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Are mortgage rates ready to make a move higher?

Mortgage Rates

One key component to the big move in housing prices has been historically low mortgage rates.  There used to be a line in the sand at about 5% for residential mortgages where housing sales would slow and prices would begin to slide.  We are a long way from that point right now, but any significant rise in rates could certainly put the brakes on this rally.  If you watch our chart of the 15-year mortgage, 30-year mortgage and the 10-year bond yield, you should notice the correlation.  The latest move in the 10-year bond yield could me signaling a longer term move higher in borrowing costs.  It looks like this latest move in rates has already impacted loan demand.  For anyone who bought a house in the last six months, there is a good chance you bought at the peak of the cycle.

House prices in South Florida

Here is a chart of the median sale price of single-family homes across the tri-county area of Miami, Broward/Fort Lauderdale, and Palm Beach.  As you can see from the chart, they have been on a tear!  That last upshot shows how much the COVID-19 pandemic boosted prices of traditional home sales as everyone wanted a house.  During the month of May the median sale price of a house in a traditional sale was $375,000.  In September it had reached $420,000.  It was like musical chairs,  but everyone grabbed a house when the music stopped.  It’s almost like they didn’t care how much they paid.

House prices in Miami, Fort Lauderdale and palm beach

Condo prices in South Florida

Up next is a look at the median sale price of condo properties across the tri-county area.  This segment of the market didn’t see the same level of excitement over the same period this spring/summer.  In May the median sale price of a condo traditional sale was $215,000.  In September that price had only moved up to $223,000.  With limited supply of houses, maybe some demand will migrate to the condo segment as we finish 2020.

Condo prices in South Florida

Real estate transaction volume

Real estate sales in South Florida

The number of transactions for 2020 is still far below prior years during this cycle.  Here is a breakdown of the total sales from 2012-2020:

AnnualMonthly Avg
2012 86,001    7,167
2013 91,180    7,598
2014 91,239    7,603
2015 96,411    8,034
2016 90,974    7,581
2017 88,227    7,352
2018 90,870   7,573
2019 90,864   7,572
2020 62,459   6,940

South Florida foreclosure activity

The pace of monthly foreclosure filings won’t pick up until 2021 since they have been on hold.  Here is a chart of the monthly filings across South Florida.  The chart is followed by a breakdown in the number of annual filings and monthly average.

Foreclosure activity in Miami, Fort Lauderdale and Palm Beach

2015  9,557   796
2016  15,194  1,26659%
2017 13,071  1,089-14%
2018 15,905 1,32522%
2019 10,355   863-35%
2020  3,138   314-64%