Vero Beach housing industry experts say the future of housing for the remaining five months of the year revolves around one word — affordability. Affordable home prices and affordable rents will determine the Vero Beach housing market’s direction.
Although home prices are still on the upswing, the pace is slower that it was during the first six months of 2014. However, mortgage interest rates are rising and the lack of Vero Beach housing inventory is likely to keep prices at a higher level than anticipated.
Vero Beach Housing Market to Remain Lukewarm
Despite renewed optimism in the Vero Beach housing market, the production of new homes has not grown substantially this year. In addition, there is little expectation that that will change between now and the end of the year. Homebuilders are being affected by tighter lending and credit requirements and a shortage of skilled construction and subcontractor labor. These and other factors are reasons that homebuilders aren’t building many spec houses anymore, concentrating on permanent construction projects for contract purchasers.
For the rest of the year, Vero Beach housing market analysts expect a slight rise in new construction, but it will likely be "too little, too late" to cure the inventory shortage.
On the rental side of the Vero Beach housing market, tenants probably won't experience much relief either. Demand for rental units are rising, as more people have entered the rental market as a result of the mortgage crisis of a few years ago. While multifamily housing starts has increased this year, supply has not met demand.
Rental occupancy levels are at record highs, putting landlords and rental management companies in the "catbird seat." And despite some migration from the rental market to the Vero Beach housing home buying arena, those crossing over represent the exception not the rule. It’s expected the remaining five months of 2015 will not see much of a change.
Occupancy is at a record high, and that gives landlords strong pricing power. Renters do not appear to be turning into buyers, at least not in sizable numbers, and the second half of this year will see no change in that. Higher than normal rent has made it more difficult for prospective homebuyers to save money for a down payment, pushing the length of time tenants will stay in the rental market longer.
One area to watch closely over the next few months is mortgage lending activity. As mortgage lenders grapple with new regulatory challenges it will likely cause them to be more cautious. Yet, as interest rates continue to rise, lenders will want and need more mortgage business. Experts look for independent mortgage lenders to gain a larger share of available business by being slightly more lenient, flexible and competitive in their credit policies and practices. Such activity will almost definitely impact the Vero Beach housing market… the question, of course, is how much.
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