I’d love to share my personal weekly real estate investment tips with you! Tips that support important investment decisions.
The market has been a bit ‘Unusual’ in the past few months in Florida and in other areas throughout the United States.Every time I turn around, I hear of people talking like ‘Chicken Little’ afraid that the sky is falling!
Yes, there are price reductions.
Yes, unless your property is priced right, it won’t sell.
There is still competition in the market, but not on EVERY deal.
Rest assured, we are
OK. In fact, we are currently experiencing more of a
‘Normal’ market in Florida. Because the marketplace was manipulated in many
ways over the past 12-15 years, most of us have forgotten what a ‘Normal’
market looks like.
In the Market cycle between phases of Market Absorption; Expansion and Decline. The marketplace is either a Seller’s or Buyer’s market.
It is very important to analyze what is taking place in the
marketplace in order to make good investment decisions. That’s why I’ve included
a link to my free presentation Watch
now: The Secrets of Market
Timing & How to Profit from Anomalies (while everyone else is asleep
at the wheel) for you to watch now!
Dr. Ken Kiefer of Freddie Mac addressed a group of 400 Florida realtors last
Thursday. He stated that he and other analysts made the following statements
are provided by the Florida Real Estate Association. Kiefer said he and other
analysts have been researching home price growth trends and other economic
factors to answer the “bubble” question.
“Home prices are up, but that by itself is no indication of a bubble; you need an element of speculation or credit financing involved as well,” he said.
“We looked at credit, capacity and collateral. In the mortgage space, credit has not expanded in anything like we saw a decade ago. As a result, the default potential rate is pretty low. And we clearly don’t see the types of financing products that pushed the dynamics then.” While incomes are up, they’re not matching the pace of rising home prices, he noted. Still, mortgage debt payments as a percentage of disposable income has declined significantly, largely due to lower mortgage interest rates. “In the downturn, people were taking on a lot of debt, which in turn pushed up prices,”
Kiefer also said.
“Now, looking at total mortgage debt compared to equity,
we’re not seeing that kind of speculation or problem.” He added, “So,
when I’m asked about a bubble, I do say no – but the way I pause before I say
no has been extending a bit as home prices continue to rise more than incomes.
However, in our view (Freddie Mac economists), house prices will moderate as
mortgage rates rise.”
So, what’s ahead for the U.S. economy and housing market in 2019?
“Employment and a
little bit of income growth will be key to supporting homebuyer
demand,” Kiefer said. “Inflation is going to drive the Federal Reserve
policy. It’s been pretty tame the past few months. We at Freddie Mac expect one
to two rate hikes in 2019 as opposed to the four hikes in 2018, though that
will be data-dependent.” The general U.S. economy should
experience modest growth, he said, while mortgage interest rates should
gradually rise throughout the rest of the year and be somewhere around 5
percent by the end of the year – about a 1/2 percentage point rise from the
current rate.
“When interest rates rise, the housing market responds pretty negatively
and home sales go down,” Kiefer said. “But looking ahead to spring,
we should see stabilization of home sales and modest growth in the U.S.
economy. Our forecast nationally is for housing prices to moderate
substantially over the next few years. However, one of the biggest challenges
for the overall economy is
a lack of new housing supply.“
2019 economic forecast for Florida Florida Realtors Chief Economist Dr. Brad
O’Connor discussed the outlook for Florida’s economy and housing market in the
coming year. In terms of job growth, Florida has done better than the U.S. for
the past few years (since 2013) and ended 2018 with an annual job growth rate
of 3.3 percent compared to the U.S. figure of 1.9 percent, he said.
The state’s population growth has not yet returned to the 2 percent annual growth rate it had before the downturn, but the latest Census figures show a 1.5 percent population growth rate from 2017-2018, ranking Florida No. 5 among states.
Looking at Florida’s price growth trends for single-family homes, the market is bifurcated, he noted.
“We’re finding that different price tiers are definitely appreciating at different rates,” O’Connor said. “The range up to $200,000 is up almost 12 percent (in price growth), while the range of $600,000 and over has less growth. There’s a lack of affordable housing supply in the lower price tier, while the upper levels are almost a balanced market.”
Lack of new housing supply is constraining the market and more construction is needed, he said. However, construction is hampered by a shortage of skilled construction workers,
“For perspective, it’s not a significantly huge increase in active inventory: it’s up 13.3 percent for existing single-family homes and up 8 percent for condo-townhouse properties. And, it’s notable that the $200,000 to $300,000 price tier of housing inventory is up, which is the sweet spot for millennials. Despite the fact that we have slightly higher inventory, closed sales are also still rising (with the exception of December’s data). Rising inventory is, so far, a good thing.”
“With current data showing that Florida is outpacing the nation in terms of home sales and employment growth, he forecasts that 2019 should see about a 1 percent growth in home sales and maybe 3 to 4 percent price growth. That’s in contrast to the National Association of Realtors’ (NAR) forecast for national home and condo sales to remain relatively flat in 2019.”
If you would like to learn more about Market Timing and Market Cycles, please watch my complimentary presentation…
Watch now: The Secrets of Market Timing & How to Profit from Anomalies (while everyone else is asleep at the wheel)
Have a fabulous week everyone!
Happy Trails!
Terry
Ps. If you would like to speak to me personally, please book an appointment and let’s discover your American Real Estate dream together!
Terry Records
National Real Estate Investment Coach. Serving Clients Nationwide including
Real Estate Agent. Broker/Realtors/Licensed Contracting & Home Inspections.
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