My Thoughts on 2019
Speculation on the Miami Real Estate Forecast for 2019 is a bit nerve wracking. South Florida is definitely seeing a major decline in foreign investors which is definitely something to take note of. As a Realtor® I am forced to state that the real estate market is always good, although some people will ultimately alway disagree at some point, based on their market position. The fact is when it is good for some it is likely going to be unfortunately bad for others. We must realize that we here in Miami are a hub to a South & Central America, which ultimately drives our market here in South Florida.
Sales up Around 15%
In the third quarter of 2018 Miami home sales increased about 15.2% for single family and about 17% for Condos. According to to the National Board Of Realtors home sales spiked to roughly 35% and single family homes had spiked to 43%. Now keep in mind that many home sales were stalled in September of 2017 which may have fueled these spikes. It is also important to note that we have been experiencing increasing home values for at least 82 months consecutively.
The inability of many buyers to access mortgages could be the silver bullet that stalls Miami’s future for 2019. Of the 9,000 plus buildings in Miami and Fort Lauderdale only 12 have been approved for FHA loans. This alone is cause for concern and many Realtors like myself are at odds when trying to help first time home buyers in a city like Miami where prices are as high as they are, finding a home them a single family home within the FHA guidelines is almost impossible. We have come to rely on low mortgage rates to make homes more affordable. And yet the 30 year fixed mortgage rate has increased to 4.75% in November. I believe this is the critical area were the government need to take note.
Currently cash buyers account for almost 35% of all closed sales in 2018. These are double the numbers of almost anywhere else in the country. Miami’s high number of cash buyers, just serves to show how we here in Miami are able to attract money from foreign countries, who are the ones who usually buy all cash. And do to the mortgage restrictions on condos it makes them a the target of these investors. Condominiums are currently roughly 50% of the all cash market. Where as single family home sales only made up 21% of those cash deals.
It seems to me that 2019 predictions will be left to the speculators to decide where to place their bets. The government is going to have some difficult decisions to make. Do they really want to lower interest rates, if after all Florida overall has had it good for so long, and risk losing money on mortgages on all other 49 or 48 states that are not in our situation. I believe it is not going to happen and the decline in home prices is inevitable. I also believe that the foreclosure rate will rise gradually. This will be likely be painful for those who purchased homes on the higher end of what they could afford. On the other hand many buyers and investors will have amazing opportunities to look forward to.