Even the most optimistic real estate experts agree, that South Florida’s housing boom is fading. What is questionable is the magnitude of the adjustment the market will go through.
Thankfully, it looks like we are coming back to a more normal market
Here are five key indicators:
1. The Florida Association of Realtors show sales are down. Whether you’re comparing December to the same period in 2004 or looking at the past six months of 2005, the number of home sales across South Florida has dropped by roughly 40 percent.
2. Listings are up. There are more for-sale signs in front yards. The number of homes and condos on the market more than doubled in Broward County from July through December. Listings rose more than 81 percent in Palm Beach County and more than 64 percent in Miami-Dade.
3. Prices have flattened. As demand wanes, sellers are losing leverage, and some are cutting their asking prices. There’s virtually no sense of urgency, and buyers can take their time considering multiple properties.
4. Incentives for buyers and real estate agents are increasing. Some builders are offering free upgrades on appliances, countertops and cabinets, as well as offering to pay points and closing costs worth thousands of dollars that the new-home buyer normally would pay.
The environment is going to get highly competitive this year. Already, Developers are trying to lure real estate agents. At the Legacy Place condominiums in Palm Beach Gardens, for instance, agents who referred buyers received 4 percent commissions rather than the standard 2 or 3 percent.
5. Interest rates are rising and credit requirements tightening. Thirty-year fixed mortgage rates are near 6 percent, and analysts predict they could inch closer to 7 percent in 2006. While still reasonable, that’s enough to keep some people from qualifying for mortgages.
And as interest rates increase, homeowners with adjustable-rate notes will see their monthly payments rise. That’ll mean more foreclosures and distressed sales, experts say.
My advice for home buyers is to sit tight for 12 months and wait for the fruit to ripen.
Gus Moore heads up Miami Beach 411 as site administrator. You can reach him at 1-305-754-2206.