Even though housing prices are cooling off in most of the United States, communities in South Florida are managing to preserve their high prices, and some homes are even seeing their value go up, not down.
Part of it is because of the location, and the many advantages of South Florida living. But an even bigger part of the story is that South Florida still has a low inventory of available housing, especially in high-demand areas and the most fashionable housing designs.
So why does South Florida have low housing inventory, what does low inventory mean for buyers and sellers, and how does low housing inventory affect prices? Keep reading to find out.
There are a lot of different reasons that South Florida has a shortage of available housing. Some of the problems are country-wide, like high prices for lumber and other construction supplies, and shortages of necessary materials and equipment.
Other problems are about what’s getting built and where – a lot of construction companies are focused on high-value housing and aren’t building affordable housing or middle-class homes.
South Florida also has some unique factors, including the incredibly high demand for housing in Miami and surrounding areas, and limited available space due to the unique geography of the area.
Increasing interest rates are expected to cool the South Florida housing market soon, but the combination of high demand and low inventory is keeping house and condo prices high at the moment.
Low housing inventory is one of those problems that towns and cities dread, but that can actually be a good thing for local home sellers – and even sometimes for home buyers. Here’s why:
High prices and limited availability might sound like a nightmare for home buyers, but it’s not actually a bad thing when it comes to the long-term financial health of home buyers. As long as your purchase price is realistic for the value of the home you’re buying, low inventory can help protect your investment.
Why is that? Because low inventory is a problem that takes years to correct and might not be entirely correctible in high-demand and high-desirability markets like South Florida.
Just like the market is demonstrating right now, South Florida is insulated from run-of-the-mill market shocks, which means that your home is more likely to maintain its value no matter what happens in the larger economy.
Low inventory is a blessing for a lot of home sellers because it means you can be more selective when deciding between different offers, and you can probably demand higher prices.
Homes in reasonable condition often sell faster in low-inventory markets as well. With less selection and more competition, buyers are eager to put in offers quickly and secure a new home when the opportunity presents itself.
Those same market conditions also put you in a better position when it comes to bargaining the details of the sale, including doing fewer repairs or remodels for the new owner, or moving faster through parts of the process.
At the moment, the low South Florida housing inventory is working to keep prices higher, despite rising interest rates. However, there is a point where those factors will reach equilibrium. Depending on how high-interest rates ultimately rise, we may reach a point where South Florida housing starts to decrease in price as demand cools.
However, barring a major market shock in the meantime, those things will take months, and we may not see declining prices at all this summer. A cooler Autumn and Winter is likely, in terms of housing that is, not real weather, but nothing as serious as the crash in 2008.
You should also expect to see South Florida insulated from lower demand, lower prices, and other shifts in the country-wide housing market. Even if prices do go down, they won’t go down as quickly or as much as in other areas. For more details, Contact Great Florida Homes.
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