limited opportunities for new single-family products that should cushion a price decline. In the condominium sector, you are starting to see much greater inventory growth. Additional inventory should result in some downward pricing. However, this may not be the case in all sub-markets.
Will the market cool when the federal eviction moratorium ends?
Joseph Hughes, Real Estate Attorney: I think the eviction moratorium will play a role in cooling the market. Many landlords who have not been able to terminate their tenants will find out for the first time that they cannot collect all overdue rents from their tenants. This will likely motivate many of them to stop renting and take advantage of the market by simply selling their properties and thus increasing supply. On the flip side, rental values are likely to rise significantly due to increased demand, which will not only encourage many landlords to keep their properties, but will likely also prompt many tenants to consider buying houses rather than renting elsewhere .
Dan Mackler: I'm not sure there are enough people out there who are rent-free (by not paying their rent) to make a difference. Based on conversations I have had with our multi-family customers, they have not experienced any major loss of tenants.