Florida real estate market healthy but challenged

The Florida real estate industry is healthy, though several thorny challenges confront residential sales. Last year, foreign buyers bought $23.8 billion in Florida real estate, more than double the figure from a decade ago. Seventy-three percent of those 2017 purchases were all-cash because wealthy international buyers don’t need mortgages. The foreign property purchases account for 11 percent of the value but only 6 percent of the sales volume, indicating those purchases were primarily high-end homes.

The top international buyers of U.S. real estate last year came, in order, from China, Canada, Mexico, India and the United Kingdom.

Although most of the Chinese purchases were in California, the Florida market certainly has a larger share of foreign investors.

The state is also raising the confidence of foreign buyers with safe property investments that are bound to appreciate.

At the same time, the trend lines indicate a decline in international buyers.  The potential outcomes of higher tariffs on Chinese imports and the impacts of NAFTA’s demise on Mexico could boomerang on the U.S. and cause a global recession.

During the first quarter of 2018, a rising number of households expressed more confidence in the economy and their financial position, but only 68 percent of consumers felt now is a good time to buy a house, the lowest percentage in two years.

Income, debt and anxiety are stopping some from buying. The very, very competitive nature of the current residential market — with inventory down 13 percent, prices up 9 percent and mortgage rates expected to rise again — is being met with caution.

From 2011 to 2017, income grew by 15 percent but housing prices surged by 48 percent. This is a big concern for renters and an obstacle to converting to home ownership.

Consumers should not wait for mortgage rates, at 4.5 percent now, to fall, not with the Federal Reserve forecast to raise its benchmark interest rate two more times this year and three in 2019. Two years from now, mortgage rates could be 6 percent. Don’t take the current rates for granted.

While national existing home sales rose last year to their highest level in 11 years, the pending home sales index has stalled and inventory continues to fall.  Builders have been under-producing and the annual increases in construction since the subprime disaster have been very minimal.

To invest in the Florida real estate market contact an expert member of the 9 Core Realty Team today!

 

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