Huge Problems in Miami Florida Market

 

For the last 6 months, I’ve been doing videos talking about the market, sales, how the market has been acting, what is happening in our market and where the market is going.

We are seeing that in fact, the resale homes are on fire but not only the resale, the brand new communities as well and this will bring massive problems that will affect you as a buyer, you as a seller, and you as a homeowner.

So let’s talk about these problems that are happening in South Florida.

Watch the full video because at the end I shared some tips that could help you better understand or manage this market.

When all this began in March of 2020, everything paralyzed, including the builders.

They stopped continuing with the works, right? So their inventories were completely gone causing even more inventory shortage. Then, they went back to continue with their works, yes, but in the same way that they stopped, the companies from which they obtain the materials stopped as well.

Causing certain products or construction materials to be in back order and of course with fewer workers. Additionally, with such high buyer demand and no inventory available, I have noticed that the properties will cost even more since prices have risen but they are also not giving the same incentives as before.

These incentives were extremely helpful to buyers. So if you are looking to buy a new home you will not receive the same incentives. Usually and many times before you received incentives and they are good for someone who did not have much money saved to cover closing costs or for the down payment. This was a very good help for first-time buyers. So yeah, that will affect you and it will affect first-time buyers.

I am pretty sure you have been hearing the Miami real estate market is hot, is on fire and while that’s true, that could also bring a lot of problems coming out from that.

For the last 6 months, I’ve been doing videos talking about the market, sales, how the market has been acting, what is happening in our market and where the market is going. We are seeing that in fact, the resale homes are on fire but not only the resale, the brand new communities as well and this will bring massive problems that will affect you as a buyer, you as a seller, and you as a homeowner. So let’s talk about these problems that are happening in South Florida. Watch the full video because at the end I shared some tips that could help you better understand or manage this market.

 

Tips that could help you better understand or manage this market

So here is issue number one:

1. There is no (enough) inventory in Miami

• When all this began in March of 2020, everything paralyzed, including the builders. They stopped continuing with the works, right? So their inventories were completely gone causing even more inventory shortage. Then, they went back to continue with their works, yes, but in the same way that they stopped the companies from which they obtain the materials stopped as well. Causing certain products or construction materials to be in back order and of course with fewer workers. Additionally, with such high buyer demand and no inventory available, I have noticed that the properties will cost even more since prices have risen but they are also not giving the same incentives as before. These incentives were extremely helpful to buyers. So if you are looking to buy a new home you will not receive the same incentives. Usually and many times before you received incentives and they are good for someone who did not have much money saved to cover closing costs or for the down payment. This was a very good help for first-time buyers. So yeah, that will affect you and it will affect first-time buyers.
• When we talk about the resale market we find something similar. If you are a first-time homebuyer and you are buying with an FHA loan or you need to use some assistance benefits such as VA loans, every home is going through the problem of receiving 10+ offers. In fact, I am working with a client that we have lost on several occasions because the sellers receive multiple offers. Sellers are not only receiving multiple offers but also offers with $ 10k, $ 15k above asking price, and also with buyers sending offers waiving appraisals. This is a big thing. What happens when you waive the appraisal? If a buyer waives the appraisal and the value does not reach the appraisal, the buyer will find that not only will they have to pay their down payment, but they will have to get the difference of $ 10k, $ 15k, or whatever is additional out of their pocket. You might think this is good for sellers, right? Well, it depends on how you see it because if you are a seller and need to buy, you will be suffering the same. You will be affected in the same way by competing with 10-15 offers and with very competitive offers. This may be the reason why we do not see so many houses on the market, which we see a decrease compared to last year and that is why the shortage we are seeing for the high demand of buyers. Now, you may say to yourself, well, it’s fine, because I’m going to rent anyway. If one thing is going up, the other too. Remember that if house prices go up, property taxes will go up too. Hence the rent as well.

2. If you are an active buyer or first-time homebuyer, you should know that if you want to send an offer to a property that has been on the market for more than 4 weeks in this busy market, it is very likely that it means that the property is overpriced or that it has issues. If this is or was your case then it is likely that you will have to take out additional money. But how so Sharon? Well, one, if we know that the house is overpriced, you would already be putting in more money, and two if the house has problems, how long do you think it will take before you have to take out some additional money from your pocket to fix the problems? So you will be getting into more debt in both scenarios, right? You may have heard and if don’t let me tell you, many times when you buy a house for the first time it does not mean that it will be your forever home. It is possible that the family grows, that you need more space, a better area for a better quality of life. If you are interested in growing your equity, this is another way. You buy your first home, get equity, and then sell to move up. You generate equity, you sell and you move up. This is the way to gain some equity out of it.
3. Now, with prices going up there are many people who find it even more difficult to afford to buy here. On the other hand, many people are moving from states like NY, CA, NJ, MA and other states. They were locked up for a long time and they no longer want to be there. Additionally, having people work from home has caused more freedom and people to move to other cheaper cities and states. Something attractive for the residents of these states is that in South Florida they can find warmer weather, the properties are cheaper for them and they do not have to pay state income tax. This also adds to why our market is so on fire.
4. Now let’s talk about a really important or the biggest issue that we are facing and that is property taxes. With what is happening on the market, with the multiple offers, with buyers sending over asking price offers, sending $10k, $ 15k, $ 20k over asking price, home values are going up. Not only to the property for sale but all around them, right? Meaning that even if you are not buying a home, your property’s value will increase and your property taxes will be reassessed higher, right? Now, what this means if you are a homeowner? If you are a homeowner who is barely affording your house this will cause you even more headaches. You know where I am going right? And if you went to forbearance the time is running off. You still need to come to pay that money and if you can’t, then you will either put your house for sale or unfortunately foreclose. For me is really sad to see that and even though, experts are predicting not a big tsunami of foreclosures they can start appearing a couple of months after the deadline of the forbearance.

Don’t hesitate to contact me if you are interested to know more about the home buying process or you have questions about the process.

Also, If you are thinking about buying or selling in Miami, CLICK HERE or you can call me at 786-376-2398.

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Sharon Colón
Your Favorite Real Estate Agent in Miami
Home Miami Realtors
786-376-2398
[email protected]
www.sharoncolonre.com