Florida Home Loan, Real Estate Market Questions and Answers
You should really get to know Paul Owens. He’s a business writer for the South Florida Sun-Sentinel and he recently answered a series of reader questions concerning Florida home loans and the state of the market. Among them were:
- Will prices for South Florida homes and condominiums drop?
- Should I hire a real estate agent now that the market has slowed?
- What about interest rates?
Some housing analysts think the real estate market will experience a major correction, while others are more optimistic. Jack McCabe, an analyst in Deerfield Beach, says condo prices could fall 20 percent to 30 percent, while single-family home prices could drop 5 percent to 20 percent during the next 30 months before rebounding.
Other analysts think Florida homes values will remain stable - and the market will continue to grow, albeit at a slower pace. They think prices will increase by 8 percent to 15 percent or so in 2006.
Some readers said they want to save 5 percent and 6 percent commissions by trying to sell their homes themselves. But selling in a soft market can be tricky and homeowners might best be served by listing their homes with real estate agents for maximum exposure.
Rates on 30-year Florida home loans are at about 6.3 percent, according to Freddie Mac, and are expected to continue rising closer to 7 percent this year. While mortgage rates remain relatively affordable compared with previous years, any rate increase prevents some people from being able to afford a reasonable Florida home loan.
Here is a sampling of other questions:
Q: Despite all this talk of a housing bubble, isn’t South Florida still an excellent place to invest in real estate for the long term?
A: Experts do agree that real estate remains a solid long-term investment. But investors and speculators who want to “flip” their units for fast cash will have a tough time in today’s climate.
Q: Is now the time to buy or should we wait for prices to fall?
A: With prices leveling off, now generally is a good time to [agree on a Florida home loan] if you plan to live in the home and build equity, housing analysts say. Some buyers are waiting for prices to plunge, but that might not happen. “I learned when I was very young that he who hesitates is lost,” said Michael Cannon, managing director of Miami-based Integra Realty Resources. “If you wait for the bargain, the bargain may not be there.”
Q: What is going to happen to all these condo developments when the developers realize that they are not able to sell them?
A: Experts predict developers would try to sell at below-market rates. In other cases, lenders would take back the properties. Some condo projects also could be canceled if developers can’t get financing.
