Sarasota, Florida Housing Bubble - Should I Buy?
With the market rising so much, the question everyone is asking is… have I missed my opportunity to buy? When there was a housing bubble in Florida. In this blog, I’m going to give you some of my thoughts on the answer to that question.
I recently had a conversation with a friend who is looking at purchasing a piece of land. They were concerned about the rising prices and if they should wait 2, 3, 4 years to buy, in hopes that the would come down. Ultimately, could the market come down in 2, 3, 4 years? Yes, maybe, but I don’t have a crystal ball!
But I think if you can afford it now, you have to look at the opportunity cost it will take in order to wait 2-4 years. I mean no one is getting any younger. Now in my friend’s situation, he was looking at a smaller piece of land that is now costing $100k where it use to be around $50k. If he bought now and the market adjusted 10% or so, we would be talking about risking tens of thousands of dollars, so I would encourage him to purchase now. Especially, if you’re in it for the long term buy.
But it may be a different situation if you’re talking about losing a half a million dollars. This isn’t the first conversation I’ve had in regards to this topic and talking through clients or friends concerns. So I figured, quite a few of you are probably also asking this question.
So, have you missed your opportunity to buy Florida real estate?
Well, regarding the short-term play, maybe? By short term play, I mean buying something with the potential to flip it or hold it for a year before selling.
For example, many people have purchased a new construction house and then when it’s build was completed, they turned around to sell it for 100-200 thousand dollars more… Because the market has increased THAT quickly. The market is up 57% since COVID in early 2020, and it did increase 21% last year. So, is it going to increase another 20% this year, I don’t know. Regarding the new construction investing, build times are longer at this point and taking up to 16 months to build. That’s a long time for the market to play out. I can’t say the margins will be as high in regards to making money on this kind of investment as they have been, especially after paying capital gains taxes and the other fees included to sell your property.
Regarding the long-term play, Florida real estate has proven itself to be a safe investment if you have intentions of owning it for 7 or more years. If your intent is to move to Sarasota and retire or relocate your family here, no, I don’t think you’ve missed your opportunity to buy FL real estate. Are the Sarasota housing prices higher than they were, yeah. But in the next 10 years are they going to be higher than what they are today, yes. In our current market, we’re still having multiple offers on every resale, we’re seeing homes on the market for 5 days or less. So basically, there are thousands of people still trying to invest their money in Sarasota real estate. This to me says that the Sarasota housing market is a good investment. Moreover, it is the safest investment because Sarasota is safe from hurricanes.
Did you miss the opportunity to get an interest rate in the 3’s?
Yes, that ship has sailed, because now we’re in the 5’s. And with inflation rising, the interest rates are going to rise as well. So, the sooner you purchase, likely the lower the interest rate will be. Are interest rates going to come down? I personally don’t think so anytime soon, not until we get a grip on the inflation problem.
So, what about you? Maybe you’re reading this blog today and you’re still in the exploratory phase, not looking to make a purchase for another year. That’s Ok! I get phone calls all the time from people planning a relocation that is 2 years out, and they just want to establish a connection with a local realtor. If that’s you, I’m happy to start that conversation. Feel free to reach out with any questions.
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