Allied Realty Group Blog

Trick or Treat?

It’s trick or treat time in the South Florida real estate market.  Not just because we are at the end of October, but we may finally see changes in the market,. Higher mortgage rates may finally be doing some damage and could impact selling prices going forward.  Our first chart shows the average selling price in the Greater Fort Lauderdale / Broward County area.  We have been using the month of June as the recent peak in residential prices here in South Florida.  Since then, the average sale price of a house declined 8% and condo prices have declined 17%.

Trick or treat for prices?

How about transaction volume?  It looks like we got a trick in that area.  Deal volume dropped 32% from the June highs.  In September there were 2,341 residential closings, down from 3,454 in June.  Take a look at the chart.  You will see that we have seen transaction volume drop during this time of year historically.  One month does not make a trend, so it is worth monitoring as we close out the year.

Trick in sales volume

Residential inventory in the Greater Fort Lauderdale market was at 13,324 in the month of September.  There has only been a slight increase over the last few months.  There were 5,603 houses and 7,721 condos listed for sale during the month of September.  If deal volume remains low, inventory will gradually build.  Nothing to worry about right now.

trick or treat - real estate inventory

Mortgage foreclosure filings have slowed down after the burst of new filings around May-June.  Here is a snapshot of the number and monthly average of filings along with a chart:

Annual  Monthly Change
2015            3,356              280
2016            5,044              420 50%
2017            5,228              436 4%
2018            4,563              456 5%

Mortgage Foreclosures in Fort Lauderdale

Posted in Condo market, Fort Lauderdale real estate, Market Insight, Single-family homes | Tagged , , | Comments closed

Have you noticed?

Have you noticed anything different in your neighborhood?  Does it appear as if those for sale signs tend to linger awhile longer than they used to?  How about that slick real estate investor trying to flip the house down the street for a quick profit?  Do you think they have seen a shift in the market?  How about your trusted real estate agent that claims to understand trends and prices?  Have you asked them if anything seems different?  Well, something has changed in the market and if you don’t know, now you know!

Have you noticed prices dropping yet?

Residential real estate prices in South Florida are slipping.  The average sale price of a house in the tri-county area is down 11% since June.  Condo prices have declined 16% for the same period,  Although September is typically a slower month, this may be the beginning of a prolonged decline.

Have you noticed prices falling?

Have you noticed a jump in mortgage rates?

The latest jump in rates may have caught everyone off guard.  Not us, we have been warning about this for awhile.  The crisis-level interest rates have successfully lured everyone into the real estate market.  Now the bills are coming due!  We haven’t seen mortgage rates over 5.00% in years and they will place downward pressure on real estate prices.  Affordability was a problem in South Florida before the rise in rates.

have you seen rates climb?

Have you noticed fewer sales?

It looks like transaction volume is slowing across South Florida.  Sales have declined 30% since June. Just take a look at this next chart and check in with your local real  real estate agent

South Florida home sales

How about condo sales?

Condo sales haven’t performed any better.  They dropped 25% from June.

Condo sales in South Florida

We have discussed at length how record low interest rates spurred a great deal of activity in the real estate markets.  It has been quite a party since the last crisis.  Now it’s time to deal with the hangover.

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

Teaser rates

Teaser rates may be a thing of the past and now we will see if the South Florida residential market can hold-up.  Today we will look at the average sale prices of houses and condos in the Greater Fort Lauderdale area.  This chart is through August, before the last pop in mortgage rates hit.  It looks like June was the final month of price gains in the South Florida residential real estate market after years of crisis level interest rates. In August, the average sale price of a house in Broward County, Florida was $449,870.  This is a 3% decline from June prices.  Condo prices averaged $220,116 in August which was a 17% decline from June prices.

Teaser rates & sale prices

Teaser rates and deal volume

Transaction volume declined from August until June as well.  House sales dropped 7% from 1,648 in June to 1,531 closed sales in August.  Condo sale declined 18% from !,806 in June to 1,480 in August.  These transaction volume declines occurred before the climb in mortgage rates, so it will be very interesting to see how much deal volume drops over the next few months.

teaser rates blow bubbles

No more teaser rates

Over the last week there was a noticeable increase in mortgage rates that will hit property markets pretty hard.  Our chart only dates back to 2013 and rates haven’t been this high since 2011.  The Freddie Mac rates are showing 4.9% on a 30-year fixed and 4.29% on a 15-year fixed rate mortgage.  These rate quotes do not including points and fees.  We are now breaking into a multi-year high on borrowing costs.  Mortgage rates over 5% will certainly impact real estate prices as we move through the end of 2018 and into 2019.

