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Real estate sales come crumblin’ down

Sales decline housing bubble

It was just a matter of time that the housing bubble would pop and real estate sales volume would come crumblin’ down.  This was an bizarre, COVID-19 pandemic induced rally in the housing market that was unsustainable.  We have been warning about the housing market bubble trouble in Miami, Fort Lauderdale and Palm Beach for awhile.  Several months of declining transaction volume is a good leading indicator that prices will begin to drop.

Crumblin' down housing sales

Real estate sales in the single-family home segment across the tri-county area dropped again in August.  It looks like June was the peak for the COVID bubble market and here is the breakdown:

  • Traditional sales – 4,508 in August, down from 4,773 in July and a whopping 5,400 in June.
  • Foreclosure sales – 27 in August, which was the same in July
  • Short sales- 23 in August, down from 27 in July

Condo sales crumblin' down

Real estate sales in the condo market are crumblin’ down too.  Here is a look:

  • Traditional sales – 5,182 in August, down from 5,748 in July and a whopping 6,677 in June.
  • Foreclosure sales – 44 in August, which up from  35 in July
  • Short sales- 9 in August, down from 16 in July

Here is a snapshot of the monthly average sales volume, going back to 2012:

Real estate sales volume

As for prices, they are holding-up for now, but will be under pressure going forward as the market loses it’s luster.

Real estate sales in Miami, Fort Lauderdale and Palm Beach, Florida

One of the main reasons that sales have dropped is that inventory remains at historically low levels.  Not only are affordable properties nonexistent, there are just very few properties to chose from in all price ranges.  There were only 7,751 single-family homes and 14,265 condo properties on the market in August.  It looks like the inventory of houses has stabilized, but it may take a few more months to see if  inventory in the condo market bottoms.  Take a look at the far left of this next chart (2011), when there were 30,768 single-family homes and 41,473 condos on the market after the last housing bubble popped.

Housing bubble in South Florida

Here are a few risks in the South Florida real estate market:

  • Insurance costs will continue to rise. Get used to annual increases and even cancellations.
  • Lenders  will eventually wake up to climate risk.
  • At some point mortgage rates will rise and further reduce housing affordability.
  • All of the COVID Bailout money that propped-up the economy for your neighbor to buy a new boat is running out.
  • This isn’t just a South Florida or U.S. issue as other housing bubbles are starting to pop after years of piling on debt.

This market outlook covers real estate activity in Miami-Dade, Broward and Palm Beach County, Florida.  Here are just a few of the cities in each of these three markets:

  • Miami-Dade – Aventura, Coral Gables, Miami Beach, Hialeah, Sunny Isles Beach, North Miami, Homestead, Doral, Miami Lakes, Downtown Miami, Brickell and Key Biscayne.
  • Broward – Fort Lauderdale, Pompano Beach, Deerfield Beach, Hollywood, Hallandale, Weston, Parkland, Wilton Manors, Oakland Park, Plantation, Cooper City, Davie, Coral Springs and Lighthouse Point.
  • Palm Beach – Delray Beach, Highland Beach, Jupiter, Palm Beach Island, Boynton Beach, Boca Raton, Highland Beach, Palm Beach Gardens, West Palm Beach, Wellington and Lake Worth.