Armstrong Economics Blog/Real Estate Re-Posted Mar 23, 2021 by Martin Armstrong
QUESTION: Hey Martin, You once described? the real estate market as a lake. You went on to compare the collapse of the real estate market to throwing a rock in the lake and eventually the waves will hit every shore? You have published the diagram of the Real Estate cycle and the market clearly hits bottom in 2033. When do you expect prices in Tampa to begin the decline as well?
ANSWER: The shift in real estate from urban to suburban was an amazing forecast by Socrates. I had originally assumed it would probably be due to sharply rising local taxes. While that seems to be part of it as cities are raising property taxes to make up for the loss in revenue from the Draconian lockdowns, as I have said many times, the fundamentals seem to unfold to make the forecast correct. That is something that has always astonished me.
The Florida real estate reflects not just the migration from urban to suburban, but a massive migration from up north to the south. The flight from New York to Florida has become legendary with restaurants fleeing NYC as well. The house I bought is up about 300% already. This is the 34th straight quarter rise. The market is so white-hot that places are selling in 1 to 3 days. With 30-year fixed-rate mortgages at 3.27%, the market has been supported by low rates.
We should see a retest of support in the second quarter. So, this may be a temporary top here in the 1st quarter of 2021.