Allied Realty Group Blog

Will borrowing costs & real estate prices fall together?

Normally borrowing costs fall and real estate prices rise.  Will rates and prices both fall together this time around?  Nothing has been normal during this last decade of low rates and asset price inflation.  Mortgage rates have been falling, but they don’t appear to be helping real estate transaction volume or prices for that matter.

Will mortgage rates keep dropping?

Borrowing costs keep dropping.  In a typical, healthy market this would bring buyers out in droves.  However, this time it may be different.  Everyone thought the economy was doing great in 2018, but rates going lower paints another (less optimistic) picture.  Here is a good article on rates and the state of the housing market.

Borrowing costs & real estate prices

Borrowing costs & transaction volume

The average number of monthly transactions has declined 17% from last year.  Through the first quarter of 2019, there have been an average of 6,257 transactions closed in Miami-Dade, Broward and Palm Beach County Florida.  In 2018, the average number of monthly transactions was 7,573.

Mortgage rates and deal volume

Year Monthly Average
2012         7,167
2013         7,598
2014         7,603
2015         8,034
2016         7,581
2017         7,352
2018         7,573
2019         6,257

Median house prices in South Florida

Here is a chart of the median sale prices of single-family homes in South Florida through the month of March.  The volatilty in short sale prices looks interesting.  It shows how nearly a decade after the housing market crashed there are still plenty of distressed properties across South Florida.

Borrowing costs and house prices

Median condo prices in South Florida

Condo prices in South Florida look like they are trading sideways.  After median prices of traditional sales reached $210,000 in June 2018, they have failed to regain that level.  While everyone thought the new tax law would be great high-end South Florida real estate, remember for every buyer there is a seller.

Borrowing costs and Florida condos

 

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

That first shot of humidity

Well, it finally hit us this week.  That first shot of humidity arrived, letting us all know that summer is here.  Even before the weather changed, it seems like something is different in the residential real estate market.  Stale listings are all over the place.  What happened to all the people that were supposed to be flocking here due to changes in the SALT Deduction?

Average Monthly Transaction Volume

Deal volume remains slightly below average so far in 2019.  This chart just includes closed sales through the month of March.  Right now we are down 17% from 2018 sales volume on a monthly basis.  In 2018 there was an average of 2,733 per month and 2019 stands at 2,266.  The first quarter is seasonally sluggish, so an active second quarter may help the average.

First shot of humidity

Active listings

There were 14,844 houses and condo properties available for sale in the Greater Fort Lauderdale / Broward County area during the month of March.  That figure is down slightly from 15,164 in February.  The number of houses for sale was 6,051 and there were 8,793 condos on the market.  The higher deal volume took a bite out of the existing inventory, but it will most likely rise again soon.  Properties are remaining on the market longer (or going stale) to put it simply.

First shot- active listings in Fort Lauderdale

Sale Prices in the Fort Lauderdale area

Keep in mind that this chart is just through the month of March.  We still believe that prices peaked last June (2018), so we will continue to compare current prices to the peak until the data shows otherwise.  The average sale price of a house was $445,033 in March, still down 4% since June.  The average sale price of a condo was $231,260 in March, down 13% since June.  The pace of sales needs to climb and inventory must drop if you want prices to remain at current levels.

First shot - Fort lauderdale real estate prices

Foreclosure Activity

What’s a market update without a chart of new foreclosure filings?   We have been charting this data throughout the housing “recovery” and continue to see plenty of filings.  Here is a chart of the filings for single-family homes and condo properties in the Greater Fort Lauderdale area. We have also included the filing data from January 2015 through April 2019 for comparison purposes.  You will nice a large spike in the spring/summer months of 2018.  We will see if that happens again this year, but so far the average monthly filings are down from 2018.

First shot - condo and house foreclosures in Fort Lauderdale

Annual  Monthly Change
2015   3,356     280
2016  5,044    420 50%
2017  5,228    436 4%
2018   5,341     445 2%
2019  1,342    336 -25%
Posted in Foreclosure activity, Fort Lauderdale foreclosures, Fort Lauderdale real estate, Market Insight, South Florida Real Estate | Tagged , , , | Leave a comment

Market support

Lower rates provided some real estate market support in the first quarter of 2019.  Whether the rate drop was caused by recession fears or the market realizing that the Fed won’t raise again this year, we don’t know.  The charts show that it provided needed support to the residential real estate market.  In the first few weeks of November 2018, 30-year mortgage rates were reaching the dreaded 5% mark, but have dropped off since then.  Since the majority of real estate purchases are payment sensitive, this decline helps bring buyers back to the market by saying:  “Come on in, the water is warm!”

Mortgage rates and market support

Rate support helps revive deal volume

Look no further than the bounce in transaction volume during the month of March if you need evidence.  There were 7,869 closed sales in the single-family and condo markets in March.  This represents a 36% increase over February when there were only 5,790 closings across the Miami, Fort Lauderdale and Palm beach areas.  Some of this transaction volume is seasonal activity. You should be able to see the spikes in volume over the past several years in the chart below.  It is still our belief that we will not revisit the highs from June 2018 when we think the South Florida residential real estate market peaked for this cycle.

