By Cheri F. Rosen
As the first month of 2023 concludes, do we see the market correction that many predicted? It depends on which market you are referring to. If you’ve seen recent headlines in the news about inventory rising in the nation’s housing market, well, they’re not totally wrong, but they are not completely accurate either. If you’re finding those reports at odds with what appears to be the current situation in Southeast Florida, especially in the communities within walking distance of Orthodox shuls, you are certainly not alone. The differing opinions in the media can be extremely confusing right now. They may even make you think twice about buying a home for fear that prices could crash or selling because there is nowhere to buy. The market is different in different places, but whether considering buying or selling, if the property is within walking distance to a shul, now could absolutely be the perfect time.
For much of the past two-and-a-half years, we have witnessed a housing market frenzy, with bidding wars, multiple offers over list price, buyer’s contingencies removed, and homes purchased sight unseen. But much of that is changing in many parts of the country where the housing market is expected to correct in 2023. However, in the areas of greatest concern to the readers of the 5TJT, no significant correction is appearing on the horizon. Instead, the advent of lower mortgage rates and creative financing options (such as those described by Chavi Kahan, my mortgage guru, later in this article) coupled with the annual spring buying season, will undoubtedly bring an influx of buyers into the mix, just when our inventory is already incredibly low.
Home prices in the U.S. have risen by more than 40% over the past three years, and here in Palm Beach, Broward, and Miami-Dade Counties prices have shot up even faster and further. The run-up in home prices was driven by rock-bottom mortgage rates and COVID-fueled demand. This past fall, while mortgage rates had risen, and the pandemic was easing, many hoped for home prices to decrease and inventory to increase. In many parts of the country, demand has stalled and price expectations are being reset, causing property prices in most local markets to substantially lower from their pandemic peaks.
But the national figures do not tell our story. Many housing market conditions in 2023 will be very strong indeed in some other local markets, particularly those that are more affordable and never witnessed prices rise as fast as we did in our uniquely specific neighborhoods of interest. So, what is our story? What may we expect in terms of inventory in the next few months?
Just as a point of reference, I compared newly listed inventory in the neighborhoods of Hollywood, Boynton Beach, Delray Beach, and Boca Raton, wherein I conduct most of my business. I searched among the most typically sought after type and size of homes listed in specific areas close to a very desirable Orthodox shul. I counted only new listings brought to market in January 2019, 2021, and 2023. Here is a table of my results:
New Listings Appearing in the MLS in January
|Hollywood (Griffin-Sheridan, 441- N Park)||6||1||1|
|Boca (Powerline-Tpk, Glades-Palmetto)||11||4||2|
|Delray Beach (Walking Distance to all 3 shuls)||15||11||8|
|Boynton (all El Clair com includes most Indian Spring)||15||9||7|
This table clearly illustrates the scarcity of inventory in many of our preferred neighborhoods.
And then there are the fluctuating mortgage rates, which have been on a steady decline since October. Although the Fed is due to raise rates again on February 1 (after this article goes to press), loan originator par excellence, Chavi Kahan reminds me that it is important to remember that the Fed does NOT raise mortgage rates. They raise only the Federal Funds Rate, which is the rate at which the government lends money to banks. To date, Chavi explains the market has priced in an increase of .25% that will signal that the Fed agrees inflation is easing and we therefore may need less rate increases than originally planned for this year. Given that scenario, mortgage rates are likely to decline even further. On the other hand, if they price out at a larger increase, mortgage rates may go up due to the Fed’s continued aggressiveness to tame inflation by raising the Fed fund rates. Chavi surmised, since unemployment came in lower than expected, that could indicate to the Fed that they need to be more aggressive, since higher employment must ensue before ending the rate increases.
If mortgage rates once again increase, or remain stable at their current levels, Chavi has solutions. She has been competently handling the heightened borrower hardship in several creative ways these past few months. For example, she has attained seller concessions, helping to reduce upfront costs that can be used toward discount points to reduce the rate. Another strategy which she has successfully employed are temporary buydowns to reduce the monthly payment for up to three years. Given that one can always refinance if and when the rates decline substantially that strategy is a win-win for Chavi’s clients. To contact Chavi for more information concerning these and other amazing financing options —as well as Florida buyer incentive programs—see her information at the end of this article. She is always happy to provide you with a clear understanding as to what homebuying price point would coincide most successfully with your lifestyle.
So, what is a prospective homebuyer or seller to make of all the facts and forecasts? First, know that whether our specific housing market resets in 2023, buyers may not have a better opportunity than right now, and should be prepared with full knowledge and understanding of their financing options. This will enable them to have an offer strategy in place to respond swiftly and successfully when they find the right home.
Secondly, sellers living near Orthodox shuls must seize this moment, while the limited inventory is dictating prices there, but not elsewhere where more and more homes are entering the marketplace. Concurrently mortgage rates are presently decreasing, allowing homeowners to sell at competitive and yet high prices, affording them the opportunity to sell high and buy low elsewhere.
Finally, and of crucial importance, you should engage a competent and creative mortgage lender as well as a knowledgeable and highly skilled residential realtor with a deep understanding of the local housing market conditions. Whether buying or selling, that huge financial decision is 100% personal and needs to be made based on the individual circumstances and needs of each person or family while simultaneously utilizing the wisdom and proficiency of experienced professionals.
You can reach out to Chavi Kahan directly by text, e-mail, or phone call. Eager to impart knowledge, Chavi is always happy to help.
Mortgage Loan Originator, NMLS# 57521 Delray Beach, FL
BranchNMLS# 2284614, O: 813-252-1385, Cell: 917-613-3819
Cheri F Rosen, of Lang Realty, has been a realtor in South Florida since moving to Boca Raton over a decade ago. You can learn more about real estate in South Florida by visiting Cheri’s website, southfloridacondosandhouses.com or calling Cheri at (561) 221-2233. Or just Google the words “Orthodox Boca.” Cheri’s website is the top search result.