Buying a home in South Florida is starting to look like an impossible proposition.
Shoppers are swarming open houses and sparking bidding wars that drive prices out of sight. Thousands of potential buyers are growing frustrated as they watch homes vanish from the market in a blink.
How do you win at this game?
The South Florida Sun Sentinel reached out to three real estate experts and asked them for their best suggestions for buying in this pandemic-fueled market. They are Linda Bright, of Illustrated Properties in Palm Beach Gardens, Dee Emmanuel, of The Keyes Co. in Hollywood, and Gary Finkelstein, of Berkshire Hathaway HomeServices in Fort Lauderdale.
Here’s what they recommend.
Q: Is now the right time to buy?
Gary Finkelstein: Absolutely. You don’t want to miss the opportunities in South Florida real estate right now. A good deal is a good deal. And if you a buy a property that you know you can hold for five to ten years as a homestead – you’re going to be OK. The [interest] rates are still low enough that even if you think you’re overpaying for something, as long as you cover that monthly bill it’s totally going to be worth it in the long run, especially with the migration we’re seeing right now.
Q: Experts say the South Florida market is overvalued by nearly 20%. If you buy now, is there a good chance your home will lose value?
Dee Emmanuel: No. Because of the supply. Whenever there is low supply and high demand, homes sell faster. These homes are turning over fast. The lower the inventory, the more turnover. The more supply of inventory results in less turnover. The homes sit on the market longer than usual.
Right now the indicators show low supply and high demand. The more turnover, the more appreciation.
Is (the market) overvalued by 20%? No. Due to the lack of supply and high demand, the market is showing low monthly supply, which means as a result, there will be multiple offers, in some cases above market price.
We are seeing a shortage of inventory and homes are being purchased above the asking price. It’s safe to say that in the South in general, I don’t see any indicators showing that if you buy now there is a good chance you will lose value. All I see is positive benefits.
If we had high supply, then you and I would have a different discussion.
Q: How can you find a property that will hold its historical value?
Dee Emmanuel: Essentially the most important thing is you just have to buy in a neighborhood that justifies the value. School districts play a big factor, as well as from a commuting standpoint and the family’s lifestyle. You are buying location.
Q: How can you get a leg up on finding newly listed homes ahead of the pack?
Linda Bright: You do need to be working with someone actively in the market who knows exactly what’s going on and has connections with other agents. We all speak to each other. That is one way to know when things are coming on the market, for sure. The agents that have longstanding relationships are connecting with people.
Q: Is it worth the time to try to find an off-market home?
Gary Finkelstein: A hundred percent. Because inventory is so low, an off-market property is much more advantageous to you. Then you’re not dealing with the rest of the market. If you start knocking on doors to try to find a better property, you’re not fighting with other potential buyers. Two of my properties I purchased I’ve knocked on doors. I said, “Hey, are you interested in selling? How much would it cost for you to leave this property?” I bought a property for $350,000 and now it’s worth $750,000. It’s always an advantageous thing to try to get your foot in the door before somebody else.
Dee Emmanuel: A seller may have leverage … because they know you need a home. There is nothing wrong with off-market deals as long as the seller’s expectations on price are realistic and they’re motivated. If you are in a contract there could be issues you want to negotiate. The seller says, “You called me, I’m not looking to sell, but for this price I am.” If the seller is not realistic in price, it could result in your overpaying.
Q: If you get into a bidding war, should you stick around or leave?
Gary Finkelstein: It depends. Let’s say you and I have had a prior relationship and you are a real estate agent. Knowing each other and knowing the way each other works, the deal holds a big value there. Knowing the other agents is going to help you in that bidding war, and yeah, you should stick around because you never know what happens.
Linda Bright: I think that if the house fits your needs ... some of it has to do with the length of time you’re going to stay there, if the property is right, and it’s what you’re looking for.
Q: How much longer will South Florida be a seller’s market?
Linda Bright: The indications are the [interest] rates are going to continue to stay low. The buyers coming from the Northeast and Midwest tell me their friends and family are coming. Based on the information we’re hearing, this is not going to change any time soon.
Q: Are more new homes and developments on the way in the coming year? Where are they?
Dee Emmanuel: They were slow coming in early this year. We saw new construction out west in Parkland, Coral Springs, Plantation and Davie.
Linda Bright: We’re seeing developments already starting. There are some things in Palm Beach Gardens and west of the Bee Line. But it’s as far west as Palm Beach Gardens would go. And we’re seeing development in Boynton Beach, Delray and Boca Raton.
They take quite sometime to go through all of the approvals. But there is not as much land left, and that includes Palm Beach County. If people are interested in new construction, they should go forward, with the [rising] cost of building supplies.
Renovated homes are just as desirable in these areas, particularly for people looking for something newer. Renovations are a great option.
Q: Is it better to rent now and wait for the available supply of homes to grow?
Gary Finkelstein: That’s a question that depends on the buyer. If it’s somebody who’s got a stable job and they have less risk, absolutely, pull the trigger on a house. If it’s somebody that’s working for $50,000 [a year], maybe it’s smarter to rent. For me I would buy with the 3.5% loan. For some people you’d be crazy not to purchase if you can afford it. But not everybody is going [to qualify] to get 3.5%. You’re just going to have to hang in there if you’re not able to do that. For those people I would tell them to rent.
Dee Emmanuel: It’s always a good time to buy against renting because the rents have not devalued by any means. They’re actually increasing every year — especially in certain areas where we are seeing rents going above $3,000 — that’s more than a mortgage payment. If you have money in the bank for the down payment and the closing costs, your job is stable and if you maintain your good credit standing, this is the time to buy. You just have to be motivated.©2021 South Florida Sun Sentinel. Visit at sun-sentinel.com. Distributed by Tribune Content Agency, LLC.