When things are hot in real estate, they are steaming hot in my South Florida community. I know because I sold my home in one day with multiple offers before the market crash. Now, the housing market is heating up again. Real estate market conditions are forcing me to take a hard look at whether I should sell and move. According to a recent MarketWatch article, 90 percent of U.S. markets should experience home appreciation in the next year. A CNBC article suggests real estate might be a new "bubble in the making." Having owned homes before, during and after the first housing bubble in South Florida, I am noticing striking similarities. The only difference between the old and new housing bubble is the catalyst. According to the CNBC article, the new bubble is being driven by very low interest rates as opposed to easy credit. Still, I'm seeing the telltale signs of a housing bubble in the works.
Getting easy credit
I still think it's easy for people with full-time jobs to get credit. My husband and I were recently pre-approved to purchase an investment property. We currently have a mortgage payment of about $930 per month. To me, credit is easy if we are able to own two homes. We decided against it because I work in the media industry, which hasn't recovered since the Great Recession.
Paying above asking price
I've noticed a lot of cash investors are driving up the home values in my area by offering 10 percent or more above the asking price. All of a sudden, the homes for sale listed on Zillow went from the $90,000 to $110,000 to double at about $200,000. When I put my condo on the market before the housing crash, people offered me more than what I was asking. I took the best offer that I received the first day.
Flipping homes for profit
Most of the investors buying up distressed properties or foreclosures fixed up the homes so they could rent them out. Rent in my area is so pricey that I am skeptical we could afford to rent out our own home if we didn't already own it. I've noticed investors are now buying up properties, fixing them up and selling them for a profit. In other words, the "home flippers" are back. Even people who purchased new construction homes just 6 months ago could now sell for a profit. Considering no work has to be done, it's an easy way to make a huge profit.
Even though we could sell our home for what we paid during the housing bubble, I have to consider other factors. We just refinanced this year, which means I'd lose all my closing costs. I'd have to pay a new round of closing costs if we sold now as well as moving expenses. Also, we are in the predicament of living in an area where rents are sky high. Crunching the numbers tells me we would not come out any further ahead by selling and becoming renters. For now, we will have to let this real estate heat wave pass us by.
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