I get this question a lot. Unlike the real estate crash that occurred from 2007-2009, where the thriving market was built on speculation and buyers getting sub-prime mortgages, this market is much more sound from the perspective that it hasn’t been investor driven, and most buyers have either paid cash or taken out a smaller percentage of financing. As I’ve mentioned in previous newsletters, people found they could work remotely, and having sold homes up north at significantly higher prices, decided there was no reason to wait until their retirement years to move to Florida. However, with prices having risen due to high demand and low inventory levels it would appear more likely that the meteoric rise may become more gradual and that buyers will become more patient, waiting for there to become more of a balance in the market than the buying frenzy that has occurred the past two years. Where I do see signs that inventory levels could remain low stem from sellers who would like to take advantage of the market, but don’t want to jump into the pond of other buyers desperately looking for a home. The feeling the profits attained could be offset by the increased price they would be paying for their next home, may not be worth putting their home on the market for sale. Could that limit new listings coming on the market, resulting in fewer homes available for sale? Possibly, but natural disasters, epidemics and the loss of loved ones can put what is important in life in a different perspective. The desire to downsize, travel more, or moving back closer to family will continue to bring new inventory on the market and the willingness we are seeing from buyers looking for a better quality of life I feel bodes well for the market to remain strong this new year.
Housing Market Update In a Nutshell
Unless you haven’t been watching the news or seeing the number cars with out of state license plates traveling our roads, let me tell you there has been a tremendous increase in the number of people who are now calling Florida “home” on a full time basis. As I’ve mentioned many times in our previous newsletters, last January we were hearing people saying it was the inclement weather and high taxes that had them strongly considering a move to Florida however, when Covid hit, it changed the market dynamics.No longer did people want to live in densely populated areas, commute via mass transit and work in the tight quarters of commercial office buildings. Employers found production levels didn’t decrease as anticipated and were now allowing their employees to work remotely. As a result instead of waiting for retirement to move to Florida, they were making the lifestyle change now, and for some cities, it has become a mass exodus!
Florida and Texas are two states seeing a tremendous influx of people looking to relocate on a permanent basis and with very low inventory levels the competition for existing homes has been fierce. In fact some of major builders such as Lennar have put a “sales hold” on some of their developments so construction can catch up with sales.
Recently we had three of our listings sell in one day, and well over full price. Our most recent listing had 28 confirmed showings within 12 hours and 15 offers, with the accepted high offer almost $80,000 over full list price….yes, you read it correctly! Agents were telling us of their frustrations in not having their offers accepted when bidding $20,000, $30,000, $40,000 and more over list price. Buyers who wanted to give some thought to the home they viewed before making an offer found themselves on the outside looking in as the property went pending shortly thereafter.
While this may seem reminiscent during the real estate boom in 2004-2006, it is a very different scenario. Sub-prime mortgages and other forms of loans were being approved for buyers who under normal circumstances would never have been able to qualify. Inventory levels were much higher and the speculation that baby boomers were headed to Florida for the next 20-30 years had everyone giddy the sky wasn’t going to fall. Appraiser’s couldn’t keep up with the increases and started giving valuations on properties that were called into question years later.
What you are seeing now are not only retirees, but those looking to make lifestyle changes prior to retirement, both vying for short supply of available properties. Unlike the market back in 2004-2006, this market is not being driven by investors and speculations. We are in a market where there is strong demand and short supply. With the cold weather now hitting the north, those that were contemplating a lifestyle change are acting with a sense of urgency, adding an additional strain to an already robust market. Sensing their opportunity may be slipping away we have seen an immense uptick in offers well above list price. What was a market characterized by gradual growth, we are now seeing the realization by some this may be their last opportunity for some time and are willing to pay a premium for it.
As always if you have any real estate questions, feel free to reach out garycardillo@wesellpg.com 941.916.0939
While most people would like to talk about themselves, Gary and Gail have always put their clients first, and their diverse backgrounds have provided their clients an unparalleled level of service and knowledge throughout the past years.