There was a bounce of the lows in residential activity during the month of June. When we last updated deal volume and prices after the May slump, we knew that there would be a snap back. How long will the rally last? We aren’t sure about that right now. The June sales show a 53% bounce from May in the single-family home segment and a 47% jump in condo sales. Some of these deals could have been delayed through the lock down, but only time will tell. Here is a quick look at how 2020 stacks up with the past several years in real estate activity:
Did prices bounce off the lows?
There was a noticeable increase in the average selling price of houses across the tri-county market. The average selling price reached $594,934 in June, up from $563,889 in May. It only takes a few large mega-mansion sales to drag the average higher, and that has been the trend as people flocked the Northeast during the pandemic. Condos were a different story, where the average selling price declined to $310,503 in June, down from $324,971 in May. Just in case anyone is wondering if this is a bubble: Of course it is! The only problem is that this can go on for years. All of the bailouts and manipulated interest rates helped reflate prices after the last housing bust and it won’t end now that we are in the midst of another crisis. Welcome to the “Weekend at Bernies” real estate market!
How about Mortgage Rates?
There have been rumblings about tightening credit in the jumbo mortgage market over the past few months. At this point it is difficult to see how these issues will impact the housing market in South Florida. Right now the conventional loan limits in the tri-county area are $510,400, so anything above that amount would be in the jumbo category. As we move into the second half of the year, the larger concern for the housing market is the pace at which temporary job losses become permanent. Mortgage rates have remained and crisis levels since the last housing crash, so don’t expect that to change anytime soon. We barely touched 5% on the thirty year fixed-rate mortgage back in November 2018 and we have been on a downward trend since then.
South Florida Inventory
There hasn’t been this much of a decline in the available inventory in years. Was this because properties were removed from the market due to COVID-19? That has to be the case. The number of houses on the market dropped 14% from may to June. Condo inventory dropped 3%. There were 14,007 houses on the market in June, down from 16,277 in May. The available inventory of houses hasn’t been this low as long as we have been charting it(2011). In the condo segment, inventory was 28,266 units in June, down from 29,048 in May.