The South Florida real estate market is doing great, thanks to COVID-19
There’s no doubt the global pandemic has put everyone in a place of uncertainty. Florida’s first-time unemployment claims have decreased by 39,335 during the last week of August, according to the Sun Sentinel. This month also recorded 881,000 unemployment claims nationally.
Although unemployment numbers in Florida are decreasing, there are still many businesses struggling to stay afloat giving reason to believe that the coronavirus would lead the economy into a downward spiral, which would negatively impact the real estate market. But, in reality, the housing market is actually benefiting and thriving right now.
Broker and CEO of Treasure Property Group Luban Quiceno made a hypothesis back in April, when COVID-19 cases were beginning to increase, that the market would thrive in spite of the circumstances because there would be factors that the U.S. economy has never seen before. Fast forward a few months and that’s exactly what’s happening.
“Many people were expecting the market to collapse, afraid of having another year like 2008. But, the market was totally different,” Quiceno said. “Back in 2008, lenders didn’t verify an income for a person to buy a property. They would make confirmations over the phone, not through taxes, so people did not have the money to pay their mortgage and make it sustainable.”
Quiceno also mentioned that people didn’t have equity on the houses, so they were losing their homes. The government understood that, and to fix these issues, a person must now have proof of income on taxes to get approved for a loan.
Additionally, the status that COVID-19 created for the housing market has provided conditions that allow people to invest, buy or sell in a way that could leave more money in their pockets.
“Despite the pandemic, sales are up in all areas, and the pending sales have actually been trending up for the past few months with June 2020 surpassing the sales of June 2019,” Coldwell Banker Realty real estate agent Natalie Ramirez said.
Social distancing orders and a shift in consumer behavior has led people who lived in small condominiums to want to move into more spacious and open areas.
“I have had several clients coming from the Northeast who lived in highrises now coming down looking for single families or villas where they wouldn’t have to share many common areas with their neighbors,” Ramirez said.
Florida has become a target for many people to invest and move to, allowing many brokerages to increase sales and gain a large base of clients. Although the market is experiencing a state of affairs where both buyers and sellers are going to benefit, the pandemic did bring a shortage of inventory, so there’s a great need for more sellers. It’s also a crucial time for sellers to be listing properties so the market can maintain its momentum.
“It is a win-win situation. Right now it is both a buyers and sellers market,” Quiceno said.
The real estate market is called either a “buyer’s market” or a “seller’s market.” Both markets are prominent now; therefore, real estate has been a major factor in South Florida’s economic rebound.
“A way to define these terms would be by saying if we have six or more months of inventory, we call it a buyer’s market, or if it is under six months of inventory, we call it a seller’s market. It’s about how much supply there is as well as demand,” Treasure Property Group real estate agent Alex Rios said.
With equity on their homes allowing them to make money on those sales, sellers can sell at a good price.
Buyers are also benefiting because of the low interest rates. The current economy is showing interest rates under 3%. This not only motivates buyers to buy homes, but it allows for more clientele and movement in the market.
“When you are looking at a $250,000 home at a 3% interest rate versus about a year ago when it was over 4% interest rate, you are talking about $40,000 to $50,000 in savings over a 30-year period,” Rios said. “It’s one of the lowest rates we have had in history.”
Ramirez explained that the real estate market has been bolstered since the Federal Reserve is supporting the mortgage-backed securities market. Low rates make home buying more affordable.
Real estate agents also suggest that their clients look into buying instead of renting due to the favorable aspects of the current market.
“In many cases, the rent you would be paying is actually more than what you would be paying for a mortgage,” Ramirez said.
Quiceno has also been seeing this new buying trend and is advising his clients to look into the best option according to their financial stability.
“A rental apartment, two bedrooms/two bathrooms, goes around from $1,400 to $1,500. I have clients who are closing properties, three bedrooms/two bathrooms, with backyards, nice spacious properties and they are paying $1,800 a mortgage,” Quiceno said. “And these people have gone with a three and a half percent down payment. When you go to rent, you need to pay the three months. Think about that.”
By: Daniella Parra