The Good News About the Florida Real Estate Market

They say that it’s an ill wind that blows no one good. What they mean is that someone’s bad fortune is nearly always someone else’s good fortune. In the Florida real estate markets, that’s never been truer. When the national pundits and financial analysts say that the Florida real estate bubble has burst, they’re overlooking some important distinctions, and those distinctions have to do with the reasons that people buy real estate.

 

Those reasons are varied, but people generally buy real estate for one of two reasons: they plan to make money on it or they plan to live in it. Most people who buy to live in a home also hope that its value will go up, but they’re not looking for the type of fast turnover profits that speculative investors envision. Those speculative dreams drove the real estate market in Florida from 2000 to about the middle of 2005. Real estate prices rose astronomically, almost geometrically – and there was a reason.

 

That reason was the same as it is any time prices rise in any market: an imbalance of supply and demand. A shortage in supply triggers higher prices which triggers an increase in supply as people rush to fill the demand. As the demand is filled and the two parts balance, sales slow and prices stabilize. Translation: pre-2000, there were fewer houses available than people who wanted to buy them. That shortage sparked a speculative rush as investors tried to cash in on the shortage by supplying what was in demand: housing. In the past two years, the increases in price have leveled and even started to drop for one simple reason: the supply of housing increased to meet – and in some cases exceed – the demand. This is bad news for people who bought with the intention of cashing in on a buzzing market – but it’s very good news for those who are looking to buy homes in Florida.

 

It’s especially good news when you consider other changes in the economic landscape of Florida – one of the fastest growing population rates in the country, dropping unemployment rates, a steep increase in permanent new jobs and a cost of living that is below the national average. With the recent downward trend for 30 year mortgage interest rates, this is a great time to buy a home in Florida.

 

Read more about why at The Doom Sayers vs. The Silver Lining

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