The Pros and Cons Waiting to Buy in Florida Until Home Prices Drop After the Next Recession
The number of people moving into and out of Florida, drastically affects home prices
Huge numbers of people move to Florida every day for what they hope will be a better life. Large numbers of people each day also move out. These people, who had previously moved there, learned that Florida wasn’t right for them. Now having better information they decide where they moved from really wasn’t that bad and move back. The chances of this happening are far higher than what people now considering a move to Florida would guess. Almost everyone that moves to Florida believes it’s a permanent relocation. Population researchers know better.
If you’ve read the Florida Move Guide, you know Florida’s real estate prices are like a roller coaster. When the number of people moving in is high during good times, Florida real estate price increases usually outpace other states because of supply can’t meet demand. During recessions the number of people moving to Florida can slow terribly and quickly put an end to that strong demand and cause prices to tumble. During these slowdowns, the number of people who want to leave Florida usually remains steady or increases due to job losses adding to supply at a time when demand decreases.
During downturns when money becomes tight and consumer confidence falls, fewer people vacation in Florida. Hotels, restaurants, golf courses and other tourism related businesses suffer and don’t need as many workers so they let them go. Not as many homes need to be built. Fewer people furnish homes or buy boats. All of this adds up to significant job losses. Tough times in Florida can cause people whose previous honeymoon with Florida is now over and are on the fence about moving “back home”, to make the decision to leave, further increasing the supply of homes that need new owners. When real estate prices drop below what people owe on their Florida home, foreclosures start to increase, further accelerating price drops.
When Florida home prices become too high for many people to afford to buy
Many people who currently would like to give Florida a try, have decided over the last couple of years they couldn’t afford to move to Florida because Prices shot up too high. Many are waiting until the next time Florida home prices drop. They dropped 60% on average during the last recession. I expect a similar situation in the near future. But what are the pros and cons of buying a Florida home or condo after large price drops?
The Pros of buying real estate in Florida during downturns after prices crash
- You can usually buy a home at a significant discount, up to 60% off compared to the previous “bubble” pricing.
- The market can quickly flip to a strong buyers market and some sellers will do anything to accommodate a buyer to sell their home.
- The number of homes for sale will grow dramatically and delight buyers because it will be more likely they will get exactly what they want and for a price they can afford.
- As prices drop in Florida, so do property tax assessments so buyers may save on real estate taxes and possibly insurance rates.
- During downturns, buyers for Florida homes become like an endangered species and real estate agents will treat you like royalty.
- If you buy at a bargain price in Florida and end up discovering that Florida isn’t right for you, chances are your home will be worth far more that what you paid when you want to sell and move out. Unlike most of the people who bought when times were good and prices were high, you may actually break even, or at least not lose as much when the total cost of multiple home sales and long distance moves to Florida and back is tallied up.
The Cons of Buying Florida real estate at a bargain price after a downturn
- If you couldn’t afford to buy when prices were high, you may not be able to afford your bargain when Florida home prices rebound sending real estate taxes, insurance and other ownership and maintenance costs higher. This can be especially true if you are on a fixed income or otherwise not in a position to increase your income as the cost of living increases.
That’s it. That’s all I have. The pros seem to greatly outweigh the cons.
However, here’s the big problem with waiting to buy in Florida until prices drop.
We all know that buying low and selling high is better than the opposite. So why do far more people buy when home prices are high in Florida than when they’re “on sale” for 50% off? Why will most people, maybe even you, even knowing how much better it would be to buy when homes are half price, not be able to take advantage of the coming buying opportunity?
- Because during the next downturn, it will be tough as nails to sell your home where you live now in order to buy in Florida.
- Most prospective Florida real estate buyers won’t or can’t buy in Florida until their current home sells.
- The real estate market where where you live now will also likely have few buyers and prices may stagnate or even drop.
- It probably won’t be anywhere near as bad a Florida, but finding a buyer during economic downturns is never easy.
- You’ll also likely feel less comfortable as the stock market drags 401k’s, IRA’s and other accounts in a southerly direction.
There are some excellent strategies to make the real estate markets in your state and Florida work to your advantage. I’ll make them available soon
Ron Stack “That Best Places Guy”
- Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.