Are we in the midst of another Housing-related perfect storm? Or is the housing market simply doing better? Morris Massre explores the issue.
Some thought Hurricane Wilma of 2006-fame was the perfect storm that started the housing meltdown in South Florida. Well, if you coupled that with mortgage fraud, rising home prices that were out of control and unscrupulous Realtors, mortgage brokers and appraisers, then maybe it was.
But, today we have a perfect storm of other sorts. I like to think of it as the perfect storm for our housing recovery. Whether or not you like it makes no difference. Housing is the single factor in the U.S. economy that dictates whether or not we fail or succeed economically as a country. Not Wall Street, not the auto industry, not banking. This is why everyone should be paying close attention to the market, especially here in your own backyard.
What South Florida is experiencing now is not unlike pre-meltdown housing numbers, but make no mistake about it, everything has changed in the way we conduct business. The perfect housing storm arises first from rising seller prices. Although not enough to bring a lot of homeowners from the abyss, it is still enough to rescue many others.
Another factor that has been taking hold are buyers who are coming to the U.S. to invest for various reasons, although mostly political. All of the political and economic unrest in various parts of the world have led to foreign investment in U.S. housing. These buyers are coming in droves, too, and this has led to a shortage of inventory, thus driving up demand and prices. In particular, Canada, Venezuela, Argentina, Brazil and China are the biggest movers and shakers in the buying business.
American buyers, on the other hand, are driven more by simple economics, like interest rates. Foreigners do not have to worry about that because they buy with cash, but with Americans who finance it is the single biggest factor in the purchase of a home. Give out zero percent interest rates like the auto industry and the run on housing would be so great that we would surely run out of homes to sell in record time.
So, given the fact that we have a great deal of buyers for homes, low interest rates, higher home values and a shortage of inventory, everything points to a housing perfect storm. This time, however, it is all for the better.
Morris Massre is a Realtor with Prudential Florida Realty. He can be contacted at:
Phone: 954-214-6014
Email: agentsunstate@gmail.com
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