Make sure you get a good look at today’s charts, because they are sure to change dramatically in the coming months (maybe years). The month of February showed some big moves in real estate prices in South Florida. The average sale price of a house in the tri-county reached $561,502 during the month. This is a 3% climb from the previous month and also an all-time high for this cycle. The most recent high was $557,442 in July of 2019. As far as condo properties across the South Florida area, the average sale price was actually down 3% to $313,638 from $324,551 in January.
Get a good look at the inventory
The number of houses and condos in South Florida declined again in February to 46,539 from $6,870 in January. Obviously the restricted supply of single-family homes has propelled the sale prices to new highs. There were 17,383 houses on the market in February, down from 17,711 in January. Inventory of condos remained basically unchanged for the month at 29,156. That figure dropped by a whopping 3 properties from 29,159 in January. Given the recent developments, it doesn’t always mean that people automatically list their properties, but they do rethink the economics of speculating in real estate once they see the liquidity challenges. The immediate strain will most likely be in the vacation rental segment where people flocked for the “easy money.” On a positive note, additional inventory will help ease the affordability challenges that real estate markets have experienced in the last several years.
Get a good look at transaction volume
The recent decline in sales volume is mostly seasonal. You will notice from this next chart that the number of closed transactions usually drops in January and slowly increases as we move into the spring and summer months. There were a total of 6,269 closed sales in February, up 7% from January. We can expect the spring rebound to be muted this year for certain, but we won’t know by how much until we move through the next quarter.
How about mortgage rates?
What’s crazy is how mortgage rates haven’t moved too much with all the volatility in the bond market. Here is a chart showing mortgage rates up though this Thursday 3/19. Lenders still have to factor in the risk they assume, so as we have discussed in the past this may put a floor on how low mortgage rates actually go. The good things is that when the real estate market stabilizes, low rates will help buyers with new purchase loans and even existing homeowners in refinancing.