Allied Realty Group Blog

Thumb on the scale

It appears that someone still has their thumb on the scale as we begin 2018.  With housing, stocks and bonds still at elevated levels, maybe we should give credit where credit is do:  Central banks!  By keeping rates at record lows and buying every asset class regardless of price, the invisible “thumb” is what keeps all of this stuff in the air.  If you look at the U.S. Federal Reserve (The Fed), European Central Bank (ECB), and Bank of Japan (BOJ), they hold approximately $14 Trillion in various securities.  Clink on the link below from FRED, the Federal Reserve Economic Data website labeled “Chart of Fed Assets” to take a look at the nearly $4.5 trillion balance sheet of our own Federal Reserve and you will see who is helping keep prices in the air.  (The FRED website is an amazing resource for all types or economic data) You will notice a spike in the 4th quarter of 2008 when the Fed launched QE1 with an initial purchase of mortgage backed securities in response to the financial crisis. They continued the party with QE2 and QE3 lasting through the middle of 2014.  Look at the chart below and you will see a noticeable decline in prices around May of 2014.  Now does it all make sense?

Finally, after nine years of the “recovery” they are gradually reducing their holdings (treasuries, mortgage backed securities) to mature and run off the balance sheet to the tune of $10 billion per month, with plans to increase the amount over time.  As of December 27th, the Fed was holding nearly $1.8 Trillion dollars in mortgage backed securities, which is a pretty big “thumb”!  If you remove the Central Banks and their impact on asset prices, would you still consider this a recovery?  Where do you think residential real estate prices would be?

Chart of Fed Assets

Thumb on the scale impacting prices

Thumb on real estate pricesAverage sale prices of single family homes continue to show strength through the month of November.  Condo prices look like they will continue to move sideways until there is a decline in inventory.  Average sale prices for November 2017 for the tri-county area were as follows:

  • Single-family homes – $481,274 which is a 18% jump from $409,216 in November 2016
  • Condo properties – $258,206 which is a 4% decline from $268,753 in November 2016

The thumb keeps rates down

This is pretty simple:  As long as Central Banks aren’t dumping their bond holdings, rates will stay low.  Also, the bond market doesn’t seem to buy into the MAGA growth projections.  If there was a strong growth outlook, the ten year bond would be well over 3.00% by now.  It just cannot seem to get any traction.  Low rates will continue to support real estate prices.

Thumb keeps rates low

South Florida Residential Inventory

South Florida real estate inventory

As of the end of November, there were 48,061 houses and condos available for sale in the tri-county area, up slightly from 47,146 in October.  Some of that increase may be attributed to properties returning to the market after the storm.  The chart clearly illustrates the divergence between the single-family home and the condo property inventory.  As me move through 2108 the South Florida condo inventory should continue to climb.

South Florida real estate transactions

Residential transaction volume was lower by 2% year over year in November, which really isn’t much.  As for the average number of monthly closings, here is a summary of the past 5 years with 2015 having the highest volume:

  • 2012 – 7,167
  • 2013 – 7,598
  • 2014 – 7,603
  • 2015 – 8,034
  • 2016 – 7,581
  • 2017 – 7,356 (through November)

Were foreclosures halted again?

Of course they were!  Take a look at this chart.  Just as new foreclosure filings were gaining momentum and reaching a multi-year high in August, they were put on hold by FEMA in September after Hurricane Irma.  The average number of monthly foreclosure filings in Miami-Dade, Broward and Palm Beach was 1,400 from January to August of 2017.  After the hold,they declined sharply to only 362.  Expect them to resume filings in the first quarter of 2018.

Thumb on foreclosures REO

There are still plenty of safeguards in place since the financial crisis.  Whether they are periodic foreclosure halts, keeping rates at crisis lows or Central Bank intervention and asset purchases, they are all akin to a thumb on the scale.  Until the training wheels are removed and markets are permitted to function on their own, we will not have true price discovery. Until then, party on!

