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Is Miami’s Real-Estate Market On The Brink of a Major Crash?

Foreclosures and short-sales are now starting to hit one of the nation’s most expensive cities. Could this be the perfect time to buy?



Photo: Unsplash

Key Takeaways:

  • COVID-19 has created a level of homeowner uncertainty that we haven’t seen since the housing market crash of 2012.
  • As of May 2020, nearly 4.3% of loans are delinquent and 8% are in forbearance according to the Mortgage Banker’s Association 
  • The CARES act and several other new emergency relief services have helped cushion the financial stress for millions of recently unemployed homeowners unable to make their monthly payments. However, not everyone is covered.
  • If you’re on the optimist side, you see a speedy recovery as the nation begins to open up and homeowners are able to catch-up on payments and other financial obligations. Resulting in no real-estate market crash of sorts – just a small bump in the road for the broader 2020 market.
  • However, when looking on the pessimist side, things start to look a bit more bleak for the broader market. In the event that numbers begin to surge again and states revert back to lock-down status, or job and income recovery take much longer than expected, the defaults on home mortgages will only worsen causing an unprecedented level of short-sales and foreclosures.

Is the Miami Market Crashing?

It’s honestly too soon to tell. There are certainly signs of distress with growing levels of uncertainty each day as Florida reopens and COVID-19 cases begin to pace back up. However, there are also strong signs of hope as parts of the state continue to move into Phases 2 and 3 of re-opening and jobless claims begin to slow back down to early February figures. For now, it’s a matter of waiting to see how quickly the economy recovers and homeowners are able to return back to a financial normalcy.

Is Now a Good Time to Buy?

It depends on your situation and location. If you have the financial means to act quickly on an opportunity, and live (or are looking to purchase) in an area with a prominent number of properties being moved into short-sale or foreclosure statuses – then perhaps the timing makes a lot of sense. You can quickly and easily find these on popular real-estate sites like Zillow, Trulia, or Realtor by doing a simple keyword search in the property filters:

foreclosure search on zillow

But for others, it may be a while longer before the inventory of discounted properties really starts to take affect. Especially in more premium markets and on higher-priced properties where homeowners may have more financial options to stay afloat during these uncertain times. 

The Fed’s main job is to make sure the mortgage market continues to function. The Fed is going to stay the biggest buyer of mortgage-backed securities” – Greg McBride, Bankrate’s Chief Financial Analyst


What Should I do If I’m a Homeowner and Have Lost My Job?

The good news is that there are lots of options with the CARES act (if your mortgage is government-backed) and other relief measures that financial institutions are making.

There is also the option to sell if you’re in a position to do so, and if you’re in an area where you could ask for a fair market price. However, it really depends on a case-by-case basis and on an individual’s financial distress.

Looking Ahead

So, is the Miami real-estate market on the brink of a major crash? Possibly, and there are lots of signs indicating that it’s very possible. But then again, things could also quickly recover over the next few months and all returns back to normal in terms of the housing market. An “instant” economic collapse caused by a pandemic is not something any of us has a whole lot experience with.

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