The dangers of keeping interest rates so low for so long is that low rates “tease” people into buying more than they can afford.  The low rate environment over the last decade is not much different from teaser rates on credit cards.  The stores / banks get you to load-up on debt, the teaser rates expire, rates climb and eventually those bills come due.  Be careful out there, the real estate market is changing quickly and something tells me the smart money understands.

teaser rates are cooked

 

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Take a bite

At what point will higher mortgage rates take a bite out of residential real estate prices?  By looking at a few charts, you will notice that it may already be happening.  Here is a quick look at the trend in mortgage rates over the past five years.  The 30-year conforming mortgage rate as per Freddie Mac climbed to 4.72% last week (not including fees and closing costs).  This is a level that we haven’t seen since the financial crisis.  Although these are still low rates, they will eventually start to impact real estate prices if they continue to climb.  As housing affordability shrinks, don’t forget the risky mortgage loans that created the last crisis.

Take a look at mortgage rates

Take a look at sale prices of houses

The average sale price of single family homes have already started to take a hit.  This next chart shows the prices of houses in Miami and Palm Beach have declines and Fort Lauderdale prices are holding-up (for now).   There is a good chance that your local real estate agent is ignoring these numbers like Chief Wiggum.   Here are the average sale prices for August:

  • Miami – $538.263 down 10% from $598,494 in June
  • Fort Lauderdale – $449,870 down 2% from $462,275 in June
  • Palm Beach – $501,088 down 11% from $568,414 in June

Take a look at house prices

Take a look at sale prices of condos

During the month of August we noticed a small bounce from July, but there is a good chance it will be short-lived.  Here is a snapshot of the average sale prices of condo properties in South Florida:

  • Miami – $397,106 down 10% from $439,546 in June
  • Fort Lauderdale – $220,116 down 5% from $264,975 in June
  • Palm Beach – $272,281 down 11% from $304,478 in June

take a look at condo prices

Take a look at residential inventory

Residential inventory is still in good shape as we move into the fourth quarter of 2018.  As of August there were 18,662 houses and 28,267 condo properties listed for a total of 46,929 available properties in South Florida.  If transaction volume declines due to higher rates, you will see inventory numbers start to climb higher.  You may already be seeing listings sitting on the market for extended periods. The next phase will be a gradual build in residential inventory.  This last chart goes back to 2011 when the South Florida market was flooded with foreclosures.  Some of the REO inventory was sold, while a large share of bank properties were removed from the market due to the robo-signing litigation that started in late 2010.  What’s crazy is that South Florida still has thousands of properties that have been in various stages of foreclosure since the crisis and will eventually reach the market after years of delay.

Take a look at inventory

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

Cooling process

A cooling process is underway in the South Florida residential real estate market.  Prices are stretched and buyers are finally taking notice.  It has been ten years since the housing bust and some of the same behavior is present in the market today.  Let’s look at a few charts.

Condos cooling off?

During the month of August, it looks like the sale prices of condo properties in the Fort Lauderdale area have already cooled.  Our first chart today is a quick snapshot of traditional, short sale and REO sales in Broward County.

Fort lauderdale condos cooling off

Single-family homes are cooling off

It looks like the median sale prices have stopped climbing also.  Its just a matter of time before the flippers get stuck with their properties if they don’t make price adjustments.  If you haven’t already noticed, the yard signs in your neighborhood have been sitting there awhile.  Get used to it!

Cooling house prices in Fort Lauderdale

Not cooling, rates are heating-up!

The trend in mortgage rates is higher and will continue to add downward pressure to real estate prices.  We are looking for the next move in the 10-year bond over 3.12% and its off to the races.  We just surpassed levels from June and the next rally could take us to levels that we haven’t seen since the financial crisis.  People forget how low rates have been since 2009 and they have been a big factor in propelling real estate prices to bubble heights.  As mortgage rates grind higher, you will see residential real estate prices decline.  This is just basic math and the low rates that lifted prices will have the opposite effect on real estate prices as rates climb.

Not cooling mortgage rates

Transaction volume (should be cooling next)

Residential transaction volume in the Fort Lauderdale area has been good so far when compared to the past six years.  We anticipate that deal volume will decline for the balance of 2018 and continue to soften in 2019.  Keep an eye on deal volume.  As it slows, prices will follow it downward.  This chart shows the average monthly residential transaction volume.

Good deal flow (so far)

As California goes…..

When it comes to residential real estate, California usually leads the way.  Here is a good article on the California real estate market and the recent price activity.

