Is the real estate market stagnant?
Have you noticed that the real estate market in the United States has gone to somewhat of a standstill? Do you ever wonder what may be the cause for this? In this blog, we will talk about some of the reasons why the Florida real estate market has slowed down a bit.
The real estate market is not the same as it was between 2019-2022. The amount of appreciation that happened during that time was unsustainable (we, the US, borrowed a lot of money during that time).
In November 2023, there are property owners still asking for 2020/2021 prices. With interest rates still trending upwards, a lot of people are staying put in their current homes or renting to see how things play out. So those owners asking for high prices are not in a hurry and hoping for an out of stater coming in and paying cash. Still, lots of people are fleeing the Blue states and their strange policies. Florida is still the number 1 state in the country in terms of people coming in. According to the National Association of Realtors, Florida had a domestic net Migration of + 318,855 people in 2022.
Higher interest rates increase the cost of borrowing, making it more expensive for potential homebuyers to secure a mortgage. Due to this, it can deter some buyers from entering the market, leading to a decrease in overall demand for real estate. They could afford a $500,000 house in 2021 when rates were at 3%. Now at 7% and some change, that same family can only afford a home in the $300,000 range. This decrease in demand is leading to longer listing times and slower sales. In the right neighborhoods and pockets of FL, homes are still selling pretty quickly. However, there is still not an excess of inventory right now in FL. Historically speaking you’d say we have a low inventory of homes for sale right now.
The owners who locked in the 2% to 4% fixed-rate mortgages during 2019-2021 are staying put in their current homes. Also, many people are choosing to rent as it might be cheaper to pay monthly rent compared to paying a mortgage. While high-interest rates may be the top concern for renters, they also don’t have to worry about maintenance issues that may arise when living in a rented property. This allows them to avoid the financial and time commitments associated with homeownership. If you’re renting, make sure to stack up some cash for investments.
While the market may seem stagnant, if you are looking for investment properties there is always the possibility of finding great deals. You just have to make sense of the numbers and you may need to get creative with seller financing or assumable mortgage strategies. There are some diamonds in the rough if you put in the work and time to find those diamonds.
If you would like to find out what we do at Grow Inn Homes, check out our website to learn more about us. You can also check out our social media pages to get a visual on exactly what we do.