Why is “Selling My Home” a Hot Topic on Google?
Online searches for “sell my house” has increased by 147% as of July. Florida ranked number 5 out of the top 10 states that had the most searches for selling a home. In fact, Fort Lauderdale, West Palm Beach, Miami, Coral Springs, Boca Raton, and Port St. Lucie are some of the cities that had the most search queries.
Is there a housing shift in the market?
Why are there more sellers? One reason is that the buying frenzy of six months ago continues to wane as mortgage rates increase to almost double from last year, and increased housing costs add pressure on housing affordability. In addition, some sellers are hoping to, nevertheless, obtain the high prices that buyers were willing to purchase just a month ago, and fear that they may not be able to obtain that price level as before. A third reason is that new construction is now finally ready for market, with a 36% increase in the number of new single-family homes coming to market per week in Fort Lauderdale in August as compared to last August. Further, some sellers are also buyers themselves who wish to list their current homes and choose their next home or investment property from a larger housing inventory. Additionally, sellers who are investors may believe that they missed opportunities to sell when there were multiple offers outbidding each other on the market, and are therefore now ready to sell.
As a result of all of these factors, there is a shift in the real estate market. Only a few months ago, there were more buyers, looking to purchase, and less inventory on the market. Due to the demand, sellers were able to obtain higher than expected purchase prices amidst bidding wars. While there still remains the issue of housing affordability, however, as increased inflation, mortgage rates, and potential workplace layoffs effect the overall housing market. There may be, overall, a shift in the housing market.
What about South Florida Home Prices?
Yet, the question remains as to whether home prices in South Florida will continue to slow down despite more inventory on the market. As we indicated in an earlier blog, home prices in South Florida are still relatively high and housing inventory, while increasing, does not address the issue of affordability. While searches for homes in Florida are soaring perhaps due to our climate and favorable tax laws, drawing people and businesses from higher tax states such as New York and California, the issues of rising inflation and higher mortgage rates may prevent purchasers from buying.
As we mentioned in our June blog, Zillow predicts that annual home sales will gradually slow through January 2023 due mostly to increased inflation and increasing mortgage rates. The forecast is that 30-year fixed mortgages will average 4.5%— up from 3.1% in 2021. Such higher interest rates place pressure downward on the housing market as some potential purchasers will now be ineligible for the loan amounts they want, while others will simply price out some home purchasers—despite the uptick of sellers in the market.
What does this all mean?
Change is ever evolving in the South Florida housing market. While more sellers are coming to market, the supply versus demand of housing is changing. However, in South Florida, the need for affordable housing still remains, and the overall demand for such housing outweighs the supply.
From The Trenches