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Let’s wait and see

Let’s wait and see how a variety of factors shape the real estate market as we finish 2017 and move into 2018.  Today we will discuss a few of them.

Wait and see if rates rise

We are now in the 8th year of the so-called “economic recovery” and the 10-year treasury rate remains below 3%.  Although the real estate industry loves low rates, this is troubling.  The bond market predicts economic conditions before anyone else, so it is basically communicating to us that it doesn’t believe the economy is so hot.  Take a look at the chart below and you will see a brief spike after the 2016 election, but the rally in rates has faded.  Until the 10-year gets over 3%, the real estate market will continue to receive support.  After that, as mortgage rates get closer to 5% you will see a significant slowdown in transaction volume and downward pressure on real estate prices.  Until then, party on!

Wait and see if mortgage rates climb

Wait and see about tax reform and/ or tax cuts

Some of the proposed changes to tax policy could impact real estate bigly.  Capping the mortgage interest deduction, eliminating state and local tax deductions and eliminating the tax deduction on second homes could have far-reaching impact.  There are notable differences in the Senate and House bills and we found a good chart on CNBC that compares the two.  Until the legislation goes through reconciliation, we won’t really know the impact on property markets. What’s great is you can just hover over each line item to see how the Senate and House proposals differ.

Here is the link:  Compare Senate & House tax reform plans

Wait and see if sales rebound

After Hurricane Irma stalled sales dring the month of September, we figured that transaction volume would rebound in October.  Not so much!  After a 34% decline from August to September, sales of single-family homes only snapped-back 26% off the low.

wait and see if South Florida house sales decline

As for condo transactions, they only had a small rebound as well.  After declining 24% from August to September, they bounced back only 14%.  As we always say, one month does not make a trend, but transaction volume will be worth watching as we finish 2017.

Wait and see if South Florida condo sales decline

Wait and see if prices stall, drop or rebound

From the look of the average sale prices of houses and condos in South Florida, it sure looks like the price momentum has stalled.  It’s never a good idea to try and catch a falling knife. With all the uncertainty in the real estate market, it may be worth sitting on the sidelines for awhile.  In October, the average sale price of a single-family home in South Florida was $449,577, up slightly (2%) from the September drop.  This is still an 11% decline from the recent peak of $505,236 set in February of this year.  The  average sale price of a condo in South Florida declined 4% to $257,703.  If you take a good look at the chart, the average sale price of a condo in South Florida has remained somewhat stagnant for the past few years.  What will happen once the onslaught of new construction product hits he market?

Wait and see if prices drop

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Greater Fort Lauderdale area market observations

After some storm-related data volatility, it is a good time to discuss a few of our market observations for the Greater Fort Lauderdale residential real estate market.  Today we will discuss trends in transaction volume, sale prices, existing inventory and foreclosure activity.  At first glance, it appears that storm activity impacted sales volume, foreclosure filings and possibly the inventory of properties on the market.

Observations in transaction volume

Storm activity obviously crushed transaction volume during the month of September in South Florida and our chart below illustrates the drop in Broward County.  There was a 28% decline in deal volume from August to September in the single-family home and condo markets combined.

  • The August residential transaction total for Broward County was 2,844
  • The September residential transaction total for Broward County was 2,066

Fort Lauderdale residential transaction observations

Observations in Average Sale Prices

Residential sale prices in the Greater Fort Lauderdale have been holding-up for now.  Here are the numbers for September:

  • Single-family homes sold for an average price of $433,148 in September, a 3% decline from the August price of $444,424
  • Condos sold at an average price of $200,294 September, essentially unchanged from $199,640 in August

Observations in Fort Lauderdale real estate prices

Residential inventory observations

Broward County saw a 1% decline in residential inventory during the month of September.  Some of this may be attributed to sellers removing their properties from the market to evaluate any wind or flood related damages from Hurricane Irma.  We will have to see the October numbers to see if supply increases again.  There were 5,085 houses and 7,644 condos available for sale in September, for a total of 12,729 properties on the market.

