It appears that right now in South Florida, we have both a buyer’s and seller’s real estate market at the same time, although record low levels of inventory will eventually lead us more towards a stronger seller’s market. Real estate, like any market, is driven by supply and demand, and “supply” in real estate is the number of properties (inventory) that are available to sell. When supply is “down” and demand (number of people wanting to buy) is “high,” prices tend to rise. For now, buyers and sellers both can win.
Whenever a seller asks me to evaluate the value of a home, I study the relationships between the other properties I consider to be comparable to theirs. I consider the number of properties currently available (supply), those under contract, and those sold (an estimate of demand) in the past three to six months. If these numbers are relatively balanced, then I consider that to be a “healthy” sales pattern, and feel we should price accordingly—to anticipate future demand as well as existing market conditions. The time of the year, staging, condition of the property, and other factors like tourism also affect pricing decisions and “upside” potential.
For buyers, there is no question that prices are going up. That suggests an urgency to act sooner than later. I would strongly disagree that there will be another big drop in prices soon. In order for prices to drop, we need to have a surge of inventory to meet or exceed current demand. This is not happening. In fact, we are currently entering our busiest season and have every reason to expect more buyers and increased demand. Although prices are going up, they are still a fraction of what they were and will be.
If you sell now at prices that are lower than they may be in six months, and also buy now, the property you are buying may cost significantly less than it will in six months. That savings may be more than you will gain by waiting to sell.
This is a balancing act. If you want to buy, sell, and “overlap” the processes, your Realtor should coordinate that transition.
As a buyer, with limited inventory on the market I would advise more than ever to work with an experienced Realtor. If you are competing with cash buyers in some of the lower price points, ask your Realtor to explain “Homepath” and “Homesteps” programs. These and other programs may place you in the “driver’s seat” with a distinct advantage, especially if you have a limited budget for down payment or are FHA qualified. Homepath is arguably more favorable than FHA for primary home buyers.
Generally speaking, if you can, buy now. What goes up goes down—and prices are still way down. Now is the time to be a performer, not a spectator.
Rick Gibson is a Realtor and Team Leader with Re/Max Preferred. A Certified Distressed Property Expert (CDPE) and Investment Agent Specialist (CIAS), he is Principal of Gibson Group Property Management, LLC.