Rate support boosts deal volume in Miami, Fort Lauderdale & Palm Beach

Impact on housing inventory

It’s interesting to see how the higher transaction volume took a bite out of the existing residential inventory.  Total inventory declined from 54,242 houses and condos on the market in February to 53,024 in March.  This is still the highest level we have seen since October / November 2011 after the last housing crash.  The steep decline on the left hand side of the chart is when banks halted foreclosures and the government bailouts started.  After 2012 the creation of housing bubble 2.0 started.

Miami, South Beach, Boca Raton inventory

Rate support and sale prices

Lower rates may have prevented prices from falling in the first quarter.  In March, the average sale price of a house was $512,256, up a whopping 49 Bucks from February.  Condos fared slightly better, where the average sale price reached $322,817, up from $309,463 in February.  The average sale price has higher price sensitivity to a few large transactions lifting the figures and that is most likely the case here.  All real estate markets are different, but on a national level it looks like the market is softening and properties are remaining on the market longer.

Rate support holds prices up

Foreclosure activity

Here is a quick snapshot of the new mortgage foreclosure filings in the tri-county area.  There was a large spike in 2018, especially in Miami-Dade County.  So far the new filings have remained tame in 2019.

Miami, Hollywood, Miramar, Delray Beach foreclosures

Posted in Fort Lauderdale real estate, Market Insight, Miami real estate, Palm Beach real estate, South Florida Real Estate | Tagged , , , , | Leave a comment

Just waiting on the buyers…..

There are plenty of condos available in South Florida, they are just waiting on buyers to emerge.  The current inventory from Miami to Palm Beach has reached a level we haven’t seen since we emerged from the housing crisis.  In February there were 32,578 condos available for sale.  This is the highest inventory since June 2011 and does not include all of the new construction units that are often withheld from the Multiple Listing Service.  If transaction volume perks up this spring, much of that inventory could disappear.  However, if sales volume remains sluggish throughout 2019, inventory will continue to build and price declines will continue.

Condos waiting on buyers

Waiting for buyers – deal volume still light

The pace of sales has been sluggish for the first few months of 2019.  We have repeatedly mentioned how June of 2018 was the peak for the housing cycle.  in particular, we focus on the tri-county market of Miami, Fort Lauderdale area and Palm Beach County.  In June there were 4,353 closed sales in the tri-county condo market.  Traditional sales volume declined 32% to 2,949 closed sales in February.  You will notice from the chart there was a slight uptick from the January number of 2,611 closed traditional sales.

Waiting for condo buyers in Miami

Here is another look at the total condo transaction volume since 2012. The chart has plenty of peaks and valleys with the lowest point this past January with only 5,113 total condo transactions.  To put this in perspective, we haven’t seen volume so low since we started charting in January 2102 following the last condo crash!  Sluggish deal volume isn’t just a South Florida issue.  Reports of slower sales and lower prices have been making news lately.

Miami condos, Fort Lauderdale Condos, Boca Raton

Median sale prices by transaction type

Looking at the median sale prices by transaction type, you will notice that traditional sale prices have declined since June, but foreclosures and short sale prices have increased.

  • Traditional sales – $197,000, down 6% from $210,000 in June
  • Foreclosure sales – $153,300, up 8% from $142,000 in June
  • Short sales – $162,500, up 3% from $158,000 in June

Condo prices - waiting on buyers in South Florida

Posted in Condo market, South Florida Real Estate | Tagged , , , | Comments closed

Mortgage rates collapse (again)

This week mortgage rates collapsed again.  This is tricky since it wasn’t long ago that we thought the economy was gaining strength.  Apparently the Fed and the market think otherwise.  This was the largest one week drop in a decade!  Lower rates could bring some real estate buyers off the sidelines.   However, if rates cannot climb, it sure feels like a recession is right around the corner.  Would you rather have low rates and a recession, or higher rates and a strong economy?

Mortgage rates get crushed!

Mortgage rates collapse

Fort Lauderdale area Residential Inventory

This next chart shows how the inventory of unsold houses and condos is at a level we haven’t seen since March of 2016.  This February there were 6,145 houses and 9,019 condo properties currently listed for sale, for a total of 15,164 properties.  There is a chance the recent decline in mortgage rates will help reduce some of this inventory.  On the other hand, if we are heading toward a recession, low rates may not boost sales activity enough.

Mortgage rates collapse

Will mortgage rate decline boost transaction volume?

The first few months of the year are usually slow and 2019 is starting off sluggish.  Below is a chart of the average monthly transaction volume in the Greater Fort Lauderdale area.  We always stress that transaction volume leads price action.  Therefore, a prolonged slowdown in deal volume will inevitably lead to lower prices.

Mortgage rates tank

The average monthly transaction numbers since 2012 are as follows:

2012   2,555
2013   2,647
2014   2,636
2015   2,829
2016   2,815
2017   2,668
2018   2,733
2019   1,984

Residential prices in the Fort Lauderdale area

The average sale price of a single-family home in the area was $451,410 during February.  This is only a 2% decline from the June peak of $462,275.  Condo prices have declined 20% for the same period.  The average selling price in June was $264,975 and dropped to $210,668 in February.

Will mortgage rates help prices?

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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 condo 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

Deal volume in the condo market

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

Condo property 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

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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

 

 

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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.

Residential inventory Fort Lauderdale housing sales

Real estate 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.

Residential inventory Fort lauderdale

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
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    2550 North Federal Highway
    Suite 200
    Fort Lauderdale, FL 33305

    Phone: 954-586-8400
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