Uncertainty. It’s a word we are hearing a lot these days. It’s in just about every advertisement you hear because it’s something we are all actively thinking about. Uncertainty for what the future holds for yourself, your family, your company, your industry. It has to be on our minds because we are all trying our best to plan for the future and make equitable decisions in the face of an unprecedented circumstance with an array of unknown factors.
In the midst of uncertainty, one of the best things we can do to help mitigate the unknown is to draw from similar past experiences. While it is true that many aspects of the current situation are unprecedented, the patternfs of how markets respond to economic difficulty, and to what degree they rebound can tell you a lot about the potential benefit of your investments, despite all of the present unknown.
Take the South Florida real estate market for example. Despite the hit the housing market took in 2008, the South Florida real estate metro has soared over the past decade. Rewind to 2008 and Florida was one of the hardest-hit areas during the foreclosure crisis. However, present-day they have experienced one of the greatest recoveries in the nation.
In Miami-Dade, home prices rose 106% from 2010 to 2019 according to a report by Redfin. In Broward, the median home price increased 161% from $106,000 at the beginning of 2010 to $278,000 at the end of 2019.
Real Estate Investments In a Post-Pandemic World
So what does this mean for the future of real estate investments? It means that the time may be coming to make smart investments in the face of dropping prices. If the housing market is to take a hit, historic data shows that the Miami Beach market, in particular, has the fundamentals needed for a strong recovery. Getting into a typically expensive market at a lower price point at a time when demand is lower in the face of economic uncertainty sets you up for a smart investment that has proved to pay out in the past.
Outside of potentially falling prices, interest rates in early 2020 are at historic lows, which is a very important factor to consider for your investment. Buying a property when interest rates are low and getting that rate locked in can truly save you thousands of dollars in interest over the life of your loan.
Interest rates and market prices are important factors to consider if you are thinking about listing your house as well. It will take a bit of time for market prices to adjust following any potential economic downturn, and in the meantime, ready buyers are out there taking advantage of lower mortgage rates. The low mortgage rates will also be beneficial to any seller who will be subsequently or simultaneously listing their home and purchasing a new one.
Looking Beyond South Florida Real Estate Market Trends
These market trends are important to keep in mind, but so is the fact that a deal is a deal no matter when it appears. Prices may be high in a market, but if you find your dream home at a good price point, you are still going to want to make an offer. Prices may be down in a market, but you are the one who still gets to decide what your home is worth when you go to list it.
The economics are much more micro in practice than in theory. Real estate market trends guide, rather than determine, individual supply and demand. And that is the way it should be. This is why it usually doesn’t make sense to wait to enter the market based on predicted trends. Deals tend to be out there at all times, you just have to find them. And when you do find them, you have to act based on the current market situation while still keeping in mind those future predictions.
For example, if you know that a listing is very competitively priced, you should make an offer that is competitive to that price point. Why? Because if it’s priced low it is likely to receive more bids, which means you have to compete with a greater number of buyers and offers. You don’t want to take advantage of a competitive listing price by low-balling a bid in an effort to get an even better deal or because you predict a drop in market prices in the future. With that strategy, chances are you will bid yourself right out of that deal time and time again.
Can We Help?
A trustworthy real estate broker can help determine if a property is competitively priced. Knowing when to jump on an investment and when to wait for something better is something that takes years of industry experience to feel truly confident in. Your broker can also counsel you in what bid you should place in order to maximize your chance of winning while still getting you the best deal possible. This is a fine line to walk. Let us help you! Reach out to the Properties & Paradise team today.