Anyone who has seen most of the previous posts here for the last several months knows that the South Florida residential real estate market is a lot like the weather – hot and only getting hotter. Residential development is basically in full swing, especially in the condo market, as builders attempt to capitalize on the incredibly strong demand in the local area. But, although most reports indicate that it is all “sunshine and roses” in South Florida real estate – especially for sellers – a recent article detailed just how far the market may have to go to get back to where home values were before the housing “bubble” burst.
The article, although filed with more positive data for the South Florida market, made one key point: values in the area are still approximately 41 percent lower than they were before the housing bubble burst. That is a large number, even though the gap is closing rather than getting worse. Recent figures from a S&P/Case-Shiller real-estate index, an index that has been referred to many times in previous posts, indicate that values have increased 14 percent in 2013.
So, what does all of this mean for those individuals, families and investors who are active in the South Florida real estate market? Well, for sellers, the demand that they are seeing, often resulting in bidding wars or all cash transactions, is hard to pass up. But buyers should probably be encouraged as well, because even if they believe that they had to pay more than they should have for a choice property, the reality is that the value of that property may still have a ways to go before the full potential of the property value is reached. That can be a powerful incentive to show that, despite all of the reports of the full-swing housing recovery in process right now, there are still good investments to be made in residential property in South Florida.
Source: Miami Herald, “Seven years after a peak, South Florida home prices climbing back,” Douglas Hanks, July 30, 2013