South Florida Home Prices to Rise in 2017
Expert insights suggest that home prices in South Florida will continue to inch higher come 2017. It appears that there are a lot of bullish buyers willing to splash recent investment windfalls from an all-time stock market high. According to Jim Flood, a regional manager for Supreme Lending, people will see their best yet ever 401 (k) statements in January. If what he says is anything to go by, it’s going to be a big deal not only for the Floridian but also the national real estate market. This should help markets like Boca Raton which cater to second home owners.
Although Flood says that rising interest rates may dampen demand at some point in 2017, it won’t be enough to shrink down the recovery that started in 2012. Based on our own research, and what reputable industry observers are saying, here are some four key projections to watch in 2017.
Slow but steady spikes in property values
Currently, there are a lot of people trying to buy in the state, driving demand high. Most of these home buyers are looking for single-family units worth about $500,000 or less. Due to increased shortage of homes that meet this criterion, the value of homes in low and middle ends of the market will keep surging higher. Jack McCabe, a real estate consultant based in Deerfield Beach, thinks that growing demand but no increase in supply will push home prices up.
Zillow, the Seattle-based real estate site says that homeowners in South Florida can expect modest gains of 1.7 (rise) come 2017 according to the Sun Sentinel.
Price corrections for the luxury sector
According to Max Martin, an agent working at Fort Lauderdale, there seems to be a rampant trend involving price cuts for high-end property in the area. Max has witnessed the owner of a 2-bedroom luxury condo initially priced at $1.25 million authorize price cuts five consecutive times all the way down to $899,000. That’s because the market for luxury condos in the area appears to be flooded. New constructions are making the going harder for owners of existing units. With this increased supply, buyers have higher expectations; they are looking for the brightest and the best. In 2017, South Floridians selling luxury real estate need to be ready to make some significant price drops.
Reduced Influence of foreign buyers
In the recent past, we have seen foreign buyers hunting for bargains swarm to South Florida. This activity facilitated a Condo rebound over the last few years. However, strengthening of the dollar is dimming prospects for these foreign buyers. This slowdown will be even more pronounced come 2017. Experts expect that under the leadership of President Donald Trump, there will be greater deregulation. This will probably loosen lenders’ attachment strings and trigger more creative financing, thus enticing domestic buyers.
Increased energy prices vs. housing affordability
The largest utility in the state, Florida Power & Light, is expected to increase electricity rates come January. Elsewhere, the price of gas is starting to move up, with Florida costs already 7 cents higher than the national average.
Brad Hunter, a lead economist based in Golden, Colo., says that increases in gas prices will probably impact real estate development in Southern Florida. This will increase demand for property near employment centers and downtowns.
It looks like it’s going to be an interesting real estate year for South Florida. We’ll certainly keep tabs to see what other changes are taking center stage in the state’s vibrant housing market.