If this headline about seller’s remorse strikes you as a little bit of a non-sequitur, you wouldn’t be alone. With the turmoil in South Florida’s active adult and real estate market, you would think we should be talking about “buyer’s remorse”. That’s the affliction that comes when people who bought a few years ago are under water with their mortgage – they owe more than what their home is worth.
Rafael Diaz could tell you all about it. Two years ago this Miami builder listed a brand new home near the University of Miami for $979,000. Today’s listing price – $599,000. What’s worse is that he turned down an offer of $770,000 just a year ago. What he told the New York Times says a lot of sellers remorse, “I should have taken it. … I guess I was a little cocky….”
The problems are understandable. Sellers are still thinking about prices in hot real estate markets. None was hotter than Miami, where home prices rose without interruption for 21 years. So they hang on to their asking price longer than today’s market will tolerate. The biggest problem in Florida, Nevada, California, and other former real estate hotbeds these days is that instead of yesterday’s bidding wars, short sales are setting prices. A short sale is when the asking price is less than the remaining mortgage, and the lending institution is willing to forgive the rest.
Unfortunately, even with massive discounts buyers are not biting. One realtor told the Times that “there are more qualified buyers on the sidelines than in the 35 years I’ve been doing this.” Buyers, who are afraid prices will drop further, are making the rental market hotter than it has been in years – in fact more deals are rentals in South Florida right now than are sales.
When home inventories get back to normal levels and the rate of foreclosures slows down prices will finally stabilize. But for now, the market remains fearful, except in the high end, where properties valued for more than $1 million are selling better than lower priced homes.