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Is the Miami Real Estate market crashing?

August 8, 2022

The past couple of weeks I have had the same conversation with a lot people…
And I wanted to address it and hopefully provide value.
What is going on in the Miami Real Estate market? Is the market crashing?

The market is not crashing!!!

There’s no doom and gloom in the Miami real estate market. Yes we can talk recession, inflation, but right now this real estate market is in a correction, going back to a normal market.

To put this in perspective, Lets start with the DEMAND SIDE.

The extremely high demand we saw in the previous 18 months was caused by a couple things… mainly historically low interest rates, and a 1-100 year global pandemic that accelerated the demand for housing in the State of Florida like we had never seen before. We were one of a handful of States that remained open during the pandemic while corporations were allowing their employees to work remotely or as the new phrase was coined “work from home”.

This caused many people to move to South Florida, both temporarily as renters, and permanently and buying. Local buyers, were now competing with out of town buyers from other States where the real estate is more expensive and thus were bidding over asking prices both in rentals and sales for properties. It truly was “the Perfect Storm”

I can vividly remember last summer working with a buyer whose family had outgrown their condo and needed to buy a home. At the time whenever a home got listed you could not make an appointment to see it. They would only hold it open for 2-3 hours on a weekend, and that’s it. Then all offers had to be in by Monday or Tuesday.

What would happen is you would get to the property and there would be 30, 40, 50 people waiting outside in line in the middle of the afternoon. It got to a point that buyers starting making offers sight unseen, all-cash, over asking, no contingencies. they just needed to get a home and they didn’t want to deal with all the madness. This madness, this euphoria caused bidding wars against buyers, and drove prices sky high.

I remember standing outside this particular home waiting to get in, looking around and I said there’s no way that this is normal, and there’s no way this can last. I knew at that point we were in something that we had never seen before but I also knew it wasn’t gonna last. Those days are behind us which is actually great for the market.

Where are we right now???

Demand Decreasing is causing, Inventory Levels to Increase. The past 18 months we saw incredible demand for housing in South Florida which has started to decrease, while at the same time, interest rates are increasing while inventory levels are also increasing.

How did we get here?
Let me point out a series of 4 events that happened sequentially:

  1. 4th Quarter 2021 – Buyer Fatigue – Buyers got out of the market after missing out on various properties, getting outbid, having to clear their schedules to go run see a property.
  2. January 2022 – Starting the new year companies began to end work from home policy, calling employees back to the office.
  3. February 24, 2022 – Invasion of Ukraine by Russia
  4. March 16, 2022 – Federal Reserve raises interest rates for the first time in a few years.

These two last events caused global uncertainty and started a massive sell off of the stock market which has wiped out Trillions of Dollars in Net Worth and Company Valuations.

This series of events has lead us to where we are now

Real Estate Market# Months Inventory
Normal Market6 -7 Months
August 20222 – 3 Months
Previous 18 Months0 – 1 Months

Both the rental side and buy side. We are still below the 6 months we need to see a normal market and things to level off.

Inventory increasing is good for the market to help it balance itself.
It’s good for Buyers because we can now go see properties on your schedule, take the time to see various properties and then make an informed decision to pick the right property.

Interest rates are higher, yes. But remember whenever they go down which they will you can always refinance.

SELLERS – The days of sky high pricing are gone. You now have to listen to us agents when we recommend a selling price. The great thing is… If you price your property correctly it will sell very fast.

We are moving back to a more balanced market, it’s a correction, we are reverting back to the mean. Back from the madness and the euphoria. Yes, there will be some bumps along the way but all will be well.

I’m Jose Laya and I was born and raised right here in Miami.
I’ve been in the Real Estate business for 17 years, and I put a lot of work in behind the scenes and do a lot of research to be able to give clients the best advice for them.

If you ever need any advice, any help, you know how to reach me.

Have a great one and we’ll talk soon.

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