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It is as if someone just let the bulls out of the cage, as the South Florida real estate market has turned on a dime since early 2010. Whether we can attribute this to the intervention of government stimulus or a true change in consumer sentiment, there is no arguing that both the pace of real estate sales as well as pending transactions has sky rocketed recently.
My personal opinion as a real estate professional? I would have to say that most of this so called “bottom” in real estate prices has been artificially created by the government new home buyer tax credits as well as second home buyer tax credits now being issued as well. With those planned to end in late April 2010, I have a funny feeling that the market will all of a sudden come to another quagmire in which we bounce around a “bottom” and then wait for the next signal from either interest rates or additional government stimulus to initiate the next move in real estate prices.
As an agent, investor, writer and industry expert, my honest opinion on real estate in South Florida is that we still have some downward price adjustments to look forward to. Let me clarify this so there is no confusion… In general, we are already 40-50% off of peak prices in Florida that were reached in mid 2006. When I say downward adjustment, I am not implying that we will see anything even close to that severe once again. I expect 2010 real estate prices to average a decline of 1-2%, a nominal decline compared to prior years… But, it is 2011 that is the wildcard. Do we get more government help and prolong the inevitable or do we let market conditions dictate prices the way that true capitalism was intended to do so?
If I had to make a bet, I would say that Florida real estate prices will bottom somewhere around mid 2011-2012. They will need to adjust for higher rates of lending, hence; less affordability which usually means lower prices for homes. Assuming no national tragedies, terrorist attacks, or world outbreaks that send markets into a random tailspin once again, I foresee interest rates topping out in 2011-2012, and coinciding with a bottom in real estate prices. It is at this pinnacle moment when prices will have fully adjusted to a point where affordability truly is back in play, and as interest rates begin to decline after 2012 and into the next five years thereafter, we will see an uptick in prices.
All of this is hypothetical, and can all be altered based on external, uncontrollable factors. So far, I have been right on with my forecasts. I have flipped homes, brokered homes, bought, sold and invested in South Florida for over a decade. In that time, I have precisely orchestrated over 500 transactions, most being highly profitable. You don’t have to listen to me, but I think my advice is better than the goons on CNBC who have other motives such as trying to STEAL YOUR MONEY.
It is always a good time to rent, it just has to be the right time for you.
Marshall Sklar Co-Founder Florida’s Best Realty
write by Augustus