The surprisingly high demand for housing, even during the slowest winter season, makes Florida homebuilders increasingly confident about new projects. Historically low inventory also stimulates the market. The index that measures this sentiment in the US construction sector is called the NAHB/Wells Fargo Housing Market Index (HMI) and it rose one (1) point in December 2021, reaching an all-time high of 84 points for the second time. The last time the index reached this level was in February 2021. For comparison purposes only, any score above 50 points is considered positive.
What is the NAHB and how is it calculated
The NAHB/Wells Fargo Housing Market Index (HMI) is calculated based on a monthly survey conducted with NAHB member homebuilders. Through this research it is possible to feel the vigor of the single-family housing market. The survey asks respondents to rate market conditions for new home sales at the current time and in the next six months, as well as traffic from potential new home buyers. Since the housing segment is one of the most important to the economy, this index is closely followed in the US to measure the general health of the US economy.
Labor shortages, material shortages and inflation are obstacles
The improvement in the confidence index occurs in a troubled scenario, where construction companies face situations of lack of material and labor. In addition, the inflation that the American economy is experiencing at the moment is also an obstacle. The prices of construction products made of wall plates, steel, aluminum and plastics rose sharply in November.
“The most pressing issue for real estate remains the lack of inventory,” NAHB Chief Economist Robert Dietz said in a statement. “Construction has increased but the industry faces obstacles, namely cost/availability of materials, labor and lots. And while the 2021 single-family home segment is expected to end the year 24% above the pre-COVID 2019 level, we expect higher interest rates in 2022 to detract from housing affordability.”
Interest rates are being revised upwards in the US due to rising inflation. For the first time since the early 1980s, the US economy is experiencing a period of high inflation. As a result of supply chain disruptions attributable to the pandemic and a significant increase in government spending, the US Consumer Price Index (CPI), which measures inflation, saw a 7% gain in December, year-on-year. This is the highest level in nearly 40 years.
Opportunity for investors
In a scenario of high and rising inflation, investing in real estate is a great asset protection. Another great advantage in investing in real estate in Florida today is the lines of credit with initially fixed interest rates. In this way, even with high inflation, the cost of borrowing (interest) is fixed and low.
Leverage your investment with resources from American banks
Investment leverage consists of using third-party resources to invest a considerably larger amount, in addition to own resources. Investors can buy a property financed at very low interest rates and pay in up to 30 years. This property can be rented and generate dollar income. With this income it is possible to pay off the financing installment and still make a profit on the operation.
About AMG International Realty
AMG International Realty is a full-service luxury brokerage firm in Florida. If you want to learn more about the opportunities in the real estate market in Orlando, Miami and the Tampa Bay area, please contact us today and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).