Miami Lakers are not selling! Why it may be wise to sell sooner, rather than later.
Updated: Mar 7
Lately, while speaking to potential Miami Lakes home sellers, I hear the same concern. "Where will we go if we sell now, when everything is so expensive?" Indeed, property values are up in many coveted areas, in South Florida. The lack of affordable single-family homes has driven many buyers to consider condominiums, townhouses, or villas; the typical properties considered by those seeking to downsize. Year-over-year, for instance, values for these types of properties have risen roughly 12% in Miami Lakes. Other desirable South Florida locations have recorded similar price increases.
So what is a home seller to do, who is seeking to downsize?
If you are an empty nester, typically defined as a parent 55 years of age or older, whose children have grown up and moved out, you perhaps own a home, which has become a shore to maintain and keep clean. If you have owned your home for 15 years or more, you are likely sitting on a lot of equity, which will make purchasing a new home, much easier. Your monthly mortgage obligations, if any, may be greatly reduced, if you take advantage of today's low mortgage rates and put down a nice down payment.
If you are postponing the sale of your Miami Lakes single family home, waiting for prices of townhouses, villas, and condominiums to come down, you need to keep in mind that due to the high demand for these more affordable types of properties, they are less likely to come down in value, than your single-family residence, if we have a downturn in the market, for which there is a real possibility.
Presently, we are in uncharted waters and there is a real possibility of a market downturn. Low interest rates cannot last forever. Forbearance periods will eventually end. These measures will not rescue our economy, when the supply of available homes for purchase nationwide and locally, are shrinking at the same time. Something must give! And something eventually will!
In Miami Lakes, multi-family homes have appreciated 12% over the last year
According to the Mortgage Bankers Association, the U.S. housing market currently has approximately 2.6 million borrowers with mortgages in forbearance plans. In February, the Federal Housing Finance Agency extended forbearance protection for another six months, bringing the total to 18 months. It also extended moratoriums on single-family foreclosures and real estate owned evictions through June 30, 2021. Currently, there are also about 1.6 mortgage holders, who are 90 days on more behind on their mortgage payments. If these homeowners are unable to begin making their mortgage payments, it is anticipated that we will see a slew of foreclosures, in the next 12 to 18 months. If this happens, it is important to understand how it will affect your home's value. Typically, if your neighbor down the street is foreclosed on, your property can lose about 10% of its value, just like that.
For some perspective, in all of 2019 or before the pandemic, 35 of our neighbors faced foreclosure. In 2020, the number of our neighbors facing foreclosure declined to 19, an off-year, due to government mandated foreclosure moratoriums and homeowners taking advantage of forbearance plans, offered by government backed mortgages like Fannie Mae and some institutional lenders.
In Miami-Dade County, we had 43% less foreclosures last year, compared to 2019. So, what does this mean? Well, it tells me that there is a backlog of last year's foreclosures, which will be processed this year, once the moratoriums and forbearance agreements end. If you add them all up to the number of new foreclosures this year, the likelihood of having a flood of foreclosure soon, will impact home values.
Another slightly significant area to keep an eye on, over the next few months, are interest rates and mortgage applications. Over the last three months, mortgage applications have trended downward, fueling speculation there is some cooling in the housing market. February saw new home mortgage application drop 5%, January had a 4% drop and December drop was 3%. Additionally, Interest rates are trending higher, from their lowest recorded level of 2.66% last December, for a 30-year fixed rate mortgage. As of this writing, according to Freddie Mac, the average interest rate for a 30-year fixed mortgage averaged 3.02% for borrowers with excellent credit. However, the good news for buyers, is that Freddie Mac, is forecasting rates to remain relatively low this year, as the Federal Reserve keeps interest rates near zero, to help the economy rebound and avoid a housing crash. Let us hope it works!
One more area home sellers should keep an eye on are the unemployment numbers. Thankfully, Florida has done much better than other states, to quickly restart the economy and reduce unemployment, which reached 14% statewide, last September. Remarkably, it's now 6.1%. If the unemployment numbers continue to improve, there is a likelihood that many now facing foreclosure, will be able to save their homes, which is good for their families and your home's value.
If you have been contemplating selling your single-family home and downsizing, perhaps it is a good time to consider your options now. Waiting to sell may eventually eat away at your home's equity in the near future, if foreclosures swamp our local real estate market, later this year.
I know from experience that most people purchase and sell real estate, for personal reasons and not because of market conditions or low interest rates. It is important to understand what type of seller you are, so you can plan accordingly and know all your options.
WHAT TYPE OF SELLER ARE YOU? LEARN MORE HERE.
If you could use some honest advice as to whether it isa good time for you to sell or purchase, call me for a confidential consultation. I will help you explore your options. Sometimes, your best option is staying put and not selling or buying at all!
" When you help a family sell or purchase their one home, it's magic when you can bring them peace of mind! "
Jesus M. Fernandez,
Jesus M. Fernandez, is a REALTOR® and the publisher of this website and blog. His primary area of service and expertise, is in the town of Miami Lakes, Florida, where he has resided with his family, since August, of 2000. He is passionate about his profession and truly serving the needs of his South Florida clients. He has been a REALTOR® and licensed in the state of Florida, since 1995. He proudly works with Morris Williams Realty, a state-of-the-art real estate company with offices in California, Texas and Florida. The firm's national headquarters is located in Palm Coast, Florida. Jesus, is a member of the National Association of REALTORS®, the Florida Association of REALTORS®, the Miami Board of REALTOR® and the REALTORS' COMMERCIAL ALLIANCE.