The South Florida residential real estate market will not rebound to previous highs until 2030, according to a Moody’s Economy.com prediction. The forecast made something of a stir when it appeared deep in an article on community development districts in Business Week Monday (see chart on the forecast below).
While Moody’s Economy.com was under a contractual obligation not to release the specific data it had supplied to Bloomberg, it provided The Real Deal with data that supported a reasonably similar forecast — a peak to trough price trajectory that tells of a long road ahead for Florida real estate.
The data was provided with a forecast map upon which the Bloomberg citation was based, along with separate data showing a comparable recovery forecast.
The 2030 number comes from the map compiled by Fiserv, FHFA and Moody’s Economy.com. The map, entitled “Harder Hit Metros Will Take Longer to Recover,” predicts that Florida real estate, specifically South Florida, will not be able to regain its previous price peak until 2030 or later. With the exception of a few counties across the United States, only the Southwest — California, Nevada and Arizona — have regions with such dire predictions. The nationwide recovery prediction is 2020, according to the map.
Additional Moody’s Economy.com data shows a comparable trajectory.
According to analysis of the single-family home price state and countywide dating back to 1979, when it was $44,760. Florida real estate hit its peak in the fourth quarter of 2005, when the median existing single-family price was $267,910 that is, a median existing home price of $267,910.
The additional set of Moody’s analysis does not show Florida prices regaining that number until, the earliest, the fourth quarter of 2025.
mapbberg
March 16, 2010 at 7:18 pm, Rob M (NYC) said:
Utilizing Old Testament methodology of feast and famine, whereby economies grow and contract for seven years, a methodology that tracks real estate markets in general, recovery of real estate prices in Florida should start in 2013 with a peak around 2020; nine years earlier than the Moody’s forecast. While admittedly not scientific and to be taken with a grain of salt, following Moody’s likely very technical approach is likely inaccurate as well. The problem is that a technical approach fails to take into account irrational price swings. Every week speculators make large bulk purchases. The longer unfinished developments go, the more likely they get permanently shuttered, further reducing supply. At some point inventory drops sufficiently that sales to individuals will begin at bargain prices as the weaker bulk buyers will not be able to afford the continued carrying costs. Excitement builds and flipping reignites. Miami may end up with a permanent middle class rental stock; especially if business with South America accelerates with industry realizing that it starts to make sense to have a presence in a prominent Latin city. But don’t ask me when new pyramid construction begins. That’s a different analysis.
March 12, 2010 at 10:17 am, South FL Real Estate Agent said:
Read the article – it says the SoFL RE market won’t PEAK again until 2030 (using the 2005 market analogy). Those days are over. The usual and historical market appreciated per year at 4-5%. If this report is correct then you should be buying now or in the near future LOW, hold on to it for a few years, then get your 5-9% (or higher depending on how long you hold it) appreciation. In 2005 people were getting over 22-25% appreciation that year.
March 12, 2010 at 11:38 am, Get in the Game said:
Historical appreciation is NOT 4% – 5%.
Historical appreciation is inflation (at best).
SAVE your money and buy with cash.
Then who cares if the used or new structures appreciate or not.
You are LIVING in the dang place.
March 12, 2010 at 11:41 am, Anonymous said:
Who trusts RE agents anyway? These tools were telling everyone to buy, buy, buy in 2002, 2003, 2004, and 2005.
Then they had to gall to tell people ‘now is the time to buy’ in 2009!
If you listen to a RE agent, you are an idiot.
March 29, 2010 at 1:33 am, Anonymous said:
I just bought in South Florida. The deal closes in 3 weeks. 308k. The home backs up to the water. Got a nice pool. Large, multiple palm trees. I’m going to park my boat behind on the 10k lbs lift, and be on the open water in about a minute.
I agree, buy now.. There is extreme value to be had. Check it out. Gulf Cove Florida in Charlotte Country. Thanks real estate crash!!
May 27, 2011 at 1:20 am, Anonymous said:
Realtors, especially in South Florida are in the same category as used car salesman, horse traders, and lawyers. They’re basically bottom feeders and will take from any food source.
March 12, 2010 at 3:22 pm, Anonymous said:
well said
March 12, 2010 at 4:32 pm, Realtor with integrity said:
Thank you South florida Real estate agent from one to the other! You are correct! Thids why these people are complaining, they think they know more than you – and you work the market every day!
I think they watch too much HGTV.
I watched on Sunday and how is it these agents are able to get offers higher than the list price?
I don’t get it?
March 12, 2010 at 5:29 pm, South Florida Broker said:
When property values shot up to unrealistic highs, who in their right mind thought it could continue? Traditionally, a 3-5% increase in values has always been enjoyed in South Florida and based on today’s purchase prices, that same 3-5% increase would in fact place values at or about 2005 values in the years 2020-2030. Florida is still and will remain the No. 1 seasonal, vacation, and retirement area of the country. So go ahead, point your fingers, but if you’re smart, you’d buy now with the marketing bottomed and interest rates at the lowest is years.
