Late cycle behavior

Late cycle behavior is back in the South Florida residential market.  For the last decade it appeared as if this slow grind higher in prices would not abate.  There is evidence of peaking residential prices in the South Florida market and a reversale might be right around the corner.  today we will highlight some of the Broward County residential activity in houses and condo properties.

Late cycle inventory

Inventory declined in the Greater Fort Lauderdale area over the last few months, which has boosted sale prices.  As the spring selling season wrapped-up, the single-family home inventory dipped to 5,317 listed homes in the month of May.  Condo inventory declined to 7,900 condos listed for sale during May.

late cycle inventory

Late cycle prices

Will residential real estate prices move higher from here?  There could be a few months left in this rally.  An alarm will not sound at the top of the market, so we will continue to monitor the charts.  By looking at this first chart, you will notice that the average sale prices of single-family homes in the Greater Fort Lauderdale area have been trending higher, with the average sale price reaching $456,861 during the month of May.  The average sale price of a condo was up slightly to $231,238.

late cycle real estate prices

Late cycle debt

Over the past several years we have warned our readers about the dangers of keeping interest rates so low for so long.  Consumers tend to borrow much more than they should.  You will see in this next chart that foreclosures are making a big comeback.  Many of these are from the last housing crash, but now we have new ones piling-up thanks to the massive accumulation of debt.  We haven’t seen this many foreclosures in Fort Lauderdale since the last crash.  It’s really fun buying stuff, but eventually the bill comes due.  By looking at this chart, you should be able to see that people are facing some challenges in paying their mortgages.

Late cycle debt problems

This foreclosure problem isn’t just an issue in Fort Lauderdale.  The last chart shows how Miami-Dade and Palm Beach County see mortgage defaults climbing also.  We used the appropriate color red for this chart.

South Florida mortgage forelcosures

Good reads

Real estate is local and the South Florida real estate market is certainly unique.  However, real estate is also cyclical and here is a good article we found discussing various signs that the current real estate bubble/ market cycle  might finally be turning.  We haven’t seen the inventory climb or prices drop in South Florida yet, but the level of distressed properties in the tri-county area is disturbing.