Should Surfloridans buy a home now in a hot real estate market or wait until interest rates drop?

Many aspiring homebuyers are scratching their heads as they reflect on South Florida's housing market: Media prices have hit record highs for four straight months despite falling sales, and mortgage interest rates have risen to a record high. maximum of 20 years.

Is now really the time to buy or would it be better to wait and continue renting, perhaps until mid-2024, when interest rates are likely to be lower? What are the risks and benefits of buying now or sitting on the sidelines until later?

The Miami Herald spoke with four real estate professors and analysts to hear their tips for navigating the treacherous real estate market. The advice comes on the heels of all-time high sales prices for homes and condos in Miami-Dade County.

July figures, the latest available, show Miami-Dade County reported a median sales price of $631,670 for single-family homes and $420,000 for condominiums. In Broward County, the median price for a home was $600.000 and a condo was $280.000. The average for a 30-year fixed-rate mortgage fell last week for the first time in six weeks to 7,18%, according to Freddie Mac. A year ago, that average mortgage rate was 5,13%.

Not surprisingly, South Florida real estate experts' predictions for the 2023 housing market have proven to be off from what they told the Herald in January. They thought that after two years of rampant increases, this would be the year prices would stabilize.

It turns out that, as a result of scarce options, buyers are willing to pay more for what they want in a home, constantly driving prices up even higher.

Here's what experts now had to say about the hot topic of discussion with four months left in this year:

BUYING NOW

• Set a budget and buy what you can before prices continue to rise. How do you know what you can afford? Well, you should pay, at most, three and a half times your annual income for a home.
• Interest rates are unlikely to fall too much. When they recede, they are unlikely to reach the low levels seen during the coronavirus pandemic that emerged in March 2020.
• Demand is generally strongest for homes at or below the median price in Miami-Dade and Broward. Therefore, prices are likely to continue rising in that portion of the market.
• Neither the inventory of homes for sale nor prices are likely to decline where buyers need it most: homes priced at or below the median price in each county.
• Eli Beracha, professor of real estate and director of the Tibor and Sheila Hollo School of Real Estate at Florida International University : “I don't think prices will go down. I think they will go up as soon as interest rates go down. If you can compete in a market that is less competitive, you will have more options and you will get prices today, before interest rates drop, which would appeal to everyone. By buying now, you beat everyone, you have more selection and stable prices. There is a lot of pent-up demand. “A lot of people are waiting for prices to come down.”

STOP WAITING, BECAUSE…

• Other homebuyers are sitting on the sidelines while you wait for prices or interest rates to drop. The first fall, and they too will be hunting, leading to tougher competition and an even tighter housing supply than today.
• Landlords can raise the rent (and many have done so in South Florida by hundreds of dollars) but buyers can gain stability with fixed monthly mortgage payments.
• Ana Bozovic, founder of Analytics Miami and Miami Dealsheet : “I don't see an influx of new supply,” because the owners will not be motivated to sell. "Even if interest rates go down a little bit, they won't go down to three percent."

SAVE TODAY, BUY A HOUSE IN 2024

• Buyers who buy homes today, during a period that some analysts consider to be peak prices, risk having to wait many years to see a return on their investments.
• The 30-year fixed-rate mortgage has averaged 7,23% in 2023, a not-so-high mark since the early 2000s. Sure, rates aren't expected to fall to the lows seen during the pandemic, but they are expects them to fall below the bar set this summer, giving house hunters more purchasing power next year.
• Jack McCabe, owner of the eponymous real estate research firm, Jack McCabe Expert Services : “Prices have to go down. The key to a successful market is affordability. Right now, the market is unaffordable, unless you come from the northeast with lots of cash and high income. …We will see a slowdown in migration to Florida next year. “We are going to see a difference in terms of supply and demand.”

FORGET TO BUY TODAY, BECAUSE…

• It should be a long-term investment. If you buy a home today and plan to move in at least seven years, it may be better to wait, since you're unlikely to see a healthy return on your investment if you sell faster.
• Condo supply in Miami-Dade will increase over the coming months in desirable neighborhoods such as Edgewater, Brickell, Miami Beach, North Miami Beach and Midtown. It will tip the balance of supply in favor of high-rise buyers, leading to some attractive condo deals.

FINAL WORDS OF WISDOM

“It is impossible to time the real estate market. Instead of waiting for lower prices, I suggest buying a house based on your budget and needs,” he said Tingyu Zhou, Dean Gatzlaff Associate Professor of Real Estate at Florida State University . “However, if you feel like you sacrificed too much to buy a house [or condo], it's not the right time for you. Potential homebuyers should review their financial situation, understand what they can afford, and prioritize what they need over what they want.”