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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 & 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.

 

YearMonthly 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.

House prices Fort Lauderdale

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.

Condos in Fort Lauderdale Florida