Buyers struggle as residential development lags
Home buyers in Florida are facing higher interest rates than last year, yet financing costs remain low by historical comparison. Following the election of Republican Donald Trump, investors began trading in their U.S. Treasury bonds for other investments in expectation of rising inflation rates, according to CBS MoneyWatch. The increase in Treasury yields has driven the increase in mortgage rates, but analysts expect this trend to lose momentum in 2017. The article cites lack of residential development sufficient to meet demand as a primary reason to expect stability. The author also provides money saving tactics for home buyers.
A Zillow analysis points to an underlying problem of a low supply of new homes. The cost of residential real estate has grown at a faster clip independent of mortgage rates. The continuing growth in demand has outpaced supply for a variety of reasons, including more expensive materials and lack of suitable land. Seller flexibility and increased residential development is expected to follow a market distinctly unfavorable to more and more buyers.
In the meantime, buyers can take steps to lessen the burden of a new mortgage. One tactic cited is to ask that closing costs be paid by the seller. Once this money is freed up, the buyer can use it to buy down the interest rate on the mortgage.
Residential development is likely to increase in response to higher home prices. Developers, investors and buyers alike will face a number of hurdles specific to the residential real estate markets. In a seller’s market, buyers may experience difficulty protecting themselves from lack of disclosure and negotiating the best contract terms. Experienced legal counsel may provide the property research, knowledge of legal requirements and negotiation skills necessary for protection and profit in Florida residential real estate.