Are we headed for a housing bubble in Florida? There are many experts who have hinted at the possibility of a recession in Florida, but nobody is quite sure as yet about what to expect. So far, we have educated guesses about what the future holds for the housing market in Florida. If you have plans of selling your property in Florida in 2016, you would want more than that.
In this article, we do our investigations and find out what lies ahead for the property market in Florida and if the rumours of a “housing bubble” are indeed true.
Is there a housing bubble in Florida?
There is every indication that property prices are overpriced in Florida and are pushing many genuine buyers out of the market and this according to Professor Ali Bustamante of Florida International University’s Center for Labour Research Studies is not good news at all.
Prof. Bustamante says, “It’s a vicious cycle for would-be buyers. They’re going to have to have a lot more time of savings and renting before being able to jump into the real estate market than they would have in the past ... and the longer they sit out of the market, the higher the real estate prices will grow. So it’s really a game of catch-up.”
Another real estate analyst, Jack McCabe says that Florida may well be headed for a housing market recession in the near future. He blames overdevelopment for this and in particular, blames state authorities for this.
McCabe said in an interview to Washington Post, “Every [real estate] project is getting approved again. Particularly in the luxury-condo sector, there’s going to be a crash in prices in the next few years.”
Home prices in South Florida have risen consistently over the last few years. But 2015 saw a deceleration in price growth. This is not a good sign at all. In fact, this is an indication that there could be a housing market collapse around the corner.
Why properties in South Florida are unaffordable for many…
Daren Blomquist, senior vice president at RealityTrac, explains why properties in South Florida are overpriced: “While [South Florida] markets are still affordable by their own historic standards, they’re headed in a direction of becoming not affordable.”
“It’s mostly because of interest rates coming down. That has helped somewhat mitigate the affordability crunch. But it’s not going to be a long-term solution,” Mr. Blomquist adds.
Here are some of the trends to watch out for in Florida in 2016 that may give you a better indication of what to expect.
Lukewarm Job Growth
Florida has always been one of the fastest growing states in America. Florida is home to a diverse population, many of them recent immigrants from Cuba and elsewhere in Latin America. However indications are that job growth in 2016 isn’t likely to be as strong as in the recent past. That’s because the economy has slowed down considerably.
Tight Margins for Developers
Developers have to reckon with higher construction costs largely because of a serious labour shortage. This coupled with slower appreciation of home prices means margins will be a lot tighter for developers.
Slowdown in Miami and Orlando
Miami and Orlando are expected to experience a slowdown in 2016 and the home price appreciation is likely to be half of what it was in 2015. This is not a bad thing for buyer, as it allows them to get into the market.
Demand from Baby Boomers Continues to Remain High
Baby Boomers continue to drive the Florida economy and this is expected to continue. There will always be a strong demand for retirement homes in Florida and we don’t see this changing any tome in the future.