What is in store for South Florida real estate in 2016?
As the Broker of a productive Boca Raton real estate agency, I am involved in not only my own transactions, but those of my busy agents as well. Additionally, I am an avid consumer of business and political news, and am particularly interested in how current trends impact our local community.
That being said, here are some of my predictions for the year ahead:
URBAN LIVING: I predict that more baby boomers will sell their suburban homes and move into downtown areas of Boca Raton and Delray Beach. The empty nesters are looking for a lifestyle change and are seeking homes, both condos and houses, in neighborhoods that offer walkability to the beach and to restaurants and shops. One only has to look in downtown Boca Raton to see what is happening: the Tower 155 and 327 Royal Palm developments have been sold mostly to locals living in country clubs and gated communities whose children have grown and left them puttering around in large houses. They are looking for a new lifestyle change and being closer to the “action”. Developers as well have been buying up the older single family homes in East Boca in the Golden Triangle and building spec homes. I think this trend will continue in 2016.
INTEREST RATES: It does not take a soothsayer to predict that the Federal Reserve will continue to cautiously and slowly raise interest rates. For Boca Raton home buyers who have been sitting on the sidelines, I predict a flurry of activity so that those seeking mortgages can lock in their monthly payments while rates are still low. Although the fed funds rate only increased a quarter of a percent, there is a perception in the market that mortgage interest rates will never be this low again. However I predict that even though they may tick up a fraction here and there, that interest rates will continue to be attractive to buyers and favor owning over renting.
SELLERS MARKET: Although the latest market stats indicate that the market is relatively balanced, I do predict that prices will rise in 2016 particularly in the below $500,000 price range where more buyers obtain financing and are motivated to lock in those low rates. So if you have a property to sell, 2016 is a great year to do it.
NEW CONSTRUCTION: I predict that buyers will continue to flock to new construction homes and condos. Developers have begun building again for the first time since the recession and there is a huge pent-up demand for new homes. Although many of the developments will not be completed until 2017 or later, the indications are there. The majority of the housing stock in the Boca Raton and Delray Beach markets was built before 1990. What was once new is now over 25 years old. The existing homes either have been renovated or are in need of renovation. It is our experience that buyers will pay top dollar for a home that does not need “work”. A property in need of renovation will sell for a substantial discount to those that are in current condition.
RENTS: I predict that rents will continue to rise, even though there is a substantial amount of new rental construction. Most of the new construction in rental communities is “luxury” and expensive for the amount of space. After the market crash in 2008, many investors purchased distressed real estate at a bargain price and rented out the properties. Now that values have returned, more owners will sell those properties and lock in their gains. This will have the effect of reducing the affordable stock of rental real estate and drive prices up.
CANADIAN BUYERS and SELLERS: We are noticing that many Canadians are postponing their decisions to buy because of the weak Canadian dollar. This is more noticeable in the lower price ranges. The luxury buyers who are willing to spend over $1,000,000 do not seem to be as affected. On the flip side, we are seeing some Canadian owners selling their vacation properties here. In one instance, our Canadian seller was able to sell a seldom used condo that they purchased at the height of the market. Even though they did not recoup their initial investment in US Dollars, they made a profit because of the favorable exchange rate for sellers. So my prediction is that fewer Canadians will be purchasing this year.
Admittedly none of these predictions are earth-shattering however they are trends that we are noticing and think will affect our market in the year ahead.
Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.