Allied Realty Group Blog

What to watch in the condo market

What are a few things to watch in the South Florida condo market?  Inventory, transaction volume and sale prices will tell you everything you need to know.  Today we will take a look at the Broward County / Greater Fort Lauderdale market with some charts.

Available inventory

The number of condos on the market in the Greater Fort Lauderdale area climbed to 9,019 units last month.  This represents a 17% increase in available inventory since the peak in June 2018.  Keep in mind that this number doesn’t include all of the new construction condo projects.  With developers only listing a small fraction of their project in the MLS (if any units), the actual condo inventory could be much higher.

Watch condo inventory in Fort Lauderdale

Transaction volume

There were 1,113 closed sales in Broward County during the month of February.  This number is a 38% decline from the peak of 1,806 closings in June of 2018.  Here is a breakdown by deal type during February:

  • 1,077 traditional sales, down 22% from the peak in June
  • 31 foreclosure sales, down 32% from June
  • 5 short sales, down 73% from June

Watch condo foreclosures, short sales in Fort Lauderdale

Sale prices

This chart speaks volumes.  You will see why we firmly believe that was the peak month for this cycle.  It’s basically all down hill from there.  The average sale price of a condo reached $264,975 in June.  Since that peak it has declined 20% and was at $210,668 in February.  If inventory continues to climb and transaction volume remains low, prices will remain under pressure as we move through 2019.

Condo prices in Fort lauderdale

Posted in Condo market, Fort Lauderdale real estate, Market Insight | Tagged , | Comments closed

A hiccup or a rebound?

We are trying to determine if this recent data is a hiccup or the start of a rebound in housing activity.  Deal volume picked up in February with a total of 5,790 closed residential transactions, up from the dismal number of 5,113 in January.  We always remind people that one month doesn’t make a trend, so this will be worth monitoring as we progress through the year.

hiccup or housing rebound?

South Florida residential inventory climbed during the month of February to 54,242 listings.  We haven’t seen these inventory levels since August of 2011.  There were 21,664 houses and 32,578 condo properties on the market last month.  Looking at condos specifically, the inventory levels for that segment haven’t been this high since June 2011 emerging from the last condo crash.  Inventory leads price, so as long as the number of available properties climbs, prices will be facing a headwind.

Miami Condo bubble - hiccup or rebound?

There wasn’t much movement in sale prices last month across South Florida.  The average price of a single-family home was $512,2017 in February, down from $512,795 in January.  Condo prices increased slightly from $300,925 in January to $309,463 in February.  This may be attributed to a few high-end condo units dragging the average higher.

hiccup or rebound - miami, Fort lauderdale & Palm beach real estate

As you may have seen in the headlines, there has been a noticeable decline in mortgage rates.

mortgage rates

Do you remember how everyone would cheer whenever rates dropped?  Bad news in the economy seemed like good news for everyone in real estate.  Is bad news now bad news again?  Rates wouldn’t be in a free-fall if the economy was strong.  This may provide some support for the real estate market in the short term. Who knows how long the support will last.

 

Posted in Fort Lauderdale real estate, Market Insight, Miami real estate, Mortgage rates, Palm Beach real estate, South Florida Real Estate | Tagged , , , , , | Comments closed

Do your homework

Make sure you do your homework if you are considering any real estate investments at this point in the cycle.  The market has shifted and most real estate agents either don’t know, or just don’t want you to know.  That’s why it is important for your to conduct your own due diligence rather than leaving it to your agent.  Here are a few tips:

  • Make sure you obtain 2 or 3 good comparable sales from the neighborhood you are looking in.  They should be closed within the last 60 or 90 days preferably and have similar characteristics to the property you want to buy.  Asking prices are less important, closed sales really are all that matter.
  • Notice the actual days on market.  If your agent doesn’t want to print out or email the accurate property history, check out Zillow.
  • Obtain an insurance quote for windstorm, flood (if required) and a homeowners policy and make sure you understand the deductible in relation to the replacement cost of the property.
  • Make sure you obtain a mortgage pre-approval.  Are you self-employed or working in the gig economy?  Here are some helpful tips from Bankrate.
  • Estimate your property taxes based on the purchase price, not what the current owner is paying.
  • Don’t expect to flip your property.  When you reach the end of the cycle as we are now, your holding period could be several years.  Some buyers in older beach area condo buildings may never get their money out if they bought in the last few years.
  • Are you fleeing a high-tax state because of the recent cap on state and local tax (SALT) deductions?  There’s a good chance that your real estate agent is not an accountant, so make sure you consult a tax professional fully-understand the tax implications.

