All this while it seemed that the South Florida housing market was bulletproof. But the pandemic has proved otherwise. The South Florida homes for sale have never seen such a slowdown after the Great Recession.
So how has this pandemic affected the South Florida housing market?
Studies have shown that there was a mere 21% increase in the sales of new and existing as compared to last year. But that was before the pandemic restrictions. The latest numbers have shown that even though mortgage applications hit an 11-year high in early March, they dropped almost 30 percent. But realtors still seem pretty optimistic. To keep up with the pandemic and new customers, the South Florida homes for sale agents are holding online home tours and using 3-D programs to give prospective buyers the chance to see properties.
But that being said, existing house owners have a hard time overcoming the mortgage dues. Even with the consideration of the pandemic and grace periods, such bills are left due.
The fact that many businesses and industries are facing challenges to pay their employees and there is a rising brink of lost jobs, as well as failed businesses, the regular payment of rents and mortgages, is an increasing concern. Let’s have a look at some of the essential aspects of South Florida homes and how the pandemic is slowing down this industry.
About 40% of the population in South Florida are renters. According to the Federal Government, anyone spending more than 30% of their income on housing is said to be “cost-burdened.” In other words, they will face challenges in purchasing other necessities. However, only 2 out of 3 of the 40% spend at least 30% of their income on housing rent.
With the loss in job and reductions in employee salary, it is now troubling for renters. Some house owners and landlords have agreed to reduce the rents until the situation settles down. But there is nothing more that can be done for those who fail to do their part. However, under the guidance of the Government, evictions, and mortgage foreclosure have been put on hold state-wide until May.
Monthly Association Fees
Many South Florida homes for sale have homeowner’s associations (HOA) that are made up of member residents. This association is significant as it serves to maintain grounds, insurance, community amenities, as well as the overall finances of the building complex or community. The HOA, most importantly, requires owners to pay a monthly maintenance charge. It could also demand a one-time assessment to cover large community expenses.
But with this pandemic in view, the assessments for those belonging to a condominium or HOAs are due as well. On average, these monthly fees are around $200 or more per month, depending on the amenities. In South Florida, just one agency manages more than 900 associations with 400,000 people. However, some homeowner associations have a financial cushion of 10 to 20 percent of their annual budgets in reserves. And each community own collection policies that the board administers. So there could be some relaxation in these expenses.
In South Florida, 4 out of 7 homeowners have a mortgage. And considering the employment status, some lenders have granted a suspension of three months on the payments. However, the demand for homes is still high, and there is optimism to this side of the sector. What is now to be is how many such mortgages are paid-up on the dates and how many remain due.
Apart from these, the pending sales of South Florida homes have taken a considerable hit and fallen by 33%/ The pandemic has forced people and potential buyers to pause their housing search. Similarly, a lot of sellers have decided against listing their homes with the current economic status.
But wouldn’t this be dangerous in the near future? Just imagine after the pandemic, while the listing of homes will rise, demand will fall faster. This will result in an oversupply of available homes in which the buyer might have the upper hand. This will have a massive impact on the pricing of South Florida homes for sales.
It is hard to foresee what the South Florida homes for sale deals will have to face. But there has been a slowdown due to the pandemic. We know that is only the beginning, and there are going to be distressed situations.
But distressed situations also lead to opportunities. We do not know what the new market will look like, but we do more by keeping an optimistic mindset.