Q: Can you tell me what drives high real estate price gains like those in South Florida? And, is there a web site that tells what different houses sold for in those places?
A: I think the recipe for escalating home prices lies in the old economic basics of supply and demand — with perhaps a smidgen of emotional instability.
Let’s start with some of the things I’ve seen over the past few years. In South Florida, the Northeast, Southern California, San Francisco, and Las Vegas, the traditional forces of supply and demand have been helped along by super-low mortgage interest rates — which fell to generational lows — and an extraordinary number of real estate investors who decided they’d had enough of the stock market and needed another place to put their investment cash.
In addition, in South Florida, there are a growing number of wealthy people from Latin America who are always looking for a place to park their cash, a “safe port,” so to speak. You’d think that hurricanes might have kept the demand down for $3 million plus oceanfront or bay front property, but they haven’t.
When supply and demand are out of whack, the real estate market turns on a dime. By that I mean, if there aren’t enough homes on the market, or if buyer’s simply perceive that there is a shortage of available homes for sale, a “seller’s market” ensues. People will bid frantically, and emotionally, in order to get the house they really want. (That’s the emotional instability part kicking into gear.)
If the market turns, as it has in so many places, and buyers perceive that there are plenty of homes for sale, sales stagnate as buyers take their time before making a decision. Sellers get nervous, and begin offering incentives and even start dropping the price of their homes.
I don’t know of a website that tracks sales in the way you’re thinking, except for a local multiple listing service, which is a private service. You can gain access to the local multiple listing service by contacting the agent who sold you your home (or hiring one, if you’re your intention is to buy a property or sell one that you own).
Ask the agent to pull up the recent “solds,” homes that have sold in your neighborhood of choice.
If you don’t want to bother your agent, the current hot sites for property price information include Zillow.com or Domania.com. These sites will estimate for you how much your home is worth. That sounds good, but you have to be aware that various home pricing sites often provide radically different (and sometimes wildly incorrect) answers because the data may not be complete in any particular locale.
I’d suggest you be cautious about putting too much stock into any website. The market is slowing quickly these days in South Florida, and other places, and these sites may not have the most recent sales data.
The best thing to do would be to contact a top real estate agent in the area and work with him or her to define what would constitute a good deal in the current marketplace.