South Florida home prices Increase at a more reasonable rate
Home prices in South Florida have increased over 5% from last year by this point which was surprisingly among one of the smaller surges for the country’s more popular metro regions. According to the S&P CoreLogic Case-Shiller home price index which tracks pricing in 20 metro areas nationwide, only Chicago, Cleveland, New York and Washington D.C. showed smaller gains.
Before we may think this is alarming, we must remember that severe and steep price increases are not the norm for a healthy real estate market to last. South Florida’s tri-county region had experienced its time in the limelight during late summer/early fall of 2014 when it led the nation with price increases. Since then prices have been more of a consistent and steady increase year over year.
“The housing market will face two contradicting challenges during the rest of 2017 into 2018,” David M. Blitzer, chairman of the index committee, said in a statement. “First, rebuilding following hurricanes across Texas, Florida and other parts of the South will lead to further supply pressures. Second, the Fed’s recent move to shrink its balance sheet could push mortgage rates upward.”
According to Svenja Gudell, chief economist for the Zillow website, approximately half of the homes for sale across the country are priced in the top one-third of the market. This heats up the competition for starter and trade-up homes and pushes prices up further which affects affordability.
The housing market “looks largely healthy from a 50,000-foot view” because prices are rising and mortgage rates are still low, but the situation is far from ideal for buyers, Gudell said in a statement. “It’s certainly a great time to be a home seller,” she said. “But when so many sellers need to then turn around and become buyers, the decision to list a home for sale and willingly enter that buying fray is the worst kind of Sophie’s choice.”
The index is often regarded as the nation’s most valuable housing market barometers as it tracks the prices of the same house over time. With home prices increasing at a more steady rate, this could be a step in the direction to more of a balanced market where sellers still benefit with gains and buyers can more easily afford to enter the game.