Some buyers postponed searches, assuming prices would drop as they did in the last recession. But now homes they once considered are financially out of reach.
FORT LAUDERDALE, Fla. – As South Florida home prices spiked during the pandemic, some people decided to put their home shopping on pause in the hopes that prices might drop, a decision they are coming to regret.
Now, a year-and-a-half into record price growth and dwindling inventory, non-buyers are stuck in a precarious situation: they want to buy, but are facing higher prices than they did when they first started searching, and they’re finding themselves at risk of being priced out of the South Florida real estate market.
“They feel like they made a mistake at some point and they feel like they can’t catch up because the market is so far ahead of them that they can’t get back in.”
Allie Sinbine and her husband, Steve, were among those who decided to try and wait out the real estate market after they started looking at homes in June of 2020. They put their search on pause a month after shopping, thinking it was likely that homes prices would start to lower towards the end of the year.
“We assumed that with the New Year and the election ending, we would start to see things level out and they would come back down to where they were,” she said.
Instead, home prices just kept rising, further pushing the couple out of the housing market. They are looking for a three-bedroom, two-bathroom home in the $250,000-$300,000 range, but as prices have continued to climb, they’ve expand their search beyond Palm Beach County, farther north to Port St. Lucie. They’re exploring new construction homes and considering that they may have to up their budget at little bit.
“We never anticipated that it would be almost 2022, and there is still nothing for us to move into that is affordable,” Sinbine said.
Homes prices jumped, no slowdown in sight
Homes prices skyrocketed in South Florida during the pandemic, as intense demand from out of state buyers dovetailed with historically low inventory to create an intense seller’s market where buyers were often faced with paying over asking price and losing out in bidding wars.
In a market where it’s common for buyers to lose out and face multiple bidding wars, it can cause home shoppers to get discouraged and more hesitant to buy. “I’ve had buyers regret waiting more recently, given that the market hasn’t slowed down like they thought it would by now.”
About 30-40% of clients in the last year end up trying to wait out the housing market. Many were wary of buying in the spring or even last summer as they watched prices skyrocket, only to see them rise even more as the year comes to a close. The overall sentiment is that they made a mistake in trying to wait out the market.
Now, as they begin to look again, buyers say they are greeted with homes that are $100,000 more expensive.
As a result, they are looking in different markets, like in Southwest Florida or more affordable markets.
A buyer was looking at a three-bedroom, two-bathroom house in January, listed at around $410,000. He decided to wait, but when he went back to the house in April, it was priced at $480,000. He was able to get it for $450,000.
In February of 2021, the median sale price of a home in Miami Dade County was $450,000, a 21% increase from the year before, according to numbers from the Broward, Palm Beach and St. Lucie Relators. For Broward County, the median sale price of a home was $433,000, a 12% increase from the year before. For Palm Beach County, the median sale price of a home was $450,000, a 24% increase from the year prior.
Flash forward to October of 2021, when median sale prices rose 19% from the year before in Palm Beach County to $500,000 in October. For Broward County, the median sale price of a home was $489,000 in October, a 17.8% annual increase. In Miami Dade County, the numbers shot up 12.6% to $490,000 for October.
Jeannie Schwartz is another shopper who decided to put her search on pause in hopes that the market would stabilize.
“I’m kicking myself,” she said. She started looking in January for a home within her budget of $300,000-350,000, but discovered that the properties were below the quality she was hoping for. Almost a year later, the same neighborhoods where she was once looking had prices jump up almost $100,000.
“I got priced out of buying,” she added. “I really should have bought something because now properties are worth so much more. I feel like I am going to have to leave Florida.”
She added that she also feared purchasing a home when the market was at its peak, in case there was a crash later.
The housing crash of 2007 is likely still fresh in a lot of potential buyers’ mind, noted Eli Beracha, director of the Hollo School of Real Estate at Florida International University, and is potentially one of the reasons that they are trying to wait out the housing market.
Beracha also noted, however, that the forces fueling this housing market are different. “We had an excess of supply last time [in 2007]; we don’t have that this time. If you don’t have excess supply, it’s hard for the market to correct in a significant way.” In other words, he does not see a dramatic bust in our future.
Out-of-state home shopper Dr. Ketang Modi, his wife and two daughters are making the move from New Jersey to Broward County, and are looking for a home that is around 4,500 square feet with a minimum of four bedrooms.
When they searched previously, they looked at homes in a community in Davie that were priced around $1.2 million, and now, four months later, prices are hitting $1.6 million, prompting him and his family to consider renting to wait out the market.
“Everything is overpriced,” he lamented. “I’m not sure when there will be a correction or when prices will stabilize.”