Many of our South Florida readers who keep their ears to the ground listening for real estate transaction news may be hearing the beginnings of a dreadfully fearful word: “bubble.” After all, it was the “bursting of the real estate bubble” several years ago that led to the beginning of the near-constant state of America’s moribund economy. For months now South Florida residents have seen news of soaring real estate values in the area, as well as tales of bidding wars that a couple of years ago would have been laughable. Now, the watch for the next “bubble” has begun. But, to hear it from a recent article, there may not be anything to worry about – yet.
According to the article, a chief economist for a major real estate website bluntly said this about the prospects of a South Florida real estate bubble: “Is there a bubble? The answer is no.” What is the reason for this sunny prognostication? Well, apparently real estate values in the area aren’t even close to where they were in the healthy days of the market prior to the “bubble” of late 2007.
However, the most recent data from May indicates that the local market remains hot. Sellers are indeed seeing bidding wars, and the influx of all cash purchases is having quite an effect on the market. The data indicates that over 50 percent of the residential real estate sales from May were all cash.
So, it appears that anyone in South Florida who is concerned with the development of another “bubble” can rest easy for the foreseeable future. They can especially take comfort from this nugget of information from the recent article: there are less speculative buyers this time around – perhaps meaning that those who do complete home purchases will be staying in town for the long haul.
Source: Sun Sentinel, “Another big jump in South Florida home prices,” Paul Owers, June 20, 2013