Written by Mark Salib
The Covid-19 crisis temporarily, and perhaps in many cases permanently changed our behaviors and habits. It is reasonable to attribute the strong comeback of the South Florida housing market to these changes. While many reasons exist, there are 3 that I consider the most significant towards the sudden and sharp comeback of residential real estate in South Florida.
1. Real Estate has always been a Safe-Haven Investment
Many investors who are either unwilling or unable to stomach the volatility of equity markets will look to real estate as a safe way to park their money. Historically real estate has been a strong long term asset that provides investors with passive income. South Florida real estate is still considered some of the most affordable among the major metropolises in the country.
2. Comfort and Space has Become a Greater Necessity
The more time we spend at home the more accommodating we need the home to be. For most Americans that means an additional room for a home office, and a yard or even a pool for the kids stuck at home instead of being in school or summer camps. These new requirements force many people to either search for larger homes or migrate from condo living to single family homes. However, the moves have not just been from one home to another. People are also preferring less dense areas causing a surge of interest in suburbs over cities. While much of it is local still many would be buyers are coming from much denser cities that were hardest hit by the pandemic, such as New York City and San Francisco. All this movement means more home buyers are on the lookout for a new place to call home.
3. Pent up Demand Coupled with Low Inventory
While I discussed the reason for the increase in real estate demand in numbers 1 and 2 above, my 3rd reason brings the entire thesis together. Simply put, demand has been pent up for months as we were entering the late spring and summer season; typically a hot time for real estate sales. This demand coupled with still low inventory especially for single family homes has caused prices to come back strong. In fact, we have already seen multiple offer scenarios and bidding wars for single family homes in both the Palm Beach County and Miami-Dade County markets in just the last month. Moreover, single family home inventory is lower now than before the pandemic. Many would be sellers simply want to wait out the crisis before selling. Selling your home means strangers must come in to view the home. Some sellers believe it is just safer to stay put than to pack up and go anywhere else. Still other sellers cannot move as some international borders remain closed for many travelers.
The Covid-19 crisis has changed what really matters to us. Where we live and the home we live in is a stark reflection of this. This change in our beliefs coupled with low inventory has fueled the real estate market once again in South Florida for now and into the near future.