Frustrated homebuyers wait for the market to crash

People who have spent months trying to find an acceptable, affordable home in South Florida are starting to think they’ll wait until the market collapses and they can snatch up a house at a bargain.

© Carline Jean/South Florida Sun Sentinel
A potential buyer walks in to view a home listed for sale during an open house in Parkland.

They’re probably going to be disappointed.

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Economists and housing experts don’t expect another crash like the one in 2008, when hordes of people got homes at rock-bottom prices and then made out when the values recovered.

The world is different now, economists say. The housing bubble from 15 years ago was driven largely by risky lending practices and a frenzy that drove a boom in new construction — the type of factors that lead to a recession.

Today, prices are skyrocketing as before, but the fever is the result of different forces, including low interest rates and years of underbuilding, partly because of difficulty getting supplies.

In short, we had too many homes last time; we don’t have enough now.

“The market in 2008 was very different from the market we have now,” said Zillow Economic Data Analyst Nicole Bachaud. “What we have right now is a market based on scarcity. There is not enough supply.”

Intense demand

One of the biggest differences is where the demand for housing is coming from, according to real estate agents.

People from all walks of life looking to buy a home today: people wanting to relocate; millennials trying to buy their first home; people looking to upgrade for more space as remote work takes over.

“Not only do we have strong demand locally, we also have strong demand from people coming in from the Northeast,” said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton. “The demand is linked to the number of buyers who are out there circling neighborhoods looking for a home,”

The real estate market in the 2000s was mainly driven by the ability to get quick and easy credit, regardless of a buyer’s ability to actually afford the house, said Christina Pappas, vice president at The Keyes Company in Brickell.

“Everybody was able to purchase a home without the clear ability to pay. There was demand because the credit was available,” Pappas said. “This demand we have now is fueled by families looking to move to the suburbs.”

Stricter lending practices

Today’s lending practice are more stringent, with homebuyers now expected to come up with a bigger down payment when they go to buy a home.

“The typical person coming in today understands they have to have cash when they come to talk to us, ‘I know I have to have some money down. I’ve got to have 10% to 15% down,’” said David Druey, Centennial Bank’s Florida regional president. “During the Great Recession, we had mortgage companies and banks financing 100% of the purchase price and closing costs. We created our own crisis.”

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