The open house on a leafy street near South Miami featured a snack wagon with cupcakes and chilled beverages, but the real draw was the newly listed house for sale for $435,000.
Over a two-hour stretch on a Sunday afternoon, 44 groups of couples and families streamed through the well-kept 2-bedroom, 1-bath house on an outsized lot.
They didn’t come to eat cupcakes. Five purchase offers came sailing in – three that day, two the next.
“I’m continually overwhelmed by the response when houses come on the market,” said Lisa Dority, a RE/Max Advance Realty agent who listed the home. “If a house is priced properly, it goes quite quickly.” Since last fall, she said, her listings typically have been selling within the first week.
The buying frenzy is reminiscent of the boom days of 2005 and 2006 – except today’s buyers are using cash and heavy equity, not “liar loans” boasting inflated income or assets.
Rising buyer demand is colliding with a shortage of supply, making the always-emotional experience of buying a home all the more intense. Multiple offers are competing for a scant supply of homes and condominiums for sale. Bidding wars are breaking out. Properties are fetching asking price – and often more. Prices are up double digits year over year and rising at a brisk pace.
With the peak buying season in full swing, South Florida’s housing market is on fire. Real estate agents complain about needing more to sell. Traditional homebuyers shopping for a place to live are facing stiff competition from cash-rich investors, including foreign buyers and institutions.
Given the imbalance of supply and demand, working with a sharp-eyed agent who monitors listings as soon as they hit (sometimes even finding off-market prospects that fit a buyer’s criteria) is critical in today’s market.
While South Florida’s coastal and urban cores have seen the biggest rebounds, buyer interest is coming in all shapes and sizes, with the outlying areas picking up as well.
“What we’re seeing is pent-up demand,” said Philip Vias, a broker associate with Prudential Florida Realty in Fort Lauderdale, Fla. “Not that much has been bought in the last few years.”
Mortgage rates are at historic lows, thanks to the Federal Reserve’s unprecedented maneuvers to stimulate economic growth. Banks have begun to ease terms on mortgages, with down payments of 10 percent and less increasingly available, widening the options for prospective buyers to jump in. Said Vias, “Interest rates are so low, people are crazy not to buy.”
And with housing prices marching higher in many areas, many buyers are feeling a sense of urgency to act now or miss out.
“We have a chance to grab something. We want to take advantage of this great market. Interest rates are low,” said Leonard Bridgnauth, a 36-year-old courier who, with his wife Kimmy, has been scouring the Miramar, Fla. area for a house in the $250,000 range since December, so far without luck.
Listings that sit unsold in today’s market are either overpriced or have some issues, agents say.
An important metric in real estate is the number of months of supply.
Six months of supply – or six times the number of homes sold in a month – is considered a balanced market between buyers and sellers. As the inventory rises, buyers gain the upper hand and prices turn soft; with less supply, sellers call the shots and prices rise faster than normal.
Aggravating the shortage: New construction of homes and condominiums came to a standstill during the downturn, and while thousands of condominium units are in the works in South Florida, most projects won’t be ready for several years.
Many economists and Realtors say the housing recovery has plenty of room to continue, although the dramatic price gains of the past two years will likely moderate in the next year or so.
“I don’t see interest rates going up soon,” said Drew Epstein, a broker with Century 21 King Realty in Sunny Isles, Fla. “There are still a lot of people wanting to get in. I see us maintaining this over the next year. Over five years, who knows?”