Allied Realty Group Blog

Year in review – 2018 foreclosures

Today we will do a year in review with a look at foreclosure filing activity throughout South Florida.  It’s crazy to think that ten years after the last housing bust, the delinquent mortgages still remain.  There have been a variety of foreclosure halts in South Florida over the last decade.  As a result, we continue to wrestle with this problem.  Also, the fact thatFlorida is one of the 22 judicial states in the U.S. that doesn’t help matters.  delinquent borrowers and their attorneys have gained years of experience on gaming the system. Our charts today illustrate the monthly foreclosure filings in Miami, Fort Lauderdale and Palm Beach houses and condo properties.

2018 foreclosures in Broward County, Florida

The months of may and June had a large number of new foreclosure filings in Broward County.  There was a foreclosure halt in the 4th quarter of 2107 due to Hurricane Irma.  As a result, there was a sharp decline in 4th quarter filings.  Maybe it took awhile to get some of those filings cued-up again.  It’s anyone’s guess at this point!

2018 year in review Forecloures in Fort Lauderdale

Here is a look at the Greater Fort Lauderdale / Broward County filings by the numbers:

Annual Monthly Change
2015      3,356           280
2016      5,044         420 50%
2017      5,228         436 4%
2018       5,341            445 2%

2018 foreclosures in Miami-Dade County, Florida

The new filings in Miami remained strong through the summer months:  May, June, July and August all had above normal filing counts.  After that, the filings tapered off, but the averages in 2018 increased over 2107.  Look at the September-December 2017 portion of these charts to see the last halt due to Hurricane Irma.

Year in review - Miami foreclosures

Here are the numbers and average monthly filings for Miami and the monthly averages:

Annual Monthly Change
2015     4,638   387
2016     6,855    571 48%
2017     5,393   449 -21%
2018     7,622      635 41%

2018 foreclosures in Palm Beach County

Palm beach seems to have fared better than Miami-Dade and Broward over the past few years, but still has it’s share of mortgage loan defaults.

Palm beach area foreclosures - Year in review

Annual Monthly Change
2015    1,706           142
2016       3,295           275 93%
2017    2,450           204 -26%
2018       2,935           245 20%

 

Snapshot of the Tri-County area

Year in review - South Florida foreclosures

Posted in Foreclosure activity, Fort Lauderdale foreclosures, Miami foreclosures, Palm Beach foreclosures, South Florida Real Estate | Tagged , , , | Comments closed

Will they see it this time around?

Will the real estate agents see it this time around?  So many of them were blindsided by the last downturn.  They were busy selling and collecting commissions on overpriced properties, ignoring all of the signs of a frothy market.  My guess is they won’t see it, because they don’t want to.  More importantly, real estate agents seem tone deaf to shifts in market sentiment.  Are they letting their customers know that they might be “stuck” with this one for awhile?  I doubt it.  Accoding to them it is always a good time to buy a house.  Today we will look at mortgage rates, transaction volume, inventory and prices in the Fort Lauderdale area and hopefully shed some light on the local market.

Mortgage rates

The good news is rates are dropping again.  The bad news is that there is trouble brewing in the economy for them to decline so far so fast.  If the economic outlook was positive, this would not be happening.  It may get some additional buyers of the fence, but for all the wrong reasons.  Even with low rates, mortgage applications showed a sharp decline toward the end of 2018.

Mortgage rates fall again

Transaction volume

The number of transactions closing was healthy in 2018, compared to the last six years.  Rates remained in check for most of the year.  This chart shows the average number of residential closings through November of 2018.  You will notice that 2015 and 2016 were very strong and if you glance up at our rate chart you will see why.

Deal volume in Fort lauderdale

Inventory

It sure looks like residential inventory is on the rise again.  This is usually a good indicator that prices will start to decline.  If you are out looking at properties throughout Fort Lauderdale, you will probably notice that plenty of signs have been in the yards for awhile.  This is because property owners and their agents haven’t been able to come to grips with a changing market.  In November there were 14,356 houses and condos on the market throughout Broward County, Florida.  You have to go back to February 2017 to see that much inventory and the uptrend sure looks like it will continue.

Inventory climbs in Fort lauderdale

Sale prices

Will they see it?  The numbers show that condo prices hit a wall a few months back.  The average sale price of a condo was $220,268 in November, representing a 17% decline from the high of $264,975 set in June.  As for single-family homes in Broward, the average sale price was $444,247 in November and that was only a 4% drop from June.

Fort lauderdale real estate prices

Will they see it?  The party may be over!

Although rates have dropped again, it sure looks like the last decade of easy money dragged all of the demand forward.  There may be some activity on the lower end of the market, but it sure looks like the luxury market is already getting hit pretty hard.  If you are in the market for a property, make sure you do your homework.  Make sure that you evaluate the pros and cons of entering the real estate market at this point in the cycle.  South Florida real estate agents have anticipated an influx of buyers from high tax states impacted by the elimination of SALT deductions, but who knows how long that will last.

