Back in May interest rates starting creeping up slowly and appear to have had some impact on the pace of sales and prices of houses and condo properties in South Florida.  First, let’s take a look at the 30-year mortgage rate, 15-year mortgage rate and their correlation to the 10-year bond rate.

The rise in rates started in May, and you will obviously see it in the chart above.  If you want to see where mortgage rates are headed, simply follow the 10-year bond rate.  Even though interest rates have retreated in September and October, that bump a few months ago had some impact.  Take a look at the sale prices of residential property in Miami-Dade, Broward and Palm Beach County, Florida to see how rates may have impacted sales.

Wow, take a look at the slide in prices on the single-family home sales.  If we just look back to June, the average sale price on single-family homes in the tri-county area have slipped 17% and condo prices are down 10% for the same period.  This actually makes sense, because deals in the pipeline as rates started to rise were closed by June or sometime during the month and deals without locked rates either didn’t close or closed at lower prices.  Now, let’s look at the types of transactions that are closing.

You will notice from the chart that traditional sales tapered off by 16% since rates starting rising in May.  Here is the breakdown in the 3,566 total transaction closings by type in September in Miami-Dade, Broward and Palm Beach:

• 2,488 traditional sales or nearly 70% of all closings
• 488 foreclosure / REO sales which accounted for 14% of all closings
• 590 short sale transactions that made up 16% of all closings

How about condo/townhouse transactions in South Florida?  Let’s see the chart.

Wow, another big drop in traditional sales.  In the condo/townhouse market, traditional sales have dropped 31% since rates started to climb in May.  Here is the breakdown of the 3,560 South Florida condo/townhouse sales in September:

• 2,465 traditional transactions closed and were 69% of all closings in September
• 680 Foreclosure / REO sales closed and were 19% of all closings in September
• 415 short sale transactions closed and were 12% of all closings in September

Distressed sales are still bumping along the bottom and still haven’t rebounded since foreclosures were halted back in late 2010.  After almost 3-years of declining residential inventory for sale in South Florida, we may have finally made a bottom turn and available properties for sale may actually be on the upswing.  Take a look at this final chart and you will see how high the residential inventory was at the beginning of 2011 just after foreclosures were halted.  In September, the amount of houses available for sale grew by 5% over August and the condo/townhouse inventory climbed by 6%.  Although it may not sound or look like much of an increase, a gradual climb in available inventory will work wonders in cooling-off prices!