Fort Lauderdale real estate inventory observations

Observations in the foreclosure data

Well, it appears that delinquent borrowers were given another reprieve due to the hurricane.  FEMA apparently put a hold on new foreclosure filings in South Florida which explains the sharp decline in September and October foreclosure filings.  You will notice from the chart below that the pace of new foreclosure filings was gaining momentum until they were halted yet again.  Don’t expect them to resume until the first quarter of 2018 because they will most-likely be suspended over the holiday season as well.

Observations in Fort Lauderdale foreclosures

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Real estate market disruption

Last month the South Florida real estate market showed notable disruption in a variety of metrics.  Today we will review and discuss a few areas that were impacted from the weather and if this accelerates a downturn in the South Florida property market.

Disruption in transaction volume for single-family homes

The total number of single-family home transactions declined 34% from 4,147 deals in August to 2,735 in the month of September.  The sharpest decline was in the traditional sales, which dropped from 3,844 in August to 2,536 in the month of September.

Disruption in Miami, Fort Lauderdale, Palm beach housing market

Disruption in transaction volume for condominiums

The number of South Florida condo transactions dropped 24% from 3,610 in the month of August to 2,738 in September. Short-sale and foreclosure transactions have been on the decline for the past few years, but the additional supply being delivered will keep prices in check for several years.

Disruption in condo transactions for Miami, Fort Lauderdale Palm Beach

Total transactions for South Florida houses and condos

Overall, there was a 29% decline in residential transactions in the Miami, Fort Lauderdale and Palm Beach area from August to September.  There were 7,757 total sales in the month of August and 5,473 closed sales in September.  There is a good chance that some of these deals will show up in the October numbers, so we will have to see what happens.

South Florida real estate sales in Miami, Fort Lauderdale Palm beach

Average Sale Prices – Condos and Houses

The average sale price for a single-family home in South Florida peaked during the month of June at $493,648 and has declined 10% since then.  In September, the average sale price of a house in South Florida was $442,867.  As for condominiums, the average sale price in South Florida was $282,117 in June and has only dropped 5% to $267,437 in the month of September.

Price disruption in Miami, Fort Lauderdale Palm Beach real estate

Distressed Sales and New Foreclosure Filings

Distressed property sales in South Florida (purple line) have been in steady decline for the past few years, while new foreclosure filings (red line) were beginning to gather momentum until they were halted in September.  This is most likely due to a hold from FEMA for areas impacted by hurricane Irma.  Depending on the length of that moratorium on foreclosure filings, we may not see them restart until the beginning of 2018.  Remember there is another hold on foreclosures during the holidays.  This is actually pretty amazing since the court system is still dealing with foreclosures from the last crisis.  Most people don’t realize that there is a massive overhang of distressed properties in the South Florida area that began the foreclosure process back in 2008 and remain in the system.  This problem won’t be going away anytime soon!

Disruption in foreclosure filings in South Florida

Market Observations

There are a variety of underlying factors that will continue to impact the South Florida residential real estate market for the remainder of 2017, throughout 2018 and possibly beyond.  Here are just a few observations:

  • Interest rates have been at crisis-level lows since 2009 and will not stay there forever
  • Low rates have pulled consumption forward and real estate demand may finally be evaporating
  • Consumers are now burdened with record debt while incomes have not increased
  • Low rates have distorted all asset classes and a reduction in easy money policy could pop the “everything bubble”
  • Transaction volume was declining prior to Hurricane Irma and the correction may have already started
  • Investment buyers may now rethink a South Florida real estate purchase after an active storm season
  • Insurance costs will continue to climb for the coastal areas and negatively impact residential transaction volume and prices
  • The massive shadow inventory of distressed properties will continue to impact the South Florida market into the next correction
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Are recent sales declines in South Florida storm related or something more?