Now for some charts…

Do your homework – transaction volume on houses and condos

This chart shows the dramatic decline in deal volume recently.  The total number of single-family home sales in South Florida dropped 48% in January from the market peak in June 2018.  There were 2,502 closed sales in January, compared to 4,788 last June.

Another housing crash?

The condo market transaction volume looks just as bad.  Sales volume declined 40% in January from the peak in June 2018.

Condo sales drop - another crash ahead?

Combined – House and Condo Transactions in South Florida

Here is a chart that shows the trend in total residential transactions in South Florida.  This chart begins in January 2012 and this January’s 5,113 closed sales is the lowest since we started charting six years ago.  The total in January 2012 was 5,453 closed sales and that is after the housing crash/financial crisis.

Miami, Fort Lauderdale, palm Beach residential deals

Understand the foreclosure market

South Florida is still dealing with plenty of foreclosures from the last crisis, along with new filings.  Make sure your agent researches the number of existing foreclosures in your neighborhood, or number of condo units in your building that have pending foreclosures cases.  Here we are in 2019 and it looks like filings are gathering steam again.

Do your homework on foreclosure activity

 

 

Posted in Fort Lauderdale real estate, Miami real estate, South Florida Real Estate | Tagged , , , , | Comments closed

Residential inventory build in Fort Lauderdale area

There is a residential inventory build in the Fort Lauderdale area that we haven’t seen in a few years.  The number of houses and condos on the market hasn’t surpassed 15,000 since March of 2016.  In January, there were 6,162 houses and 8,835 condos for a total of 14,997 residential properties listed for sale throughout Broward County.  This looks like it is a slow building process and should lead to a softening in prices.

Fort Lauderdale housing inventory

Transaction volume in Fort Lauderdale area

The number of closed sales tanked in January and hit a low we haven’t seen since we started charting sales data in 2012.  There were only 1,916 closed sales in January.  This time of year typically sees a slowdown, but it hasn’t been this bad since the last crisis.  As we have detailed previously, the charts tell us that the South Florida residential market peaked around  June 2018 when there were a total of 3,454 closed sales.  The January number of 1,916 closed sales is a whopping 45% decline from that high point.

Fort Lauderdale housing sales

Sale prices in Fort Lauderdale

The average selling prices have been holding up so far.  The average selling price of a house in the Greater Fort Lauderdale was $451,918 in January.  Condos stood at $222,174.  Since last June, the average sale price of a house only declined 2%, but condos declined 16% and look like they hit a wall.  Transaction volume leads price, so you will see these lines drop if deal volume doesn’t rebound this spring.

Fort lauderdale house and condo prices

Mortgage market helping out

The mortgage market is doing their part.  Rates have settled and still remain low by historical measures.  If transaction volume is this bad under these conditions, any spike in rates could do some serious damage to the housing market.

Mortgage rates and Fort lauderdale real estate

 

Posted in Fort Lauderdale real estate, Market Insight, Mortgage rates, South Florida Real Estate | Comments closed

Price action – going nowhere fast

Price action hit a wall in the South Florida residential market.  Today we will look at the median sale prices of single-family homes and condos in Miami, Fort Lauderdale, Boca Raton and surrounding areas. Existing home sales  on a national level look like they are exhausted as well.   South Florida was ground zero during the last housing crash, will it be the same in the next correction?

