As of late, we are seeing that the consumer’s #1 question is “What is going on in today’s market?” This is a question we hear all too often. South Florida’s rental prices are through the roof, and although it is still cheaper to Buy than to Rent, sales prices keep rising as well.
So, here’s what’s really going on (in a nutshell):
- Uncertainty causes interest rates to rise. With the new President-Elect and uncertainty of what is to come, interest rates rose in November 2016 by .75%, but we need to understand that the average rate today of 4.2% is still at an all-time low compared to past decades of 12.7% in the 1980’s and 8.1% in the 1990’s.
- It appears housing prices continue to rise, while wages are lagging behind. As the promise of a new and improved economy is giving great hope, new jobs are being created and wages will rise, thus so will housing prices. But don’t fret, it is predicted to stay at a very normal budgetary condition.
- Contrary to the consumer’s opinion, housing still remains strong. Even with interest rates on the rise it’s still more economical to buy than rent besides the many other benefits of homeownership (appreciation, tax credits, etc…)
- Miami, FL continues to be the most financially desirable city of the metro areas in the U.S. According to a recent study, the average growth rate in home sales prices in South Florida is 6.6% per year. We are still far behind from Seattle, WA at 10.7%, Portland, OR at 10.3%, Denver, CO at 8.3%, Dallas, TX at 8.1%, and Tampa, FL at 7.8%. Not to mention our beautiful year-round Summer weather, city-life attractions, night-life, and historical monuments!
To really answer the question of the year, although rising interest rates are worrisome to home buyers, we must admit that these rates and home prices are still historically attractive. And if the rates continue their “gradual rise,” it will give time for salaries strengthen, therefore easing the sting of higher mortgage payments to come.
Looking for a specific neighborhood or price-point? Click Here for a map showing average price ranges per area in South Florida.
Written by: Myrissa Leon