It’s back to school season in Miami which means it’s fall. No way of deciphering this change of season any other way as the temperatures continue to scorch South Florida residents. As we inch away from summertime conditions, we look ahead to the fall and consider how luxury real estate market conditions might change in the future. The market remains a very strong sellers’ market but as always, I’m seeing that this can be considered HYPERLOCAL with some areas having severe listing shortages while others offering some balance. In general, the strong market has been propelled by newbies entering the buyer pool. For every one person leaving Florida, seven new people moved in. Florida gained more residents than all but 4 states between 2013-2020. South Florida’s June 2021 saw a 41% increase in the number of homes sold compared to June 2020. There was also a 114% increase in overall dollar volume for residential sales in the same period and June 2021 showed a very strong sellers’ market with only 1.8 months of inventory.
But I don’t believe we have been experiencing the dreaded BUBBLE. Technically, this is considered a classic BOOM. The rise in home prices is easily explained by things like cheap mortgages and supply limitations with skyrocketing demand fueled by new families jumping into the housing market looking for more space in quarantine scenarios. What goes up must come down, so you may now be asking when this boom will end. The two keys to this answer involve meeting the new demand and mortgage rates. Experts believe mortgage rates will rise when financial markets begin anticipating more inflation along with action by the Fed to curb inflation. All of my reading points to a rise in mortgage rates by a percentage point towards mid-2022, others expect by almost 2023. So expect the housing market to stay super strong until that point.
Few believe this correction will amount to a massive bust, and that perception in and of itself will drive the reality if history guides. Indeed, the strength of our market seems destined to be propelled by continued migration to Florida spurred by the pandemic which is currently bringing upwards of 1,000 people and countless corporate relocations to the state each day. Today’s economists believe that this upwards/strong trend is to become our permanent state. Those who moved here on a temporary basis for covid relief, will stay. And more will follow! Only the escalation in home values will flatten in time. I will be watching all of the emerging theories on this complicated market so I can best advise my luxury real estate clients navigating this strange new Covid era. Please reach out to benefit from my experience and subject matter guidance.