Many are asking if the current Real Estate Housing Market is a going to crash or slow down any time soon. The answer depends on who you ask.
No one would disagree that the US Housing Market is on fire. The latest Case-Shiller Index data showed an 11% year-over-year increase. This is through January 2021, so expect that number to increase by year end. Sellers all over the country are asking: Is now the best time to sell? What is my home worth? How long will this market last? These are all timely questions considering that fortunes are being made during this unprecedented seller’s market. So is this a bubble or not?
“We have strong conviction that we are not experiencing a bubble in US housing,” Morgan Stanley strategist Vishwanath Tirupattur wrote in a note to clients this week. (May 5, 2021)
Lawrence Yun, Chief Economist of the National Association of Realtors®, told Axios: “This is not a bubble. It is simply a lack of supply.” (May 6, 2021)
Sellers are enjoying remarkable gains. Look at the snapshots below of closed single-family home sales in Broward County and Palm Beach County for the month of April 2020 vs. April 2021.
In Broward County the median sales price of a single-family home was $380,000 in April 2020 and in April 2021 it was $462,500. That’s a difference of $82,500.
Palm Beach County has absolutely exploded. In April of 2020 the median sale price of a single-family home was $380,000 in April of 2021 it's $500,000. That is an astronomical difference of $120,000.
While those massive numbers are reminiscent of 2006 the current market forces are quite very different. In some areas inventory has dropped to 40%-50% of pre-pandemic levels. Many sellers who normally would have downsized have refrained from listing their homes due to COVID fears. Although mortgage rates are at historic lows, lending standards are much more stringent than they were in 2006. Soaring lumber prices are also giving a boost to home prices. Before the pandemic Florida was one of the highest in-migration states because of weather and no state income tax. The pandemic was just one more good reason to finally make the move to Florida. We get 1000s of people moving to The Sunshine State on a daily basis. When we look at the data it is clear that there are far fewer homes are on the market vs. years prior and demand is of the charts. This is truly a recipe for extreme success for home sellers who are ready for a windfall.
So what’s a buyer to do? Buy smart and don’t overleverage yourself. Don’t give up contingencies that you will regret later. For sellers, seize the moment!!! Although it is impossible to time the market, if you are in a position to sell now is the time. Why not capitalize on this once-in-a-lifetime opportunity. There are programs that will allow you to buy before you sell, so don’t worry about not having anywhere to go. Buying New Construction is also an option as is renting for a short time. Bottomline is it would be a shame to miss out on such unprecedented gains.
No one knows when this will end, but most agree that markets happen in cycles. If you miss this one, it may be another 7-10 years before the next cycle. I am in agreement with Jeff Greene, who recently said, “I think we’re going to have inflation that no one ... is forecasting whatsoever, and it’s going to have to lead to much higher interest rates and that is going to slow down all these markets.” The question is when, and the answer is anyone’s guess.
Call or email me today for a confidential, no-obligation Comparative Market Analysis (CMA) of your home. It is not an appraisal, but you will have a solid understanding of the highest price you can get for your home. At the very least you will get an unbiased valuation for your property or multifamily investment.
*The data used in this article was generated using the Southeast Florida MLS. Some off-market sales may not have been included in the data