Dilip Barot, Founder of Creative Choice Group, explains why the south Florida rental market is still hot.

The real estate market, like any traded commodity, boils down to two key things… supply and demand.  Having spent most of my career in the commercial real estate space with Creative Choice Group, I can attest that this is true. Clearly if you have too many assets and not enough buyers, the market favors the buyer. Prices go down.  If you do not have enough properties and too many interested buyers, the market tips to the sellers. Prices go up.  Whether you live in Florida, Texas or in India at Infocity consumers are always hoping to sell high and buy low. So, what does the Palm Beach County market look like for 2016? According to Zillow analysts, Palm Beach County will favor the seller next year. Home values continue to rebound in Florida and jumped 9.5 percent from October 2014 to October 2015, according to CoreLogic. Analysts also predict that rentals are poised to increase as well – up to 4%.  This might not be the good news for residential home seekers in Florida, but for investors, this is a good opportunity to capitalize.  Investing in the right location may offer a quick return.  But, there is some word of caution. There are other factors that influence the long term viability of a market and more importantly, the growth potential for a property.

1.Jobs

Zillow’s chief economist recently reported that the combination of rising home values and flat wages have put a squeeze on affordability that will keep prices from rising much higher. This is directly attributed to compressed incomes and lack of jobs.  South Florida wages are flat and unemployment rates remain above national averages.  The best housing markets are where you see job growth in the community and higher income jobs being created.  Palm Beach County has experienced modest growth, but not nearly as high as cities like Denver, San Francisco or Dallas.  Robust job creation in high-paying industries is driving up home prices. This includes high-tech fields out west and oil/gas in Texas.

Rent is also increasing to almost $1,800 a month in Palm Beach County. And while normally, steep rent would push renters to buy homes, the housing market is still struggling.  First-time buyers are delaying purchases.  This coupled with student debt and tight lending standards also have hampered entry-level buyers.  The National Association of Realtors reported last month that first-time buyers account for only 32 percent of purchases, a 28-year low.

2. Mortgage Rates

Another factor deterring home buying is that analysts predict mortgage rates could rise sharply in the coming months, creating another headwind for buyers. According to Freddie Mac, the typical 30-year mortgage cost 3.95 percent in late November. By mid-2016, rates could rise as high as 5.5 percent.

So the moral of the story is this.  Buyers in Palm Beach County are looking for affordable housing which means there will be an increase in potential renters.  This translates to even more reasons to invest in this market.  Strike now while the iron is hot!  For more info about Zillow’s recent report click the following recent link: http://www.mypalmbeachpost.com/news/business/real-estate