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The Florida real estate market has once again shown signs of returning to equilibrium. Extremely high home prices in markets like Orlando and Miami are causing potential buyers to put off buying, which is supposed to ease the demand side. There was also an increase in the number of listings for sale on the market. These are indicators that the market could be gradually returning to normalcy. However, the signs are still inconclusive and everything indicates that the imbalance will remain for a long time.
A recent survey released by Bank of America reveals that, in Miami, 45% of potential buyers said that rising prices and interest rates will delay their search for a property.
If, on the one hand, the increase in prices discourages purchases by residents, on the other hand, it stimulates the rush for more purchases by investors. They see the rise in prices as a strong potential for appreciation and do not want to “miss the train”. Investors are major players and are also responsible for the imbalance that the market finds itself today.
It is therefore difficult to predict that the market will soon return to equilibrium. Keep reading to understand!
More homes coming on the market for sale
For the first time since June 2019, the total number of listings (properties put up for sale) in the US increased, with a variation of 8% year-on-year, for the month of May, according to a report released by Realtor.com.
In addition to the slowdown in demand, another factor that motivated the increase in listings is the arrival of vaccines and the gradual return to normality. During the critical periods of the pandemic, many owners avoided putting their properties up for sale so as not to expose themselves to greater risks of contagion, receiving unknown people to visit the property.
Wait to buy or take advantage of the upside potential?
At the same time that there has been an increase in the number of people who are putting off buying, waiting for a possible market balance, with more affordable prices and lower interest rates, there are also those who want to take advantage of the appreciation potential.
“Although high prices discourage some buyers, this does not mean that the market will return to 2019 levels,” warns Heloisa Arazi, broker and owner of AMG International Realty, a real estate specialist in Florida. “Demand remains high and there are no indications that new properties will enter the market anytime soon,” she explains. “Waiting for an eventual drop in prices does not seem to be reasonable. The trend is up for the next 4 or 5 years,” she adds.
In fact, there are no indications that the real estate market will be supplied with new properties in the amount necessary to meet the great demand. Florida homebuilders are racing against time to approve new developments, but there is not so much land available and projects take time to get approved. Once approved, it can take up to 6 years for keys to be delivered. Added to this critical situation is the lack of labor and raw materials in the market, a factor that further delays the delivery of the new units.
On the demand side, the scenario is even more aggravating. According to the Florida Census, the state will welcome 849 new residents (residents from other states) per day by 2026. All of them will need a property to live in.
“Don’t wait to buy. Buy now and wait…”
“It is natural for prices to be readjusted and this can bring some sense of balance back. It’s what everyone expects. However, this is not what the indicators show”, says Heloisa.
Heloisa recommends not waiting to buy, but looking for opportunities in an unbalanced market. “We are not at an ordinary moment in the economy. It is precisely in these moments of imbalance that opportunities abound. A good realtor, experienced and knowledgeable about the market, knows where the best opportunities are. This is the time to buy well and take advantage of the expressive upside potential that Florida has to offer. Don’t wait to buy. Buy and wait to earn with the appreciation!”, she recommends.
Search for properties in suburban areas
With extremely high prices in large centers, it is natural that new buyers look for opportunities in more remote regions. In this context, cities around Orlando and Miami stand out. In Miami, the communities of Weston and Boca Raton have welcomed thousands of new residents and offer good opportunities in the real estate market. The city of Fort Lauderdale also gains popularity.
“Suburban cities offer more affordable prices and better quality of life”, explains Heloisa. “Usually they have good public schools, greater security and yet they are close to large centers”, she explains. “I have offered many properties in Winderemere and Winter Garden, two excellent cities for those looking for quality of life and proximity to Orlando”, she adds.
About AMG International Realty
AMG International Realty is a full-service luxury brokerage firm in South and Central Florida. If you are interested in buying real estate in Miami, Orlando or Tampa Bay, please get in touch today: +1 305 318 6968 (Heloisa Arazi).