The recent fluctuation of the stock market, which many analysts predict will continue for months, has made investors nervous all across the country. Thanks to the prevalence of investment properties and second home purchases, this volatility may lead to a slower housing market in South Florida, an area that has certainly been on the fast track as of late.
Why will the South Florida market be impacted?
South Florida’s housing market is ripe to be affected by these changes in the stock market, due to the amount of second homes and investment properties being purchased with cash. A recent RealtyTrack report shows that approximately 50 percent of single-family home and condo buyers in the South Florida metro areas are cash buyers. This is the third highest percentage in the country when compared to other metro areas in the same class, and more than double the percentage for the entire nation as a whole. Throughout the United States, only 22.9 percent were cash purchases.
Why may investors shy away from real estate?
When the stock market displays rapid mood swings, like it has been lately, investors become increasingly cautious with their money. If the market plunges, they usually refrain from buying up real estate, as they have fewer funds for purchases and down payments. On the flip side, when the stock market rebounds, investors would rather pursue juicy equity returns rather than place their money in real estate. This has much to do with the fact that real estate usually cannot be sold instantaneously, like stocks or bonds can. Also, owning property requires ongoing costs for maintenance, taxes, fees, and insurance.
Stay current with the Jack Elkins blog for more information regarding the current South Florida real estate market. If you want to learn more about everything the Palm Beaches have to offer, or are looking to buy or sell a luxury home in Palm Beach, Jack Elkins would love to meet.