 

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The big unwind

A big unwind is on the horizon.  Although the low rates and easy money helped propel the real estate markets to new highs, it is important to maintain some perspective on how these levels were reached.  There has been lots of market manipulation “tools” in order to create this latest bubble, so don’t expect it to pop overnight.  We will look at a few charts of where we stand in the South Florida real estate market cycle, as well as an idea of where we are going.

Average sale prices

Condo prices have hit a wall.  The average sale price of a condo property in South Florida has declined 15% since June.  Not only are they stagnant, but the next move looks like it will be lower.  In November the average sale price was $278,577.  Single-family homes have performed better and are only down 7% since June.  In November the average sale price of a house stood at $500,299.

Miami, Fort Lauderdale, Palm beach real estate

Available inventory

The total number of available houses and condos in Miami, Fort Lauderdale and Palm beach reached 51,256 properties during the month of November.  This is the highest level of residential inventory since December 2011 during the last crisis.  The only reason inventory declined so rapidly back then is because foreclosures were halted and the bailouts started. Typically an inventory build like this  leads to price declines and it looks like that is where we are headed.  There were 20,535 houses and 30,721 condos available for sale in South Florida in November.

Residential inventory in South Florida

Transaction volume

The deal volume in Miami, Fort Lauderdale and Palm Beach has been holding up well.  In the month of November there were a total of 6,711 transactions closed.  That is slightly below the monthly average for the year so far, which is 7,657.  This next chart shows how 2018 measures up compared to the past six years.

Deal Volume in Miami, Fort Lauderdale palm beach

Foreclosures

Yes, we are still dealing with them, just fewer in number.   The average new filings are up 25% over last year and there are still plenty of distressed properties left over from the last crisis.   There are plenty of modified mortgages that will be resetting at higher rates and will continue to be a headwind for the market.

Foreclosures in Miami, Fort Lauderdale, palm beach

Mortgage rates

The rising rates were starting to put pressure on real estate prices, but they appear to be slipping back.  Although buyers shopping for a mortgage may be happy, it doesn’t bode well for the overall economic outlook.  It’s scary to think that a 5% mortgage could clobber the housing market, but that’s what happens when you keep rates too low for too long.

Unwind in rates

Chart of the day – balance sheet unwind

We always like to include and interesting chart to add perspective.  Today’s chart shows the balance sheet of the Federal reserve.  It grew by $1.7 Trillion (from $2.5 Trillion in 2012 to $4.5 Trillion in 2015)!  Is it possible that this was the invisible hand that lifted asset prices in this cycle?  As the Fed unwinds this massive balance sheet, look for financial conditions to tighten.

A few tips to leave you with (for buyers)

  • Be patient and don’t let FOMO (fear of missing out) take over.
  • Make sure you have two or three recent (30-60 days) closed sales in close proximity to the property you want to buy.
  • Get a quote for windstorm, homeowners and flood insurance before you make an offer on a property.
  • Make sure you obtain an accurate estimate of what your property taxes will be based on the sale price (not the current taxes).
Posted in Fort Lauderdale real estate, Market Insight, Miami real estate, Palm Beach real estate, South Florida Real Estate | Tagged , , , , , | Comments closed

On the home stretch

Well, we are already on the home stretch in 2018 and trying to see how this year will stack-up in home sales data.  This has been an unprecedented decade of artificial stimulus for the housing market and we will soon find out how the hangover feels.  Our charts today will examine prices, sales volume, inventory and foreclosure activity.

Average Sale Prices

By looking at our chart, you will notice that the residential prices in South Florida peaked in June.  Since then, the sale price of house have declined 8% and condo prices declined 16%.  During October, the average single-family home sold for $495,133 and the average condo sold for $276,331.

home stretch - South Florida real estate

 Sales Volume

When we compare residential sales volume from October to June, house sales are down 20% and condo sales dropped 14%.  There were a total of 7,614 deals closed in Miami, Fort Lauderdale and Palm Beach in October.   Although this is typically a slower time of year for South Florida real estate deal volume, this may finally be indicating a more significant slowdown.

Miami, Fort Lauderdale, Palm beach real estate

Residential Inventory

A slowdown in sales volume usually leads to a gradual increase in available inventory.  In October there were 19,871 houses and 29,972 condos for a total of 49,843 properties available for sale in South Florida.  If you look at the far left of our inventory chart, you will see that residential inventory was over 72,000 properties listed for sale back in January 2011 in the post-crisis market.  After that, foreclosures were halted, housing bailouts commenced and inventory declined rapidly.  The trend of available properties does appear to be climbing again.  If transaction volume remains sluggish, we will see inventory climb.  That will keep prices in check.

Miami, Fort Lauderdale and palm beach real estate inventory

Foreclosure activity

Nearly a decade after the housing crisis, we still have plenty of foreclosures in Miami, Fort Lauderdale and Palm Beach.   There was a big spike in new filings during the month of June, but it appears to have slowed through October.

Foreclosures in Miami, Fort Lauderdale & Palm Beach

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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

Posted in Condo market, Market Insight, Single-family homes, South Florida Real Estate | Tagged , , , | Comments closed
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