Here is a familiar story for many Americans across the country: You were living in the city in a small 600 square foot apartment near the office that you worked at. All of a sudden the pandemic began and then you were forced stay home and your company instituted a work-from-home policy. After living like this for a few months, you decided it was time to buy a home in the suburbs that offered more living space. While this was a great idea, it was also an idea shared by many others as well. Fast forward 18 months later and you have placed offers on many different homes only to have been outbid every time. Tired, frustrated, and exhausted you have now opted to instead sign a new lease agreement on a larger apartment or home for the next 12 months. The thought of buying a home is still of interest, but you are now considered to be a “shadow buyer”.
A bad time to buy?
According to the recent Home Purchase Sentiment Index survey released by Fannie Mae, the share of respondents who believe it is a bad time to buy rose to 66% in September. This percentage rose from 63% a month prior. In fact, last September only 38% of respondents thought it was a bad time to buy. The home purchase index, which is constructed from consumers’ answers to topics including whether they think that it is a good or bad time to buy or to sell a house, the direction they expect home prices and mortgage interest rates to move, and concerns about losing their jobs, is at its lowest level since last December.
Waiting in the wings
With a large proportion of shadow buyers observing the market from the sidelines, it is expected that this segment of potential home buyers will be a significant factor in the future of the housing market. Should home inventories improve and prices pull back slightly, it is likely that we will see this pool of buyers re-entering the market. In markets such as South Florida, these shadow buyers combined with the continual stream of Americans relocating to the area should keep this real estate market quite competitive for the foreseeable future.
The median existing home price for all housing types in September reached $352,800, up 13.3% from September 2020. This marked 115 straight months of year-over-year increases, according to the National Association of Realtors®. It is quite understandable for shadow buyers to decide to temporarily drop out of the home buying market. With this said, continued inflationary pressures combined with the continued demand for housing in South Florida make this approach even more risky. Add in skyrocketing rental prices along with the price of virtually everything from groceries to fuel going higher and this makes saving for a home purchase even more challenging.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!