Florida is one of the hottest Real Estate markets with some of the highest appreciation rates in the nation with the “house price index” on a rapid increase since 2012 / 2013.

Does this feel like the housing bubble of 2006/2008? Many buyers think so, waiting to buy on the dip which is a smart idea until you consider all the factors and run the numbers.

Here are some reasons why this is NOT a bubble or an overheated market like that of 2006 – 2008.

Supply and Demand.

6-months of housing inventory is a balanced market.  Anything above this is a “buyers” market which would be high inventory, low demand, low pricing. However, during the 2006 – 2008 housing market we had 5 – 11 months of inventory, oddly with property prices increasing.

A sellers’ market would be low inventory, high demand, higher prices. For the past 3-years, we have been under 5-months of inventory with prices going up as they should.

Mortgage Regulations

During 2006–2008 anyone could get a mortgage. The higher the Mortgage Credit Availability Index  (MCAI) the easier it would be to get a mortgage, conversely the lower the more difficult.

A historical low index MCAI, a low-interest rate, low inventory makes for a solid financial investment.

The American homeowner and banks have learnt their lesson.

2006 – 2008 there was a wave of refinancing and buying with little to no equity left in the property, so when values came down homeowners were left under-water leading to a flood of foreclosures.

Today, 38% of households own their property free and clear.  18.7% have at least 50% equity and the balance with a mortgage that’s been approved under stricter conditions, a much stronger position than where we were in 2006 – 2008.

Remember low inventory, high demand drives the price, don’t be left on the fence!

Bottomline – The price you’ll pay if you wait 2-years.

In 2022, it’s anticipated that the appreciation rate for an average home in most markets will drop to 12%, and in 2023 dropping to 5% mostly due to the increased interest rates.

The chart below illustrates buying the same house today for $500,000, will cost you $590,000 in 2023! In addition, you’ll have to earn more after-tax dollars to make that extra $800 per/month mortgage payment, plus an extra $6,000 in cash to close.

As a Real Estate professional, it’s our duty to inform and educate the public on the current market giving you the knowledge to make an educated decision. So please share this with your friends and family.

The time to act in real estate is now, based on historical data, not emotions.