Price action- condos

Condo price action

We have repeatedly discussed how prices peaked around June of 2018 in South Florida.  This chart reinforces our view.  What’s interesting is how short sale prices have been trending up.  This is more evidence that South Florida is still dealing with distressed properties from the last housing crash.  You would think that ten years into a “recovery” we wouldn’t have to monitor this segment, but think again.  Here is a look at median sale prices of condos in South Florida for January:

  • Traditional sales – $187,250 (down 11% since June 2018)
  • Foreclosure sales – $142,000 (no change since June 2018)
  • Short sales – $174,750 (down 11% since June 2018)

Price action – houses

Price action - houses in South Florida

Traditional sales in the single-family home segment appear to have flat-lined.  They have been stagnant since last spring.  The only outlier in these numbers are the short sales and their big price jump since June.  There are higher priced short sales being completed which lifts the median prices periodically.

  • Traditional sales – $355,000 (down 1% since June 2018)
  • Foreclosure sales – $275,625 (down 2% June 2018)
  • Short sales – $325,000 (up 25% since June 2018)

 

Foreclosure activity

Can you believe that we are still talking about foreclosures ten years into this fabulous recovery?  January was a fairly active month with 1,074 new filings.  During 2018 the average number of new filings was 1,325.  There are still plenty of seriously delinquent mortgages  lingering out there from the last housing crash, so don’t expect this problem to go away anytime soon.

Foreclosures in South Florida

Here is a quick look at the foreclosure filing numbers since 2015:

Annual Monthly Change
2015    9,557    796
2016  15,194   1,266    59%
2017  13,071   1,089   -14%
2018   15,905   1,325    22%
2019  1,074   1,074
Posted in Condo market, Fort Lauderdale foreclosures, Miami foreclosures, Palm Beach foreclosures, Single-family homes, South Florida Real Estate | Tagged , , , | Comments closed

Residential inventory on the rise in South Florida

Residential real estate inventory was on the rise in South Florida during the month of January.  We have noted that some of this bounce is seasonal.  Plenty of sellers would rather not have their properties listed during the holidays.  They come off in late November and magically reappear in January.  What is noticeable this time is that we are now seeing available listings reaching levels not seen since 2011.  There were 21,496 houses and 32,221 condos available for sale in the tri-county area in January.  It is worth noting that residential  inventory hasn’t been this high (53,717 properties) since  August 2011!  Here is a look at the chart:

residential inventory on the rise

Transaction volume tanked!

The volume of closed sales tanked in January.  One month does not make a trend, but if this persists it will wreak havoc on prices.  Lower transaction volume and higher inventory will eventually lead to significant price declines.  There were 5,113 closed sales in January in South Florida.  This number is literally off the chart, since we haven’t seen transaction volume this low since we started charting in January 2012.  There is a great deal of “air” in this latest housing bubble.  If demand doesn’t rebound in the next few months……look out below!

Residential deal volume tanks!

Mortgage rates –  still easy money!

What we find so disturbing about this latest housing slowdown is that it is happening with all of this easy money floating around.  What would happen if rates had continued to climb back in October?  Although some may be cheering the low rates, they have had minimal impact if any at all.

Mortgage rates - easy monet

 

Posted in Fort Lauderdale real estate, Market Insight, Miami real estate, Mortgage rates, Palm Beach real estate, South Florida Real Estate | Tagged , , , | Comments closed

Pick your poison

When it comes to the current housing and mortgage market, I guess you have to pick your poison.  If rates move lower, there is a very good chance that the economy is slowing and the housing market will struggle.  If rates move higher, the economy may be stronger, but the higher rates will hurt the housing market.  It appears that we are in a no-win situation.  Our first chart is a snapshot of mortgage rates and you will notice the correlation to the 10-year bond yield.  The 30-year mortgage rate almost reached 5% (net of fees) in early November, but has been on the decline since then.  Sometimes those rate shocks do psychological damage to the market and 5% seems to be the “line in the sand” where transaction volume drops sharply once it’s breached. Last week mortgage applications declined, which is not a good sign for real estate market sentiment.  The recent decline in rates should stimulate purchase applications, but maybe this is a sign of a shrinking demand for real estate.

