It’s like someone just let the bulls out of the cage, as the South Florida real estate market has accelerated since early 2010. Whether we can attribute this to government stimulus intervention or a genuine shift in consumer sentiment, there’s no arguing that both the pace of real estate sales and pending transactions have skyrocketed recently.
My personal opinion as a real estate professional? I have to say that most of this so-called “bottom” in home prices has been artificially created by the government’s New Home Buyer Tax Credits, as well as the Second Home Buyer Tax Credits now being issued. With plans due to end at the end of April 2010, I have a strange feeling that the market will suddenly hit another quagmire where we bounce around a “bottom” and then wait for the next signal from interest rates or additional government stimulus to start the next move in house prices.
As an agent, investor, writer, and industry expert, my honest opinion of South Florida real estate is that we still have to wait for some downward price adjustments. Let me clear this up so there is no confusion… Overall, we are already 40-50% below the Florida peak prices that were reached in mid-2006. When I say a downward adjustment, I am not implying that we will see something close to that once again. I expect 2010 home prices to average a 1-2% decline, a nominal decline compared to prior years… But it’s 2011 that’s the wild card. Do we get more government aid and prolong the inevitable or let market conditions dictate prices the way true capitalism intended to?
If I had to make a bet, I’d say Florida real estate prices will bottom out in the middle of 2011-2012. They will have to adjust to higher loan rates, therefore; lower affordability, which generally means lower home prices. Assuming no national tragedies, terrorist attacks or global outbreaks send markets into a haphazard tailspin once again, I expect interest rates to peak in 2011-2012 and coincide with a trough in home prices. It is at this peak time that prices will have fully adjusted to a point where affordability really comes back into play, and as interest rates begin to decline after 2012 and over the next five years, we will see prices pick up.
All this is hypothetical and can be modified based on external and uncontrollable factors. So far, I have been correct with my forecasts. I have traded homes, traded homes, bought, sold and invested in South Florida for over a decade. In that time, I have precisely orchestrated over 500 transactions, most of them highly profitable. You don’t have to listen to me, but I think my advice is better than the thugs on CNBC who have other motives like trying to STEAL YOUR MONEY.
It’s always a good time to rent, it just has to be the right time for you.
Thank you,
Marshall Sklar Co-Founder Florida’s Best Realty