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

Watching the charts

We are watching closely as the charts of South Florida real estate may be changing.  Today we will look at the sale prices, transaction volume and foreclosure activity in Miami-Dade, Broward and Palm Beach County Florida.  Just as the speculators are getting excited (again), they may be the bag holders for the second time in a decade!  Our first chart today clearly shows prices declining.  From June to July, the average sale price of a house in South Florida dropped 7% while condo prices dropped 16%.  We expect this trend to continue over the next several months.

Watching prices decline

Watching South Florida real estate prices drop!

Watching transaction volume

The number of transactions dropped in July as well.  The number of houses sold declined from 4,353 in June to 3,845 in July. This represents a 12% decline.  Condo sales in South Florida dropped 14% from 4,788 in June to 4.098 during the month of July.  Transaction volume will usually set the tone for sale prices.  If we see the number of closed sales continue to drop, prices will follow that trend downward.

Watching deal volume drop in Miami Fort Lauderdale Palm Beach Florida

As far as the annual average number of closed sales, South Florida is actually o.k. for now.  With a monthly average of 7,943 closed deals, we are up over 2016 and 2017.  You will notice from the chart that 2015 was a big year for South Florida real estate activity.

South Florida real estate deal volume

Watching the residential inventory

As the transaction volume declines over the next few months, it will be interesting to see if the residential inventory starts to climb.  It has been held in check for awhile now, but we may finally see it start to increase again as the market softens.  In July there were 28,501 condo properties and 18,508 houses listed for sale in South Florida for a total of 47,009 residential properties.  We would love to include a chart of the average days on market for listings, but that data continues to be manipulated by real estate agents as recently reported and does not provide an accurate market snapshot.  As listings go stale, agents have a habit of cancelling / relisting properties and that impacts the days on market.  We anticipate that this problem will worsen as market conditions deteriorate.

Watching inventory in Miami, Fort Lauderdale & Palm Beach

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Rolling over

Rolling over is the topic today, as it appears the South Florida housing market may finally be cooling off.  During the month of July we saw prices of houses and condos in the Miami, Fort Lauderdale and Palm beach markets decline.  Our first chart today shows the residential transaction volume across the tri-county area.  The total transaction volume declined from 9,141 deals in June to 7.943 in July, representing a 13% drop.

Rolling over - deal volume

Prices rolling over

Residential real estate prices dropped in the month of July as well.  The average condo sale price declined 16% from $327,173 in June to $275,185 in July.  As for single-family homes, the average sale price declined 7% from $540,314 in June to $501,023 in July.  One month certainly does not make a trend, but if the transaction volume continues to drop, prices will follow.

Rolling over - prices

Not rolling over – foreclosure filings

So this is the recovery folks!  After a huge month of new residential foreclosure filings during the month of June, the numbers dropped slightly in July, but still remain above average and the highest we have seen in years.  It appears that there are a number of real estate markets that are wrestling with the same problem.

Rolling - South Florida foreclosure filings

Mortgage rates

Borrowing costs still remain very low by historical standards. If the residential real estate market is facing headwinds from mortgage rates at these levels, we are in trouble.

Mortgage rates - still rolling at low levels

As we move into the fall, we will keep you updated on all the happenings in South Florida real estate.  Until then, keep rollin’

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

Leading indicators

Leading indicators show that the housing market may finally be slowing.  It started in California, which usually leads the remainder of the country when it comes to real estate.  As for the latest South Florida numbers, there were some noticeable gains in single-family home prices, and a slight decline in condo prices.   The average sale price of a house was $540,314 in June and the average price of a condo was $327,173.

Leading with prices - Miami Fort Lauderdale Palm beach

Leading indicator – sales volume

Sales volume gained strength in the single-family home market with deal volume reaching 4,788 in June.  As for the condo market, deal volume declined slightly to 4,353 transactions closed.  We always say the price will follow sales volume, so any sustained decline in sales will lead to lower prices.  This chart clearly shows that June is a strong month each year, so a drop in the next few months is expected.

Leading indicator- deal volume

Leading Indicator – Mortgage Foreclosures

Nobody wants to talk about the elephant in the room:  South Florida Mortgage Foreclosure activity.  This next chart shows that we have a dramatic increase in new foreclosure filings throughout South Florida.  We haven’t seen this may filings since the financial crisis nearly a decade ago.  This problem should not be ignored if you are buying / speculating in the South Florida residential real estate market.  Your real estate agent should be able to show you if the market you are looking to purchase a property has an overhang of properties in default.  It takes a very long time for foreclosures to make their way through the court system, but eventually these properties hit the market and drag prices down with them.