South Florida residential sales have been on the decline in the past few months, so it may be difficult to blame the storms.   Although transaction volume declined sharply in September, it appears that cracks in the market started in July.  One month does not make a trend, but three months may be an indicator of market direction.

Closed Sales of Miami, Fort Lauderdale and Palm Beach houses

There has been a significant decline in transaction volume since the month of June.  The monthly totals for single-family home sales in South Florida were as follows:

  • June – 4,893
  • July – 4,119
  • August – 4,147
  • September – 2,735 (storm related)

Miami, Fort Lauderdale, Palm Beach houses

Closed Sales of Miami, Fort Lauderdale and Palm Beach condos

Miami, Fort Lauderdale, Palm Beach condo sales

When we look at the monthly totals for closed condo transactions in South Florida, it looks like deal volume started to slow in June, just a month earlier than single-family home sales.  The condo transaction totals for the area were as follows:

  • May – 4,450
  • June – 4,155
  • July – 3,553
  • August – 3,610
  • September – 2,738 (storm related)

Sale Prices in Miami, Fort Lauderdale and Palm Beach houses

The average sale price of single-family homes have remained somewhat stable in Miami-Dade and Broward Counties, but it appears that Palm Beach prices are sliding.  Here are the average sale prices for September:

  • Miami-Dade – $477,150
  • Broward – $433,148
  • Palm Beach – $429,916

Sale prices in Miami, Fort Lauderdale Palm beach houses

Sale Prices in Miami, Fort Lauderdale and Palm Beach condos

For now it looks like condo prices are remaining stable in Broward and Miami-Dade, while they appear to be slipping for the past few months in Palm Beach.  Obviously the new supply that will continue to flood the market will add some pricing pressure, but for now the tri-county area hasn’t declined much.  The average selling price by County in September were:

  • Miami-Dade – $379.024
  • Broward – $200,294
  • Palm Beach – $248,064

Miami, Fort Lauderdale, Palm beach condo sales

As we move into the fourth quarter of 2017 we will closely monitor real estate activity in South Florida.  If you want to blame storms for sales declines, September is the only month where closings may have been impacted.  Therefore, October should receive some of the deals that were scheduled to close during the month of September.  After that, it will be important to watch the volume of closed sales for the remainder of the year.  It usually takes a few months of slower transaction volume for prices to soften.  If that happens, we may begin the long-awaited market correction that is inevitable.

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Changes in attitudes around the lower latitudes

Jimmy Buffet had a great song entitled “Changes in latitudes, changes in attitudes” and that is the theme of our post today.  Market sentiment often shifts several months (or longer) prior to any price correction and most individuals may not see the shift until long after a cycle turns.  During the last housing crisis, most real estate professionals didn’t want to acknowledge the downturn until we were 2-3 years into it.  Since that time stocks, bonds, collectibles and real estate have experienced a bull run thanks to the invisible hand of the Fed.  After eight years of crisis level interest rates and the reflation of all asset classes, will the cycle finally turn?  Let’s run through some charts and data and maybe we will see where this market is headed.

Changes in Average Sale Prices – South Florida Real Estate

Changes in House and condo prices in South Florida

Prices appear to be trending lower in the South Florida single-family and condo markets.  Don’t tell the perma-bull real estate agents who are constantly touting residential properties as an “investment”, but this cycle may finally be turning.  The chart illustrates the 5% price decline in single-family homes and 10% decline in condo prices from May through August.

Changes in Foreclosure Filings

Changes in Foreclosure trends in South Florida

Everyone has been ignoring this issue for the past several years.  Look at the dotted blue trend line in the above chart.  If you just look at the whopping 34% jump in new foreclosure filings from July to August, that is disturbing.  One month doesn’t make a trend, and this chart shows how the pace of new foreclosure filings in South Florida has been climbing steadily over the past few years.  The next chart shows how Miami-Dade County is getting active again and new filings are reaching levels that haven’t been seen in years.