March 12, 2010 at 7:36 pm, Anonymous said:
Listen the banks are not doing anything to help us. Our home values has depreciated and by the time it comes back, we are all old. What happen to the American Dream of owning a home? It was just a fairy tale!
March 11, 2010 at 12:50 pm, Anonymous said:
obviously, it doesn’t make sense to buy in the South Florida market until 2031
March 13, 2010 at 6:55 am, Anonymous said:
It’s all about the sun and the sand. As soon as the economy and consumer confidence rebounds (who knows when) people will begin to by again. Pricing will then begin to be dictated by inventory. A slow climb for sure, but 2030? I don’t think so.
March 13, 2010 at 6:58 am, ChrissyHF said:
Sounds good to me! I am glad I didn’t buy!
March 16, 2010 at 10:12 am, RE Investor/Broker said:
This article represents a classic case of the challenges of advising the average RE purchaser on making a purchase in the face of such strongly negative media pieces. When all of the news and media were claiming that RE was the best thing since sliced bread, it caused everyone to jump in and “buy buy buy,” which fueled a tremendous bubble. The savvy folks understand that when all signs say “BUY!” it’s already too late and you should in fact not buy. They also understand that when all of the media is negative on RE, it’s often the best time to buy. This is the case now, as it is in fact a GOOD thing that we won’t be back to our ridiculous 2005/2006 prices until 2030. This means buyers can comfortably make a purchase now – rather than waiting forever to gauge that illustrious market “bottom” just right – because we’ll only see very slow, metered appreciation for years to come, meaning no one will get swept up on the bad side of a huge up-and-down market swing.
May 05, 2010 at 11:21 pm, Mike said:
Force people to buy! Make rent prices so high they have no choice.
March 22, 2011 at 10:35 pm, Anonymous said:
Unemployment tough all over and looking for work over a year now. I’m 50 and tempted to buy something, taking from my retirement pension as funding while prices are low in SFL. Scared to death though as Suze Ormon would deny for sure! Realtor’s tell us, of course, that NOW is the time to buy. Other authors think recovery will take years. I think 2031 is a bit far fetched but maybe 10 yrs?
March 11, 2010 at 3:46 pm, Anonymous said:
im going to start buying everything in 2028 then laugh about it in 2031 when people realize they should start buying again
March 13, 2010 at 9:47 pm, Anonymous said:
The market may remain depressed for a few more years for the average and ordinary home; however, hot location properties are still in high demand. One well known community in S. Florida has had homes sell in as little as one week when they are put on the market, and are well priced. It’s all about supply and demand.
April 30, 2010 at 9:55 am, Anonymous said:
I just bought as well. A large 2 bed 1500SQFT at the bridgwater condominium (N.bay Village), large private 2000 SQFT deck(included with unit) directly overlooking the Biscayne bay inlet and normandy isles. $210k Thank you real estate crash as well.
March 20, 2010 at 1:29 am, James said:
Who cares about the real state market?
I am renting a beautiful house and life is great.
If something brakes, the landlord fixes it for me
I do not pay any HOA, property tax or Insurance
I have the freedom to move out as long as I respect the lease.
I am not afraid of hurricane anymore and since I do not have
a huge mortgage, I can afford to do and buy things I could
not do otherwise.
The bottom line is that I basically love Renting!
March 14, 2010 at 11:05 am, Edward said:
What credibility does the author of this article or Moody’s economy have? What were they saying in 2005 when the cheap credit was driving home prices up? Did anyone say this real estate boom was an illusion and prices had to come down?
The fact is that home prices will never have again the same value as in 2005. A good way to measure a home’s value is to price it in gold which has functioned as reliable money that holds its value for thousands of years. Example: you bought a home for $1 million in 2005 when gold was $500/oz…so you paid 2,000 ounces of gold for the home. Today the home is worth $550,000 and gold is $1,100/oz. Your home is now only worth 500 ounces of gold. Your home will never be worth again 2,000 ounces of gold.
December 21, 2010 at 1:47 pm, Anonymous said:
I spent 4 years in the FLAT so called “Tropical paradise”
Boomers are finding out this is not what the spin doctors are promoting.
Many are finding Georgia and the Carolinas have a lot more to offer.
Florida is, and always will be transients.
As my Doctor, who has been in SWFL for many years told me at my first visit. “My wife calls Florida,a sunny place for shady people”
March 11, 2010 at 8:01 pm, Anonymous said:
you can buy but you have to be really good if u want to make $$$
the most expensive and the least may make out ok
February 06, 2011 at 2:03 pm, Anonymous said:
All I know is I bought a 2 bedroom 2 bath condo in a good spot for 43,000 cash and i cant lose so hang onto your money and wait until they go up again. I will be sittining on my porch enjoying the sun
May 30, 2011 at 10:53 pm, Anonymous said:
People should charge ridiculous rent prices forcing people to buy.