Almost since the COVID-19 pandemic hit the U.S. in early 2020, both the stock market and the real estate market have moved in unpredictable directions. But, while stocks have moved in value both up and down, real estate prices – at least in most areas – have continued to increase…with many homes and properties selling at or above their asking price.
In fact, in some areas of Florida, home values have seen increases of 60% or more since March 2022. These high home prices have, for the most part, been beneficial to residential rental property investors, as they have knocked many would-be buyers out of contention for purchasing their own homes and leaving them as tenants, at least for a while longer. This is particularly the case as mortgage rates have also recently gone up.
But just how much longer can these upward-moving prices in the Florida real estate market continue?
According to some experts, it may not be much longer. In addition, some of the country’s hottest real estate markets are likely on the cusp of a bubble. Real estate bubbles occur when increased demand pushes home prices above what they should actually be worth.
Then, when demand for homes in the area starts to decrease – and in turn, prices cool off – the bubble essentially “pops,” and it could even leave some property owners owing more on their mortgages than their home is even worth.
So, what can this mean for the owners of residential rental property?
One potential outcome is that it might entice some renters to begin looking for a home to purchase. But without knowing when the bubble will burst – and just how much prices may drop – it could be a while before this comes to fruition.
If you own rental homes or units in Orlando and/or Central Florida, and you would like to delegate some (or all) of the time-consuming tasks that landlords are typically saddled with – such as finding and screening potential tenants, responding to emergencies, and maintaining the property(ies) – give CFL Property Management a call and let’s talk about how we can make your life easier.