The chicken or the egg of Real Estate in South Florida
Since April 2013 we in Florida and the country in general have found that real estate values were escalating some say into another bubble and other say just a normal high after being at such a low for so long. This was spear headed by the new construction in many states and resale homes selling at a nice pace if they were priced at value, combined with interest rates being the lowest in history.
Rising property values and a flurry of new construction have restored profitability to markets whose collapse sent South Florida’s economy into a tailspin. Even last year which showed signs of promise did not have interest rates that were in the low 3% range and escalation of value swing up in homes appraising at higher than the sales price. Finally as interest rates went up in the last 90 days we saw the bubble burst and the local market did not stop but without a doubt slowed down since mid Augusts, as rates climbed to their highest level in 2 years, which is still historically low.
For those buyers who did not wish to be buying in the middle of a bubble and thought values would go down when things slowed down this is not happening. Instead the values are staying steady and escalating to the degree they were which looked like around 20 percent per year or 2 percent per month for the first 6 months of the year. With Ben Bernanke resolve to keep our economy going and keeping interest rates low we feel he will try to keep them in the 4 percent range giving buyers on the sidelines still time in the next 4 to 6 months to get into the real estate market and take advantage of todays great values before they are gone !
article by Lea Plotkin & Rubin Wites
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New construction allows you to lock in the price today so when it closes in 10 to 12 months or more depending on the builder and where the home is, you have a built in profit-but at what interest rate? A lot to think about and it is much easier when you have a professional to bounce things off.