By Robyn A. Friedman
City & Shore Magazine
A global pandemic. Sky-high unemployment. A recession.
These are challenging times. Yet, surprisingly, many real estate industry experts say that now is a great time to buy a home in South Florida – so much so that inventory in certain price ranges and neighborhoods here is drying up due to the demand.
“I believe it’s a good time to buy a home,” says Senada Adzem, executive director of luxury sales at Douglas Elliman Real Estate in Boca Raton. “COVID removed a significant portion of the spring buying season. There were many clients who had taken their properties off the market during COVID, but there are some really great properties that are starting to come back on the market. And, with interest rates at a historical low, it’s a phenomenal time for buyers, particularly first-time buyers.”
Buying a home brings with it financial advantages, including tax savings, the opportunity to build equity through rising home values and the ability to get out from under constant rent increases. And, with mortgage rates at all-time lows – the rate on a 30-year, fixed-rate mortgage averaged 3.03 percent for the week ending July 9, according to Freddie Mac, the lowest rate since the firm started tracking in 1971 – your monthly housing expenses might actually be less if you buy rather than rent.
Due to the low rates, which improve home affordability, 28 counties across the nation – including Broward County – flipped from being more affordable to rent to being more affordable to buy during the first quarter of 2020, according to a recent report by Realtor.com. In neighboring Miami-Dade and Palm Beach Counties, however, it’s still cheaper to rent than buy, according to Realtor.com.
Adzem said that interest rates are also making it cheaper for builders to finance their new developments, so the cost of purchasing a newly constructed home might be more reasonable. “A lot of developers are offering an expanded inventory of new homes,” she said. “So, buyers who want to create their own dream home and customize it should find it a really good time.”
Condominiums in particular might be attractive to some buyers due to a healthy supply of listings and evolving buyer preferences for single-family homes due to COVID-19. In fact, according to a report released at the end of June by Condo Vultures Realty, 424 condominiums were listed for sale in Broward County at a price of $1 million or more – a 22-month supply, indicating a strong buyers’ market.
Of course, there might be a reason to wait, if you can. A recent analysis by CoreLogic, a global property information provider, shows that home prices nationally are projected to cool over the summer and plunge 6.6 percent by May 2021. CoreLogic reported last month that strong home purchase demand in the first quarter of 2020, coupled with tightening supply, helped prop up home prices through the coronavirus crisis. However, the effects of the recession are starting to appear across the housing market, and the firm expects home price growth to stall.
According to Allyse Sanchez, a spokeswoman for CoreLogic, South Florida is one of the areas where a home price decline is likely. She said that the Miami market has a 94 percent probability of a price decline within the next 12 months, while Broward and Palm Beach have 88 and 80 percent probabilities, respectively. If that bears out, homebuyers who wait might get more for their money.