In the article Florida’s new real estate micro-cycle we warn of the beginning of a unique period in terms of opportunities for investors in the Miami and Orlando market. Our predictions were correct. Interest rates in the US are finally falling, a situation that will directly reflect on the real estate market, stimulating it and putting pressure on property prices. It is the end of a micro-cycle, which still has time to be used. Understand in this article.
Understanding the micro-cycle that ends now
The micro-cycle that began at the end of the second half of 2022 was triggered by the increase in interest rates by the American Central Bank (FED). In order to contain the rise in inflation, the FED adopted a drastic policy of raising interest rates, which impacted the value of the portion of real estate financing. As a result, many buyers have postponed or given up on buying, alleviating pressure on the sky-high demand for real estate in Florida.
Therefore, a slightly more favorable situation was created for buyers and investors, as they gained greater bargaining power. This situation, about a year ago, was unimaginable. The same property received up to 6 “cash” proposals (in cash) in a true bidding war.
As we had foreseen, this was a transitory situation, since it was maintained mainly due to the rise in interest rates. Demand fell due to the higher cost of loan installments, but the desire to acquire a property in Florida has not diminished. This created, therefore, a situation of postponing the purchase which, in turn, could be fueling a repressed demand waiting for lower interest rates in the future.
And that’s what’s happening right now!
Inflation already shows signs of being under control
In December, US inflation fell to 6.5%, while the 30-year fixed rate mortgage fell again to 6.33% on Jan. 12, after US interest rates hit a 20-year high. .
Everything indicates that we are now entering a period of downward bias in American interest rates, with the consequent re-stimulation of the real estate market, as loans become, once again, attractive to buyers and investors.
The Fed is only interested in keeping interest rates high until inflation is under control. New indicators already show deceleration in US price indices. Analysts project that 30-year fixed mortgage rates will continue to decline consistently through the second half of 2023 and reach 5.5% by the end of the year.
This could be, therefore, the end of a micro-cycle, which can still be taken advantage of, since the real estate market has not yet felt this stimulus in a significant way.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida. If you want to know more about opportunities in the American real estate market, get in touch right now and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).