Not many people could have predicted how the pandemic would impact real estate markets in 2020. Our first chart today shows how single-family home prices surged in the second half of the year. During the month of December, the average selling price of a single-family home climbed to $793,828 in South Florida. Obviously the sales of ultra-luxury prices continue to drag the average higher. It looks like the lack of housing inventory may finally be helping to bring the condo prices higher. Up until now they have lagged, primarily due to the pandemic-driven popularity of houses. The average sale price of condo properties reached $389,160 in December.
South Florida housing inventory
This next chart should help explain the surge in housing prices. There’s simply no inventory of houses on the market and the number continues to drop every month. In December there were 10,052 houses available on the market in South Florida. That represents a new low and it’s a far cry from the 30,768 houses for sale during the last housing market crash. It will be difficult for prices to normalize unless we get back to a healthier supply level. The number of condos available for sale stood at 25,193 in December. That number was 41,473 in January 2011!
Housing market transaction volume
The pace of sales certainly rebounded after dropping to lows for the cycle during the spring COID-19 lockdowns. December had the highest number of closed sales for 2020, with a total of 9,482 transactions. That number includes 4,801 closed sales in the single-family home market and 4,681 condo transactions. It may be difficult to repeat such a high number of sales with supply so limited. It may just leave buyers bidding-up prices to the moon. Are we setting the stage for another housing market crash? It doesn’t seem like there is much debt floating out there this time around, but every crash is different.
For the people out there buying and refinancing existing mortgages, debt continues to be cheap! They have started to bounce off the lows, but shouldn’t go much higher for awhile. Mortgage rates only briefly (and barely) touched the 5% market once during the housing recovery over the last decade. Easy, cheap money for extended periods will create and extend massive bubbles, but what if rates never go much higher? Maybe housing won’t correct this time around and the party goes on forever!
Comparing 2020 real estate sales to prior years
For all of the excitement, 2020 was just an average year when you look at the deal volume. All of the action was on the price side. There were 89,348 closed sales across South Florida during the year. Here is a breakdown of how 2020 compares to prior years of this housing recovery: