The Counting Crows had a cool song years ago titled “hanging around”.  It had a great beat and reminds me of a few market conditions lately.  Today we will highlight a couple of our charts that may be worth monitoring and will help you determine if the real estate market recovery is for real.

Rates are hanging around

The fact that the 10-year bond rate failed to rally over the 2.63% mark is disturbing.  A close over that level would have sent the 10-year yield closer to 3.00% and mortgage rates would have been much higher.  Rather than cheer the fact that rates are still low, people should be wondering why.  Our guess is that the market no longer believes in the post-election pro-growth trade.  If you want to know which way the economy is headed, look no further than the bond market.  Right now it does not fortell a booming economy and if rates continue to drop we will have some serious issues across all asset classes.

Foreclosures keep hanging around

Hey wait, I though we were done with these things!  Why do they keep coming back like a boomerang?  This is what happens when you kick the can down the road and don’t fix a problem.  At the end of 2016 we discussed how the decison in the Bartram case in the Florida Supreme Court would clear the way for lenders to start filing their foreclosure cases again. Until there was a decision in that case the banks were worried that their cases would be challenged and/or dismissed on various technicalities.  Yes, plenty of these properties have bounced in and out of foreclosure since 2008, but the lenders are finally on firm ground to file again.  Case filings in Broward County are escalating quickly and it is our guess that Miami-Dade and Palm Beach will follow.

To add some perspective, here are some monthly filing averages for houses and condos in the tri-county area:

• 2015 averaged 796 monthly filings
• 2016 averaged 1,266 monthly filings
• 2017 so far is averaging 1,300 monthly filings

This next chart shows the trend of total filings.  Look at how there were so few back in 2015!

This chart of Broward County is no bueno!  We haven’t seen this many filings in years.

Transaction volume is hanging around the lows

How about transaction volume?  This chart goes through February, so don’t panic just yet.  If you look at the chart, you will notice a dip in transaction volume each year around January and February.  We have stated previously that the South Florida residential market peaked in the spring of 2016.  Typically prices will lag transaction volume and if there isn’t a significant uptick in sales during the second quarter, you will continue to see downward market pressure followed by another leg down in prices.