To Buy? Or not to buy? Sell? That is the Question!
To first talk about the future of the Real Estate market in 2022, we need to talk about the first half of the year and how things have changed. On the other hand, I want to recap on the two biggest concepts that have been in all our minds: Interest Rates and Inflation. The role of interest rates on a macroeconomic perspective is not easy to understand, one must remember that they react to inflation and inflation basically defines buying power. When interest rates are high, it can mostly be attributed to inflation rate increase due to a rise in production costs (of raw materials, wages, and even transportation costs to get those resources where they need to be).
Throughout the last decade involved in the Miami Real Estate scene I have been closely working with a variety of clients, and from experience I would like to share some thoughts on how the housing market will be affected in the future. We can all agree that everyone needs a place to live, and this can mean a variety of different things: looking for more space, relocation, investment opportunities, mortgage, rent, etc. With the rise of interest rates, the main thing that will be affected relative to the housing market will be purchasing power depending on the loan you can get on your mortgage. Fixed rate mortgages vs. adjustable-rate mortgages are an important factor to consider when talking about the decisions you should make when selling or buying a house.
According to the South Florida Market Stats for Single family homes, closed sales have decreased by 12.3%, Paid-in Cash has increased by approximately 27% but the overall dollar volume has decreased by 8.3% (all in the past year). Not to mention that the median listing price last year was $500,000 vs. today at $575,000 (15% increase) and active inventory has increased by an insignificant 0.2%. I see this as stagnation in how the market has been stimulated in the past year due to the decrease in closed sales, and the inclination towards listing prices rising. The overall dollar volume has decreased and the rise in active inventory should be higher considering Miami is a city that has seen a lot of demand – 2021 saw a significant growth in closed sales and dollar volume in relation to 2020 (85.3% and 254.7% change)! As for townhouse/condo living in 2022, the most surprising stats are that active inventory has seen a staggering drop of 43.8%, closed sales have gone down 7.9%, the overall dollar volume has increased by 3% but the median sales price has changed from $325,000 to $415,000 (an impressive 27.7% rise).
The rise in inflation means that our economy is experiencing a lack of purchasing power and interest rates reflect that since they react to the bank’s needs. If I was someone who was thinking about selling my property right now, I would focus on what my next move would be (no pun intended) and the potential of cashing out (sellers’ market)! On the other hand, if I was looking to buy right now, I would really consider what kind of commitment I have to the different options I have before me. I believe there is a lot of anxiety towards a potential housing crisis in Miami and the rest of the country, however there should never be a rush in making a place your home. While inflation is affecting purchasing power in a sellers’ market today, decreased active inventory and decreased overall dollar volume may suggest that soon things will need balancing out. Although sellers are getting top dollar if they can sell right now, buyer’s will need to decide how much their money is worth.
In conclusion, I always approach helping my clients invest in their properties whether they are looking to live in them, rent, remodel, sell, etc. I would never recommend a client to invest in a home when I wouldn’t myself. This principle has led me to create better judgement when working together with my clients and finding what makes sense for them. Although selling right now might seem like a good deal and buying might seem necessary, I believe that setting your priorities straight is the most important thing when we discuss living.
About me:
Paula Sanchez, Founder
Unique International Properties
Source: https://www.miamirealtors.com/news/south-florida-market-stats/may-2022/
Chilean Journalist, Founder of Unique International Properties
Spanish journalist, great communicator, Media Professional working with Antena 3 Televison, Telemadrid, the COPE Radio Sation
Argentinian Architect
Colombian Political Science
