I’ve been reflecting on the current state of the Kendall and Miami housing market lately, and I can’t help but wonder—are we heading back into the risky territory that caused the last housing crash? If you’ve been paying attention to trends, you might have noticed some things that feel eerily familiar.
I started my real estate career during this time, I jumped in during one of the toughest times to be in the business, and those early years taught me a lot. One of the biggest lessons? The importance of helping people make informed, sustainable decisions about buying and selling homes.
I was deeply involved in assisting sellers with short sales, helping them navigate the challenges of being underwater on their mortgages. It wasn’t just about numbers—it was about helping families get through one of the most difficult periods of their lives.
Now, as I look at Miami’s real estate market in 2024, I see some trends that remind me of the past. But I also see some key differences that give me hope. Let's take a look back at the lessons learned from the housing crash and and what’s happening in Miami today.
A Look Back at the Housing Crash
If you were around during the 2008 crash, you’ll remember how chaotic it was. Back then, lending was incredibly loose. Mortgages were handed out with minimal requirements—no income verification, no down payment, no problem.
Adjustable-rate mortgages (ARMs) lured buyers in with low introductory rates, but those payments often ballooned into unaffordable amounts when the rates adjusted.
When the housing bubble burst, Miami home values dropped dramatically, leaving millions of homeowners stuck owing more on their mortgages than their homes were worth. For many, short sales became the only way out of an incredibly disheartening situation, offering a difficult but necessary solution to regain stability.
I’ll never forget those days. I spent much of my time helping families negotiate with lenders to accept less than they owed, trying to find a way out of an incredibly challenging situation.
Homeowners who went through short sales during the crisis faced serious financial setbacks. A short sale often dropped credit scores by 85 to 160 points, staying on reports for up to seven years. This made borrowing again challenging, with waiting periods of 2-4 years for conventional loans and 3 years for FHA loans.
Even after those waiting periods, lenders often required higher down payments or charged higher interest rates. But not all was lost—those who focused on rebuilding credit by paying bills on time and reducing debt often found their way back into the housing market.
I saw many of these homeowners work hard to recover, and while the road wasn’t easy, the resilience of those families is something I’ll always admire.Those experiences shaped how I guide my clients today, always focusing on long-term stability rather than just getting the deal done.
Foreclosure Hits Harder: Understanding the Impact
In contrast to a short sale, foreclosure hits a homeowner’s financial health and credit much harder and leaves a longer-lasting impact. I’ve seen firsthand how challenging this process can be for families, so let me explain what foreclosure really means for a homeowner:
Credit Score Impact
A foreclosure can drop your credit score by 150 to 200 points or more, depending on where your credit stands to begin with. It’s a steeper hit than a short sale because foreclosure signals a complete loan default to lenders.
Waiting Periods for New Loans
If you’ve gone through foreclosure, the wait to qualify for a new mortgage is longer compared to a short sale:
1)
Fannie Mae and Freddie Mac loans: You’re looking at a 7-year waiting period before being eligible for a conventional mortgage.
2
) FHA loans: The wait is at least 3 years, similar to a short sale, but foreclosure still carries more stigma.
3)
VA loans: Generally, there’s a 2-year waiting period, but it can vary depending on the situation.
Legal and Financial Consequences
Foreclosure means the lender takes ownership of the property, and this can sometimes lead to even more headaches. For example, homeowners could still be on the hook for the remaining balance of the loan if the home sells for less than what’s owed. This is called a deficiency judgment and can create financial strain long after the foreclosure is complete.
Emotional and Practical Impact
Foreclosure is tough on more than just your finances. It often feels devastating because it’s typically an involuntary process. You lose control over the sale, and it often involves public notices and auctions, which can add stress and embarrassment.
Longer-lasting Credit Stigma
Foreclosures stay on your credit report for seven years and tend to carry a heavier stigma than short sales. Even beyond mortgages, this can make qualifying for credit in general more difficult, and the consequences can linger for years.
Foreclosure is always a last resort, and for good reason. While neither option is ideal, I’ve found that a short sale is typically a less damaging way to recover financially and rebuild credit. It also gives homeowners a bit more control over an already tough situation, which can make a huge difference.
What’s Happening Now in Miami and Kendall?
Fast forward to 2024, and the Miami-Dade housing market looks different, but some trends feel a bit too familiar. Let me break down what I’m seeing:
Rising Home Prices
The median home price in Miami-Dade County is now $552,000, a 7.2% increase from last year. While this shows that the market is still strong, it also highlights growing affordability challenges. Wages haven’t kept up with these rising prices, and many buyers are finding it harder to get into the market.
Fewer Homes Being Sold
The number of homes sold in October 2024 was 1,934, down from 2,172 in October 2023 This decline in sales volume suggests that buyers are becoming more cautious—whether due to higher prices, rising interest rates, or concerns about economic uncertainty.
Homes Taking Longer to Sell
On average, homes in Miami-Dade now spend 64 days on the market, which is a 27.5% increase from last year.This marks a shift from the frenzied pace of sales we saw in recent years, and it might indicate that the market is starting to cool down.
Loosening Lending Standards (But Not Like Before)
While lending isn’t as reckless as it was pre-2008, I’m noticing some shifts that make me raise an eyebrow. Adjustable-rate mortgages are making a comeback, and lenders are becoming more lenient with debt-to-income ratios. These changes open up opportunities for buyers but can also create risks if people overextend themselves.
How Dodd-Frank Comes Into Play
After the 2008 crash, the Dodd-Frank Act was introduced to prevent another housing meltdown. It imposed strict regulations on lenders, requiring them to verify a borrower’s ability to repay and eliminating some of the riskiest loan products.
However, in 2018, parts of the Dodd-Frank Act were rolled back under the Economic Growth, Regulatory Relief, and Consumer Protection Act. These changes relaxed lending requirements for smaller banks, allowing more creative loan products to re-enter the market. While this has made it easier for some buyers to access loans, it’s also brought back some of the risks we saw in the past.
The good news is that key protections remain in place, so we’re not entirely back to the wild lending practices of 2008. But the current trends in Miami-Dade and Kendall remind me that it’s important to stay cautious.
What This Means for Buyers
If you’re looking to buy a home, my advice is simple: stick to what feels financially comfortable for your budget. Just because a lender approves you for a certain amount doesn’t mean you should borrow it all. Factor in all the costs—property taxes, insurance, and maintenance—so you don’t end up house poor.
What This Means for Sellers
If you’re thinking about selling, the current market conditions present both challenges and opportunities. On the one hand, looser lending standards could bring more buyers into the market, which is good news for you. On the other hand, the longer time on the market means pricing your home strategically is more important than ever.
A well-priced home that’s marketed correctly will always stand out, even in a slower market. If you’re not sure where to start, I’d love to help you position your property for success.
My Perspective on Miami’s Market
In Miami, particularly in Kendall and the surrounding areas, I’m not seeing the same frenzied, reckless behavior that preceded the 2008 crash. But I am noticing some buyers stretching their budgets to the limit. That feels uncomfortably familiar to what I saw early in my career, and it’s a reminder that we all need to approach real estate decisions carefully.
Let’s Chat
If you’re thinking about buying or selling in Kendall or the surrounding Miami areas, let’s talk. I’m here to guide you through this market with confidence and a plan that works for you. Whether you’re a first-time buyer, a seasoned homeowner, or just exploring your options, I’d love to help you navigate your real estate journey.
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