Changes in Miami, Fort Lauderdale, Palm Beach foreclosures

Distressed Sales compared to new foreclosure filings

Changes in distressed property sales in South Florida

The chart above is self-explanatory.  Distressed sales have declined while the pace of new foreclosure filings continues to climb.  This trend should continue as lenders now have a green light to pursue delinquent borrowers after years of litigation.

Changes in transaction volume

Transaction volume year over year in South Florida has actually increased.  In 2016 the monthly average was 7,581 closings per month and so far in 2017 the monthly average is up 3% to 7,799 closings per month when you combine the single-family and condo deals.  There has been some seasonal volatility and it will take a few more months to determine whether a slower sales pace will be the new normal.

South Florida real estate transactions

Changes in rates

Rates have been favorable for real estate for obvious reasons.  After the Fed dropped rates to crisis lows in 2009, they have had a difficult time climbing higher.  If rates begin to riseat the same time the real estate market cools, that could present some serious challenges.  The Fed will start to shrink their $4.5 trillion balance sheet of Treasuries and mortgage-backed securities next month.  That will be at a gradual pace, but private investors may demand higher yields in the mortgage space and that will prove more costly for borrowers.

Mortgage rates and the housing bubble

There are a number of factors at work in the South Florida real estate market.  If you plan to buy or sell real estate in Fort Lauderdale, Miami, or Palm Beach you should be aware of the factors that will steer this market through the remainder of 2017 and next year.  There may not be a full correction or “crash” in real estate prices, it may be challenging for prices to remain at current levels for much longer.

Here are a few summary points:

  • Residential real estate prices will continue to be under pressure in South Florida
  • Foreclosure activity will remain elevated
  • Distressed properties will not reach the market for awhile due to the lengthy legal process
  • Transaction volume will begin to decline as speculators / investors lose their appetite for South Florida properties
  • Any incremental rate increases will put additional pressure on the market
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Climbing the wall of worry

Party on!  It looks like prices keep climbing in the South Florida residential real estate market, at least through the month of June.   Historically that month has been strong for sales volume and prices, so once we get into the next few months, we should have a better indication if this freight train plans to slow down.

Climbing sale prices

South Florida climbing house prices

During the month of June, the average sale price of a single-family home in South Florida was $493,648.  Although it is down slightly from the recent peak of $505,236 set back in February, this is still an impressive number.  As for condos, the average selling price in June was $282,117.  It appears that the condo sales have cooled already (see the next chart) and should continue to do so as we move through the remainder of 2017.

Residential transaction volume

Real estate sales in South Florida

During the month of June there were 9,048 residential transactions recorded in South Florida, which is a slight drop from 9,141 in May.  The condo market had 4,155 sales, representing a 7% decline month over month.  Single-family home sales volume increased 4% from 4,691 in May to 4,893 in June.  If you look at the April – June period for the past few years, it is usually a good one for sales volume.

Residential Inventory

South Florida houses and condos

As long as you exclude the massive new construction condo product overhang, residential inventory has been declining.   There were 18,439 houses and 29,134 condos listed for sale.  The decline in condo prices is now becoming clear and this trend should continue for awhile.  With the amount of new construction condos not in the MLS and the proposed projects in the pipeline, it could take years to absorb all of the product.

Climbing foreclosure filings

Miami, Fort Lauderdale and palm beach climbing foreclosure activity

Why isn’t this being discussed?  It seems as if everyone thinks that distressed properties are no longer an issue in South Florida, but we will continue to highlight the elevated level of new foreclosure filings in the tri-county area.  In 2016 the monthly average of new filings was 1,266 and so far in 2017 the monthly average has climbed 7% to a monthly average of 1,356.  As speculators are back in full-force and people continue to stretch their budgets to afford housing, the South Florida market will continue to wrestle with distressed properties.  It sure seems as if people have a very short memory!

Mortgage Rates – Not Climbing!

