The COVID-19 pandemic has affected (and continues to affect) many aspects of our lives, including the current rent prices, residential real estate prices, and housing inventory. According to the Zillow Home Value Index, the price of a Florida home has increased by 19.9% in the last year. Looking at their data, the average price of a Florida residence in February 2020 was $249,406, and as of December 2022, the average home cost has increased to $404, 939.
During the last few years, it has also been a seller’s market as the inventory of available houses has significantly plummeted. Because many people began working and learning from home, they became reluctant to sell their homes. Builders were not building as many new homes because of the stop in the production of lumber and other needed building materials. These factors helped to influence the current market as demand can’t be met with the current supply.
The low inventory as well as the increase in housing prices can have an effect on divorcing couples. Below, we will examine how the expensive housing market can affect you during your divorce.
How Today’s Housing Market Can Impact Your Divorce
The housing market will primarily affect aspects of your property division. Florida is an equitable distribution state, which means that any marital assets will be divided fairly between both parties. If your primary residence is a marital asset, you have two options (primarily) for the division of the profit:
- selling the residence and dividing the net profits, or
- buying out the other party’s share of the home.
If you plan to sell, you should act quickly as it is a seller’s market, and if you bought the home during or prior to 2020, you will likely have a large profit from your home sale. Before buying out your spouse, you should also consider whether you are willing to risk suffering a financial loss if the market changes and the market value fails to remain high.
However, before deciding how you wish to divide the asset, you should also be aware of how difficult it may be for you to purchase a new home. As we mentioned, the inventory is low, and the prices are higher than what they used to be. Mortgage rates have also spiked; while the average 30-year rate in 2020 was 3.10%, the rate has increased to about 6.4%. Thus, you may have financial and logistical difficulties finding a new home or qualifying for a new mortgage.
The market isn’t the only factor that will impact the difficulty level of obtaining a new home. If you wish to qualify for a new mortgage, you may be denied if you are still included on your previous home’s deed. To remove a party’s name from a mortgage, the spouse who retained ownership would have to refinance the home, but that means also facing an increased interest rate. Thus, if you opt to have one party buy out the other, you both should be aware that you will have mortgage issues.
Finally, it is important to recognize that if you have children, they will be most impacted by changes in housing. While you will likely weigh the financial pros and cons of how to divide your home, you should be aware that, whether you sell or buy out your partner, your child(ren) will be impacted by either decision. A parent’s living situation can also have an impact on custody determinations as the court will consider how a home environment impacts a child’s welfare and health.
If you do decide to sell your family home and divide the profits in a divorce, you should prepare yourself concerning how you will ease the transition for your children. To help them cope with a move after divorce, you should:
- Give them time to adjust. You should make sure you tell your child about the impending move in advance so they have to mentally and emotionally prepare for the change.
- Take note of how you can make your new residence feel like home. As you prepare to move, remind your child that they can have a hand in decorating and making their new space in the new home their own. During the move, be sure to keep comfort items close by and have them available the first night.
Getting Divorced? Contact Our Firm!
The current housing market can greatly impact your divorce, especially if you are planning to sell your marital home. Because there is such high demand and low inventory, selling your home may not be as hard as you think but finding another place to live can prove to be challenging. Before deciding what to do with your home during divorce proceedings, it’s important to consult with an experienced attorney who can help you understand your options and their potential consequences.
For nearly 20 years, the Law Office of Jody L. Fisher has been helping families and clients smoothly navigate the divorce process. If you are considering or have filed for divorce, our attorney is here and prepared to help you understand your legal rights, develop a tailored case strategy, and make informed decisions. At our firm, we have extensive experience helping clients navigate the challenges of divorce and are prepared to help you understand the impact today’s housing market can have on you and your case.
You can benefit from our firm’s extensive experience. Learn more about our services by calling (352) 503-4111 or completing our online contact form.