Pick your poison - mortgage rates

Median Sale Prices – Houses

Do you want higher prices or lower prices?  It all depends if you are a buyer or seller.  As of December 2018 it sure looks like prices hit a wall.  This is typically a slower time of year, but here is a look at the numbers for single-family homes sales in South Florida:

  • Traditional sales – $355,000
  • Foreclosure sales – $275,000
  • Short sales – $240,000

Pick your poison - median house prices

Median Sale Prices – Condos

Traditional sales prices in the South Florida market appear to have peaked in June 2018, when the median price reached $210,000.  Here is a look at the numbers for December 2018:

  • Traditional sales – $193,500
  • Foreclosure sales – $143,250
  • Short sales – $160,000

Pick your poison - South Florida condo prices

You probably are wondering why we still include foreclosure sales and short sale transactions in our charts.  The reason is simple:  There was never a full clearing of distressed real estate in South Florida.  Years of foreclosure halts and bailouts have allowed this problem to linger throughout Miami, Fort Lauderdale and Palm Beach.  This last chart today shows that new foreclosure filings rebounded slightly in January.  Auto loan delinquencies climbed into the end of 2018, just another example of how this debt-fueled “recovery” could come back to haunt us.

Foreclosures in South Florida

Posted in Market Insight, Mortgage rates | Tagged , , , | Comments closed

Housing Bubble Update

The latest housing bubble in South Florida real estate looks like it has been leaking air.  Nearly a decade of easy money in the form of record low mortgage rates  helped create this monster and we aren’t sure how it will end.  What we do know is that these distortions cannot last forever and there is always reversion to the mean.  Today we will look at a few charts showing residential prices, transaction volume and foreclosure activity throughout South Florida.

Housing Bubble – Sale Prices

The average sale price of a single family home in South Florida has declined 10% since June 2018.  Condo prices have dropped 14% for the same period.  You will notice from the chart below that June appears to be the peak in this latest cycle.

Miami, Fort Lauderdale, Palm beach real estate

Housing Bubble – Transaction Volume

Some of the slowdown in transaction volume may be seasonal in nature.  It may also be exhaustion of the last cycle.  In December 2018 there were 6,647 closed sales, which represents a 9% decline from December 2017.  The key to this next chart is if there is a strong rebound this spring.  If not, that will prove an end to the cycle.  Price declines typically follow a slowdown in sales activity as listings go stale and sellers begrudgingly lower their prices.  Once sentiment changes, popping the latest housing bubble begins.

South Florida real estate volume

Here is a look at the annual numbers for residential real estate transaction volume:

Transaction volume in Miami, Fort Lauderdale & Palm Beach

By the numbers……

Annual Monthly Avg
2012   86,001    7,167
2013   91,180    7,598
2014   91,239    7,603
2015   96,411    8,034
2016   90,974    7,581
2017   88,227    7,352
2018   90,870    7,573

 

Housing Bubble – Foreclosure Activity

After a large spike in new foreclosure filings last spring, it looks like the pace has settled down a bit.  Here is a chart showing the tri-county area with some data for the last few years.

Foreclosure filings in South Florida

Annual Monthly Change
2015   9 ,557    796
2016    15,194     1,266 59%
2017    13,071     1,089 -14%
2018   15,905     1,325 22%
Posted in Foreclosure activity, Fort Lauderdale real estate, Market Insight, Miami real estate, Palm Beach real estate, South Florida Real Estate | Tagged , , | Comments closed

Has the condo correction already started?

Has the condo correction already started in South Florida?  By looking at the latest numbers, it appears so.  Today we will focus on Broward County, which includes the cities of:  Fort Lauderdale, Pompano Beach, Deerfield beach, Hollywood and Hallandale Beach just to name a few.

Average sale price in Correction territory

Our first chart today shows the average selling price of condo properties in Broward County.  Since the June 2018 peak in prices, the average sale price has declined 20% through December.  I think that would be considered a “correction” if you ask me and it looks like it is just getting started.

Condo correction in Fort Lauderdale

Condo inventory

The available condo inventory listed for sale in Broward was 8,128 during the month of December.  Our guess is that it will climb as we begin 2019.  Sellers have a tendencies to remove their properties from the market during the holidays and relist them in January.  We shall see.  This chart does not include all of the new construction product entering the market either.  Developers only tend to list a small fraction of the project in the MLS and they wouldn’t have to keep sweetening incentives if they didn’t see demand for their product eroding.

