Florida Home Prices Get a Nobel Prize Treatment
The timing for when to sell a Florida home can be a decision that pretty much makes itself. Sometimes family demands call for a move to larger or smaller quarters; sometimes a change in career demands or a schooling decision dictates a residential switch. But there are other times when an eventual move is in the cards—but timing is flexible.
That’s a situation where the decision can hinge on expectations for where future Florida home prices seem to be headed. Nobody likes to be taken by surprise—especially if the surprises were foreseeable. As we enter the start of the peak Florida real estate selling season, it would be useful to know the direction Florida home prices are likely to move. Right now, it looks as if mortgage interest rates are moving upward: will that make selling more difficult?
Looking for a truly well-educated guess, it’s hard to argue with the Nobel Prize Committee. Fortunately for us, those ladies and gentlemen named someone in the real estate economics field worthy of their international seal of approval (and a chunk of their 2013 Prize money). That’s Robert Shiller, the Yale Economics professor who accurately predicted both the dot-com and housing bubbles and who co-authors the authoritative Case-Shiller Index.
One logical concern for Florida homeowners might be whether rising mortgage interest rates are likely to soften Florida home prices this spring. The Wall Street Journal provided a reassuring answer: “U.S. Housing Market Roars into 2017, Case-Shiller Says.” Per their month-end roundup, “Home prices shrug off higher interest rates.” The shrugging they cited was indicated by the fastest growth in home prices since 2013—despite higher interest rates.
This may not be tantamount to Prof. Shiller’s personal guarantee that the recent interest rate rise won’t retard Florida home sales—yet it does seem that history has seen a similar home price phenomenon before. In 1983, a 2.04% rise in mortgage interest rates resulted in a 6.6% rise in real estate values. In 1987, similar results. Between April 1999 and May 2000, a 1.6% interest rate rise accompanied a nearly 11% rise in values!
Florida home prices will certainly not see anything like that 1999 kind of dizzying marketplace—and that’s just as well. The national consensus for 2017 is for moderate price gains in the 4%-6% range. But for those holding back from listing for fear that prospective buyers may shy away this spring, it doesn’t seem to be likely.
In fact, with a little imagination, you may almost be able to hear the approaching sound of the Journal’s housing market “roar.” If so, I hope you call me soon!
Millie Gil, Broker-Realtor is fluent in English and Spanish with a strong network of Real Estate Professionals Worldwide. Other real estate blog posts by Millie Gil
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