How can one area of the country see double digit declines in real estate values and another see double digit increases at the very same time? That is what is happening right now. Zillow's latest housing report shows Austin, TX has had declines of 10% year over year in September while Hartford Ct has had an 11.1% increase in values, all while interest rates are approaching 8.0%.
Of course supply and demand play a big part. Austin is a boom town. There is a lot of investor and builder activity and it may have been over built. Hartford is an older established NE city known for insurance more than anything. I am not going to try to explain why there is such a divergence in the direction of these local markets. The point here is all real estate is local. South Florida is different than both of those cities. There is less land to build on, the economies are completely different. Currently the Miami Metro area of which we are a part of is right in the middle of these two cities. Year over year for Sept 2023 is flat at 0.0%.
There are a lot of moving parts when it comes to the movement in residential real estate values. Supply and demand, interest rates. The cost of renting versus owning. I like to watch the rental market. Rents are a leading indicator of values. Rents in South Florida are not rising as rapidly as they were. A lot of newly built apartment buildings are coming on line and could soften rates in the future.
Residential real estate is hyper-local too. Within our metro area, some neighborhoods are doing better than others. For example neighborhoods that are popular for short-term rentals, the latest investing fad, have outpaced other neighborhoods. Ignore stats that look at the entire country as a whole. They have little relevance at all.
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