Condo sales by transaction type

This next chart shows the median sale price of condo properties by the type of transaction.  Sometimes the average sale price metric is more volatile, but you will notice from this chart that the median sale price of traditional sales has declined 13% since June.  The median foreclosure sale prices have dropped 10% and short sale median prices were down 41%.  The distressed sale prices have been more volatile as the volume declines.  The higher-priced units will drag the median prices up once they are sold, hence the periodic spikes in the chart.  Of course the distressed property owners who have the resources to fight the foreclosures have dragged these cases out since the last crisis and those units are eventually hitting the market.

Forelcoures short sales condo correction

Transaction volume by deal type

There were 1,210 condo property closings during the month of December, representing a 33% decline from the 1,806 closings in June 2018.  Although some of this slowdown is seasonal, it looks like the overall trend is down.

Condo correction - closed sales in Fort Lauderdale

Comparing houses and condos

Our last chart today compares the average selling price of houses and condos in the Greater Fort Lauderdale (Broward County) market.   The average sale price of a single-family home has only declined 5% since June, while condos have dropped 20% for the same period.  Both housing segments are facing headwinds, so it should be interesting to see how this chart develops as we progress through 2019.

Condo correction and house prices Fort Lauderdale

Posted in Condo market, Fort Lauderdale real estate, Market Insight | Tagged , , , , | Comments closed

Headline of the day

The headline of the day appeared after existing home sales tanked for December. Here is a good  link.   Apparently real estate agents were “baffled” by the latest home sales report.  How could this happen?  You mean that real estate doesn’t always go up?  If agents would spend some time doing basic math and affordability analysis, they would hopefully recognize that prices haven’t made sense in years.  What’s frightening is that they ignore all of the signs of a slowdown and their clients get stuck holding the bag.  Let’s take a look at a few charts of the South Florida market:

Average sale price

I saw a brief news segment on how all the rich people in New York are buying mansions in South Florida.  Not according to the average sale prices.  They have flat-lined and it looks like the next move is lower.  In addition, a few large transactions tend to distort the data, so don’t believe everything you hear.  We still believe that the South Florida residential market peaked in June 2018.  Since then, the average sale price of a house has declined 10% and condo prices have declined 14%.  Is that booming or collapsing?

Miami, Fort Lauderdale, Palm beach real estate

Residential Inventory

The number of houses and condos listed for sale dipped slightly in December, but that is typically seasonal as people take their properties off the market during the holidays.  In December there were 50,167 properties on the market, down from 51,256 in November.  The number of residential listings should snap back in January.

Headline of the day Miami houses, Fort Lauderdale real estate

Transaction volume

There was a total of 6,647 residential sales closed in December.  These numbers include houses and condos in Miami, Fort Lauderdale and Palm beach areas.  That number is down slightly from 6,711 in November, but down a whopping 27% from the 9,141 closings back in June 2018 when the market peaked.

South Florida housing market

As for the 2018 summary, the numbers fared pretty well compared to the last few years.  The 2018 monthly average of transactions in South Florida climbed 3% over 2017.   You can see from the chart below that 2015 was the big winner.  Although transaction volume ended the year o.k., we will continue to monitor the numbers as this latest housing bubble may be leaking air.  After nearly a decade of record low interest rates, bailouts and foreclosure moratoriums, the real estate market will eventually have to pay the piper.

Healdine real estate deal volume South Florida real estate sales volume

Annual Monthly Avg
2012    86,001              7,167
2013      91,180              7,598
2014      91,239              7,603
2015      96,411              8,034
2016      90,974              7,581
2017      88,227              7,352
2018      90,870              7,573
Posted in Fort Lauderdale real estate, Market Insight, Miami real estate, Palm Beach real estate, South Florida Real Estate | Tagged , , , , | Comments closed
  • Meet the Broker
  • Commercial Listings
  • Residential Listings
  • Allied Realty Group, Inc
    2550 North Federal Highway
    Suite 200
    Fort Lauderdale, FL 33305

    Phone: 954-586-8400
    Fax: 954-586-8410
    Email: Contact Us