05 Apr Rising Home Prices in South Florida Threaten Affordability
Will a Rise in Home Prices Affect your Decision to Buy?
Thinking of buying property in Florida for a home, vacation property or as an investment property? New data from Realtor.com shows property values may be rising in the next few years.
The causes of rising home prices in South Florida are complex however, increased population and a lack of new home construction are key factors. If new President Donald Trump’s policies do heat up the US economy, it will create a completely new generation of wealthy Americans looking to buy property in Florida. And Palm Beach, Wellington and Boca Raton are an ideal location for them.
Homes values overall were cheap, but these affordable homes for sale will likely be bought up by investors and speculators. Median home prices for Palm Beach County have grown from $160,000 to $225,000 in last 2.5 years.
“By next year, Florida is expected to see a similar pace for its year-over-year growth, but just a sliver lower. The forecasted growth by June 2017 is reported at 6.8 percent” — from a report on Inman.com
Pic courtesy of Beaches MLS Report
Also from a market report from Beaches MLS, the average growth in list prices is up 10.1% in the last year. What also shows is the rapid disappearance of lower priced properties (e.g., solds below $99,000 dropped 16% and solds from $200k to $250k were down 10%)
NAFTA AND Florida’s Agricultural Output
An improving Florida economy, rising incomes and better job prospects, along with growing in-migration of millennials and babyboomer retirees will all contribute to higher home prices. That’s actually good news for everyone except millennials hoping to buy their first starter home here in Florida, or for retirees hoping to enjoy their golden years in the Florida sun. They’ll face increasingly stiff competition for homes or condos. The heated competition will likely show up soon in 2017.
If you view this chart of home prices and average incomes in Palm Beach county, you’ll be surprised at how modest they appear. Yet it’s changing. Florida has become the 4th most populous state due to migration.
Florida has always been a tourist haven, especially for the wealthy, and also highly dependent on agriculture. The NAFTA deal with Mexico had effectively crushed the Florida agriculture market, but as Donald Trump seeks and expects a fairer trade deal, Florida’s agricultural sector is beginning to perk up. With border protection, Florida could see increased demand and higher prices for its fruit, vegetable and beef production.
Florida’s real estate market then is driven by international, national, and local economic factors. It makes it very unique and difficult to forecast. For instance, even when the US economy falters, there are always buyers from Europe, Russia and the Middle East who want property here. It’s some of the most desirable and rare real estate anywhere. 2017 may be the year buyers show up in droves for a piece of Palm Beach FL.
Time to check out luxury homes for sale in Boca Raton, condos in Palm Beach and detached houses for sale in Wellington. Remember to bookmark my search page so you can return and pick up where you left off. Keep a sharp eye and open ear on our market down here in South Florida.