As the saying goes, fortune favors the bold – and investing in South Florida real estate in the midst of a global pandemic certainly seems like a gutsy move. But is it the right one? Or more importantly, is it the right one for you? Here’s some information that may help you decide.
The Current State of Affairs
Without a crystal ball or psychic powers, no one knows exactly how things will play out in the South Florida real estate after the COVID-19 pandemic subsides (assuming it ever does). For now, the South Florida real estate market seems to be holding its own.
Although current ‘stay-at-home orders’ preclude real estate agents from showing homes in person, experts say prospective buyers are viewing properties online, while also utilizing teleconferencing apps, like Zoom, to do business and interact with real estate professionals.
The Florida Realtors association has also released an addendum to be used for conventional real estate contracts in Florida. Provisions in the addendum allow for optional extensions due to COVID-19. These include additional time for:
- Curing of the title
- Feasibility studies
- Due diligence
- Homeowners’/condominium association consent
The addendum also includes allowances for a loan-approved buyer if the lender has to make any changes due to the COVID-19 pandemic. While not far-reaching on its own, the addendum has added at least a little certainty for home buyers and investors across the state.
Meanwhile, we reported last week about good news for current renters and homeowners who are struggling to pay their bills due to the COVID-19 pandemic. Specifically, an Executive Order issued by Gov. Ron DeSantis in early April halted mortgage foreclosures and evictions until mid-May. Some mortgage lenders are also providing temporary relief when requested.
Potential Impact on the South Florida Real Estate Market Going Forward
Even so, mortgage lenders cannot and will not allow homeowners to defer payments forever. The moratorium on foreclosures will not remain in place indefinitely, either. For many, the consequences could be disastrous.
According to a recent report, 10 Florida housing markets are among those at the greatest risk from the pandemic’s economic fallout. Although most of these are elsewhere in the state, Broward County has the dubious distinction of being the top-ranking county in South Florida.
Of course, the potential for foreclosure will be even greater if the people cannot go back to work, the economy cannot bounce back, or we plunge into another recession.
A recession is usually – but not always – a prolonged economic downturn characterized by:
- A drop in Gross Domestic Product (GDP)
- Greater unemployment
- Instability in financial and real estate markets become unstable
- Tougher lending criteria, making it harder for consumers to obtain the money for houses, cars and so forth
- Government intervention, upping the national debt
- Intervention by the Federal Reserve, resulting in lower interest rates
- Changes in residential construction patterns
How a recession affects real estate depends on what causes it and how long it lasts. In most – but not all – cases, it results in lower demand for real estate and decreased values. With less demand, more apartments, condos and houses will stay empty for longer periods. Short sales and foreclosures are also more likely when people cannot pay their mortgages.
Things to Consider if You Want to Invest in Real Estate Now
Even in ordinary circumstances, investing in real estate isn’t necessarily for the faint of heart. In the midst of the COVID-19 pandemic, it is even more important that you do your homework before you take the plunge. This includes:
- Investigating areas with historically stable real estate markets
- Learning which areas to avoid and why
- Learning about areas where people may want to live in the post-pandemic world.
- Investigating where existing job markets are likely to rebound or where new jobs are more likely to be created.
Potential Investment Opportunities in South Florida
One trend worth noting is recent interest in South Florida real estate, where local real estate agents have been using video chat and other technology to communicate with foreign buyers in Latin America for decades. This has made the region better equipped to handle transactions amid the pandemic. According to one expert, South Florida’s many amenities also make it intriguing for potential buyers who have been considering their options from afar.
Other experts say savvy investors may also be able to acquire commercial properties in the area for below-market prices. It’s likely that there may even be opportunities to snap up sought-after retail spaces, office buildings, or properties associated with the hospitality industry.
Whether you decide to pursue a residential or a commercial real estate investment opportunity in the growing South Florida market, the legal team at Eskander Loshak LLP is here to help. Simply contact us online or call our office at (954) 334-1122 to learn how we can assist today.