Leading indicator - foreclosures

As for the monthly and annual foreclosure filing averages across South Florida, take a look at the numbers:

Annual Monthly Change
2015    9,557      796
2016  15,194    1,266 59%
2017   13,071    1,089 -14%
2018    8,397     1,400 28%
Posted in Fort Lauderdale real estate, Market Insight, Miami real estate, Palm Beach real estate, South Florida Real Estate | Tagged , , | Comments closed

Going vertical

The chart of foreclosure filings in Miami is going vertical.  For the past several years we have seen condo towers going vertical across the city skyline without any concern for poor fundamentals in the residential real estate market.  Ten years after the last housing crash and South Florida appears to have some  issues piling-up once again.  Although interest rates have been low, they have been artificially suppressed.  Any sharp rate increase will pop this latest bubble and do it quickly.  Today we will focus on the sharp increase in the Miami-Dade residential foreclosure filings.

Going vertical – residential foreclosures

Take a look at the purple line in this chart.  The number of new foreclosure filings in Miami is through the roof!

Going vertical- foreclosures

We haven’t seen this many new filings in years.  This clearly shows that we never recovered from the last crisis and all of the failed attempts to save the housing market continue to fail.  As far as the annual numbers for Miami, Fort Lauderdale and Palm Beach since 2015, here they are:

Annual Monthly Change
2015 9,557  796
2016      15,194          1,266 59%
2017      13,071          1,089 -14%
2018         8,397          1,400 28%

Our next chart shows the single-family and condo property foreclosure filings across Miami-Dade County.  In June we updated the existing foreclosures in the Miami area.

Vertical foreclosure chart

As for the averages and other fun stats in Miami:

Annual Monthly Change
2015  4,638  387
2016 6,855   571 48%
2017 5,393   449 -21%
2018 4,075    679 51%

Mortgage rates

Rates have stabilized for now and don’t appear to be creating much of a headwind for the residential real estate market.  Sometimes a quick spike in rates gets some buyers off the fence.  Rates are still very low by historical standards and unless you see 30-year mortgages over the 5% mark, they shouldn’t be a problem.  However, the residential market in South Florida is priced for perfection and if you have a spike in rates, slowing sales activity and a wave of foreclosures hitting the market, look out below!

Mortgage rates have moderated

Transaction volume

Residential transaction volume picked-up in the last few months, which should alleviate some of the summertime sadness  caused by the onslaught of new foreclosures across South Florida.

South Florida deal volume

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Late cycle behavior

Late cycle behavior is back in the South Florida residential market.  For the last decade it appeared as if this slow grind higher in prices would not abate.  There is evidence of peaking residential prices in the South Florida market and a reversale might be right around the corner.  today we will highlight some of the Broward County residential activity in houses and condo properties.

Late cycle inventory

Inventory declined in the Greater Fort Lauderdale area over the last few months, which has boosted sale prices.  As the spring selling season wrapped-up, the single-family home inventory dipped to 5,317 listed homes in the month of May.  Condo inventory declined to 7,900 condos listed for sale during May.

late cycle inventory

Late cycle prices

Will residential real estate prices move higher from here?  There could be a few months left in this rally.  An alarm will not sound at the top of the market, so we will continue to monitor the charts.  By looking at this first chart, you will notice that the average sale prices of single-family homes in the Greater Fort Lauderdale area have been trending higher, with the average sale price reaching $456,861 during the month of May.  The average sale price of a condo was up slightly to $231,238.

late cycle real estate prices

Late cycle debt

Over the past several years we have warned our readers about the dangers of keeping interest rates so low for so long.  Consumers tend to borrow much more than they should.  You will see in this next chart that foreclosures are making a big comeback.  Many of these are from the last housing crash, but now we have new ones piling-up thanks to the massive accumulation of debt.  We haven’t seen this many foreclosures in Fort Lauderdale since the last crash.  It’s really fun buying stuff, but eventually the bill comes due.  By looking at this chart, you should be able to see that people are facing some challenges in paying their mortgages.

Late cycle debt problems

This foreclosure problem isn’t just an issue in Fort Lauderdale.  The last chart shows how Miami-Dade and Palm Beach County see mortgage defaults climbing also.  We used the appropriate color red for this chart.

South Florida mortgage forelcosures

Good reads

Real estate is local and the South Florida real estate market is certainly unique.  However, real estate is also cyclical and here is a good article we found discussing various signs that the current real estate bubble/ market cycle  might finally be turning.  We haven’t seen the inventory climb or prices drop in South Florida yet, but the level of distressed properties in the tri-county area is disturbing.

Posted in Fort Lauderdale foreclosures, Fort Lauderdale real estate | Tagged , , | Comments closed
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