Has the condo correction already started in South Florida? By looking at the latest numbers, it appears so. Today we will focus on Broward County, which includes the cities of: Fort Lauderdale, Pompano Beach, Deerfield beach, Hollywood and Hallandale Beach just to name a few.
Average condo sale price in correction territory
Our first chart today shows the average selling price of condo properties in Broward County. Since the June 2018 peak in prices, the average sale price has declined 20% through December. I think that would be considered a “correction” if you ask me and it looks like it is just getting started.
Condo inventory in the Fort Lauderdale area
The available condo inventory listed for sale in Broward was 8,128 during the month of December. Our guess is that it will climb as we begin 2019. Sellers have a tendencies to remove their properties from the market during the holidays and relist them in January. We shall see. This chart does not include all of the new construction product entering the market either. Developers only tend to list a small fraction of the project in the MLS and they wouldn’t have to keep sweetening incentives if they didn’t see demand for their product eroding.
Condo sales by transaction type
This next chart shows the median sale price of condo properties by the type of transaction. Sometimes the average sale price metric is more volatile, but you will notice from this chart that the median sale price of traditional sales has declined 13% since June. The median foreclosure sale prices have dropped 10% and short sale median prices were down 41%. The distressed sale prices have been more volatile as the volume declines. The higher-priced units will drag the median prices up once they are sold, hence the periodic spikes in the chart. Of course the distressed property owners who have the resources to fight the foreclosures have dragged these cases out since the last crisis and those units are eventually hitting the market.
Condo transaction volume by deal type
There were 1,210 condo property closings during the month of December, representing a 33% decline from the 1,806 closings in June 2018. Although some of this slowdown is seasonal, it looks like the overall trend is down.
Comparing houses and condos
Our last chart today compares the average selling price of houses and condos in the Greater Fort Lauderdale (Broward County) market. The average sale price of a single-family home has only declined 5% since June, while condos have dropped 20% for the same period. Both housing segments are facing headwinds, so it should be interesting to see how this chart develops as we progress through 2019.