Mortgage rates

As long as rates remain low, the housing party will continue.  Low borrowing costs have fueled this latest bubble in the residential markets and we may not see normalization of rates anytime soon.  We have always stressed the correlation between low rates and higher asset prices, along with the danger of bubbly markets.  If and when rates climb we will see a direct impact on housing demand and prices, so until then, party on!

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Stall speed

Stall speed is the slowest speed a plane can fly to maintain level flight.  That sounds a lot like the state of our economy and the bond market is well aware.  After the November election we saw a noticeable jump in 10-year bond yields and mortgage rates, but halfway through 2017, they simply don’t believe the hype any longer.  The prospects for economic growth appear slim and the economy has stalled (or has simply remained stalled).   Ironically enough, the slight move upward in yields over the last few weeks was a reflex to European bond yields increasing and certainly not a result of economic growth prospects.

Mortgage rates and bond yields

Will sales prices finally stall?

For now, it looks like the average sale prices in the Fort Lauderdale area have remained elevated.  During the month of May, the average sale price of a single-family home was at $408,639 and the average sale price of a condo was $211,018.  Mortgage rates have remained at crisis levels for over eight years and have continued to fuel higher prices.  The summer months will show if the pace of sales and prices will slow.

real estate prices in Fort Lauderdale, Florida

Residential Inventory

Residential inventory around the Greater Fort Lauderdale looks good for sellers.  There were a total of 13,909 houses and condos listed for sale throughout Broward County in the month of May.  Low rates have allowed buyers to pile on plenty of debt and the fear of missing out (FOMO) is still in full-effect.

Fort lauderdale houses and condos for sale

Foreclosure filings – not at stall speed

For some reason nobody cares to report about all of the new foreclosure filings in the Fort Lauderdale area.  You will notice from the next chart that they have been climbing in 2017 and remain at high levels that we haven’t seen in years.  This is all happening during the eighth year of the “economic recovery” nonetheless!  The condo property filings (in red) have been climbing steadily month after month throughout 2017.  Here is a quick snapshot of the past three years of residential mortgage foreclosure filings in Broward County, Florida:

  • 2015 monthly average was  280
  • 2016 monthly average rose 50% to 420
  • 2017 monthly average has climbed another 41% to 593

Fort Lauderdale mortgage foreclosure filings

Our next chart is a snapshot of the tri-county area including Miami-Dade, Broward and Palm beach County Florida.  Through the month of June there have been 8,138 new mortgage foreclosure filings in the area.

Foreclosures in Miami, Fort Lauderdale, Palm beach

At some point the lack of growth in the economy will come back to haunt the South Florida real estate market.  The pace of mortgage defaults remains elevated and new debt will magnify the problem.   The fact that the ten year bond yield cannot reach 3% just shows that markets don’t believe we will see any economic growth in the near term.  In addition, the Fed currently holds nearly 25% of all the first mortgage loans in the country with a total of $2.5 trillion and they keep talking about winding-down their balance sheet.  What will happen to the mortgage market if it relies on other participants to buy all of these loans?  Anemic growth and record debt will not allow us to maintain stall speed forever.

 

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Plotting the next move

When will it be time to begin plotting your next move?  It sure seems like real estate markets have been defying all logic and the charts have showed some resilience so far throughout 2017.  At some point the rally across all asset classes will run out of steam, whether we see it first in stocks, bonds or real estate will be the question.

Plotting average sale prices in South Florida

Plotting South Florida real estate prices

After seeing a multi-year high price of $505,236 during the month of February, it appears that single-family home prices may be taking a breather in South Florida.  During the month of May, prices slipped 5% from the February highs to $480,133.  The question is whether they continue the slide over the summer or make an attempt at another high.  At first glance, we may have already seen the cycle peak in single-family home prices in this market.  As for the average selling price of condos, they appear to have made their 2017 high during the month of March at $286,474 and dipped slightly (4%) to $280,096 in May.  It is noteworthy that condo prices have failed to surpass the $300,000 mark and repeatedly meet resistance at that level.  If condo prices are failing to reach new highs with all of this accommodation, there is a good chance their next move is downward.

