What would the second wave of coronavirus do to Florida Real Estate market? If we look back and analyze the behavior of Florida’s Real Estate market during pandemic times we might be able to predict.
What happened to the Florida Real Estate market during covid?
Let’s remember the behavior of four important players in the Real Estate Market during the pandemic: 1 – The Government, 2 – Developers, 2- Sellers and 3 – Buyers
1 – The Government
Donald Trump lowered interest rates to stimulate the economy. That for sure had an impact on Real Estate and mortgage rates. Basic American interest rates are at one of the lowest historical levels. For an American, it is possible to finance the purchase of a property with rates below 3%.
2 – Developers
When the pandemic started, developers almost stopped their activities. It was a time of great uncertainty about the future. How could they keep investing and spending in a moment where retaining cash seemed to be the most correct thing to do? Builder’s confidence went down. The lack of new projects has created downward pressure on the real estate inventory. For some segments, such as luxury condos in Miami, the inventory was already low before covid.
3 – Sellers
Regarding to sellers, we are going to analyze two main types of properties: 1 – Single Family Homes and 2 – Luxury Condos.
Many Single Family homeowners that were willing to sell before the pandemic, removed their properties from the market. Where would they go? And it was not safe to receive strange people into the house during the pandemic (high risk of contagion). This caused the inventory of houses to plummet since the beginning of the pandemic and intensified a trend that already existed before.
A report released by Orlando Realtor Regional Association shows that in October this year there were 3,880 houses for sale, against 3,986 last month. A decrease of 2.6%. Compared to the same month of the previous year, the fall is considerably more significant: an impressive 37%. In October last year the number of single-family homes on the market was 6,140.
Another reason homeowners removed their properties from the market is the low-interest rate. Current owners prefer to refinance their properties rather than sell. This behavior curbs the offer of new properties.
4 – Buyers
People from all over the country suddenly realized they no longer need to live in an urban congested area next to their offices. Remote work is here for good! Why not live the American Dream and buy a single-family home in the suburbs? Spending pandemic time confined in a large single-family home, with a big backyard and pool is much more appealing than spending the days in a small apartment in New York with kids home doing virtual schooling. Many people on the fence to move to Florida precipitated their decision. The result: Florida is receiving more than 1000 new residents every day! And a great number of these new residents are aiming for single-family homes.
But where are those homes? Inventory is really low. Buyers are competing among themselves for Orlando homes for sale. For single-family homes, now is definitely a sellers market. Prices are on the rise for that segment!
At the same time, people are selling their condos in the city. So, for that segment, we have a buyers market with many amazing opportunities to invest. There are condos been offered with discounts up to 40% of what the owner paid.
What would the second wave of coronavirus do to Florida Real Estate market?
After a few months of pandemic, builders realized that single-family homes is a hot market and builder’s confidence went up to a historical record.
At the same time buyers from out-of-state realized luxury condos in Florida might be a good opportunity, specially because the, most of the times, could be a better option then a single family home. Here is why!
In October, reports show a decrease in developer’s activity, due to the second wave of Covid. History repeats itself! If that continues, inventory for single-family homes keeps going down, prices keep going up and luxury condos in Miami will be more and more appealing each day.
Another concept of living that was already on the rise before Covid, and turns out to be a great solution for pandemic times, are mixed-use developments. This kind of building or complex allows residents to live, work, play, shop and do other daily activities within walking distance. People are able to take care of their essential needs without the need to leave the building or blog, thus preventing the virus to spread to other neighborhoods. At the time time, mixed-use concept is evolving to allow residents to social distance and interact in a safe and responsible way.
About AMG International Realty
These past few months of pandemic created an imbalance between demand and supply in many segments of the Real Estate Market. This atypical and temporary behavior created many opportunities that will no longer exist after the pandemic.
AMG International Realty is a full-service brokerage firm in Florida. We are your one-stop-shop in the Sunshine State. If you are interested in investing in Florida and take advantage of theses opportunities, give us a call today: +1 (305) 318 6968 (Heloisa Arazi).