Although it may be challenging to apply “market timing” to an asset class like single-family homes or condo properties, the raw data dropped into a few charts will certainly provide some insight to market trends. Today we will look at the available inventory, prices and transaction types in the Greater Fort Lauderdale area. First, let’s take a look at the inventory of available houses & condo properties that has climbed 50% from the interim lows set in April 2013. In November, the total number of houses and condo properties listed for sale reached 14,973, up from 9,966 in April 2013.
Our next chart shows the trend in average selling prices. We have previously mentioned that the month of May was most likely the peak in this latest rally. Single-family home prices have dropped 16% since May and the condo/townhouse properties have dropped 7% since the month of May. For some reason the “experts” that provide commentary in the media fail to mention these stats. We understand that maybe a forecast of falling asset prices may not boost their sales, but maybe the real estate industry would gain some respect if they weren’t always acting as cheerleaders for higher prices. After all, it is healthy for markets to correct at some point.
What types of deals are closing? You will see that traditional sales in single-family homes have fallen off a cliff lately, along with the total volume of transactions.
Here is the breakdown of single-family home sales in Broward County for November:
- The volume of traditional sales dropped 26% from October
- The volume of foreclosure sales dropped 30% from October
- The volume of short sales sales dropped 35% from October (short sales may regain popularity after the federal government once again extended the mortgage debt relief act)
How about condo & townhouse transactions? Just like the single-family home segment, the traditional sales in the condo market have been getting crushed.
Here is a breakdown of condo/townhouse transactions in Broward County:
- The volume of traditional sales dropped 21% from October
- The volume of foreclosure sales dropped 23% from October
- The volume of short sales dropped 18% from October
As for the foreclosure activity in the Great Fort Lauderdale / Broward County market, the chart below shows that although mortgage defaults haven’t made the headlines, they will still play a role in the market throughout 2015 and beyond.
Finally, how could South Florida’s residential real estate market be sputtering with such low mortgage rates? Our final chart today shows a chart of the 10-year bond, as well as 15 and 30-year mortgage rates. Take a look at these rates, coupled with FHA announcing that they will cut their mortgage insurance premium by 50 basis points today. If the residential real estate market continues to slow in this environment, what will happen if rates ever rise to normal levels?