Plotting the Peaks and Valleys in Transaction Volume

As for transaction volume, South Florida has seen some peaks and valleys.  January saw a seasonal drop to 5,794 residential transactions, but deal volume has rebounded nicely to 9,141 closed transactions in May.  The month of June has been strong for the past few years, so we shall see if we reach the previous highs next month.  A failure to reach previous highs in deal volume will most-likely lead to a downtrend throughout the summer and lower prices across the board.

Plotting Real estate transactions in South Florida

Residential Inventory

As long as we don’t include the massive shadow inventory of new construction condos, the existing inventory of available properties looks o.k..  As of May, there were 18,937 houses and 29,922 condo / townhouse properties listed for sale in Miami-Dade, Broward and Palm Beach County Florida.  If you compare these numbers to 2011 it seems like the current levels remain healthy for now.  Remember that the far left of this chart shows when the major banks removed all of their foreclosure inventory from the market because of pending litigation.  Believe it or not, many of those properties are still lingering in default and may return to the market.

Plotting inventory South Florida houses and condos for sale

We have discussed at length how keeping interest rates at crisis level lows for so long will eventually damage a market.  A low cost of borrowing encourages buyers to pile on debt and overpay for assets.  Since there is an inverse relationship between interest rates and asset prices, the question remains of who will be the bag holders when rates eventually climb and asset prices drop?   We all know how that story ends, and apparently repeats itself.  Stay tuned.

 

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Pops & drops

Real estate data has a tendency to be seasonal and from the looks of this latest batch, we are right on track again in South Florida.  Today we will take a look at the “pop” in transaction volume last month, along with price trends, foreclosure filings and distressed sales.

A seasonal “pop” in deal volume

It’s a good think that transaction volume increased during the month of March, otherwise it would have signaled a warning moving forward through the spring.  If you look at the previous years in the chart below, you will notice the same pattern during March and April of each year.  You will want to see one more month of strength in deal volume before it tapers off for the summer months.  The first chart breaks out the condo and single family home sales and the second chart is combined.

Seasonal pop in South Florida real estate sales

Seasonal pops and drops south florida real estate

A slight drop in single family home prices (not seasonal)

This isn’t much to worry about right now, after several years of an upward trend.  However, if the April numbers are soft it could be the start of a downward trend in single-family home prices across South Florida.  The average sale price of a house in South Florida declined by 5% month over month from $505,236 in February to $477,764 in March.  Meanwhile, the average sale price of a condo climbed 6% from $270,277 in February to $286,474 in March.  Always keep in mind that the average sale price tends to be more volatile than the median, and one month in either direction does not signify the start of a new trend.  We do anticipate softening in the condo market over the summer months and it will be interesting to see if house prices follow condos South.  Mortgage rates have declined once again, so that may provide price support until rates resume their uptrend.  Be careful not to cheer low rates for much longer, because they fortell much larger problems in the economy.

South florida house and condo prices

Foreclosure activity

New foreclosure filings continue to climb throughout South Florida. During the month of march there were 1,495 new foreclosure filings in the condo and single-family home segments in South Florida.  This is a jump of 18% month over month.  So far in 2017, the monthly average of new filings is 1,304.  The monthly average in 2016 was 1,262 and it was only 796 in 2015.  Do you see a pattern here?  Just look at the chart.

Foreclosures in Miami, Fort Lauderdale, Palm Beach

Distressed property sales

Finally, here is a look at the pace of short sale and foreclosure transactions in comparison to the new foreclosure filings.  Obviously the properties that are just now receiving foreclosure notices have awile before ever hitting the market, but this chart and the one above really add some perspective to the “recovery” in the South Florida housing market.

Foreclosure sales and short sales in South Florida real estate

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