Will the real estate agents see it this time around? So many of them were blindsided by the last downturn. They were busy selling and collecting commissions on overpriced properties, ignoring all of the signs of a frothy market. My guess is they won’t see it, because they don’t want to. More importantly, real estate agents seem tone deaf to shifts in market sentiment. Are they letting their customers know that they might be “stuck” with this one for awhile? I doubt it. According to them it is always a good time to buy a house. Today we will look at mortgage rates, transaction volume, inventory and prices in the Fort Lauderdale area and hopefully shed some light on the local market.
The good news is rates are dropping again. The bad news is that there is trouble brewing in the economy for them to decline so far so fast. If the economic outlook was positive, this would not be happening. It may get some additional buyers of the fence, but for all the wrong reasons. Even with low rates, mortgage applications showed a sharp decline toward the end of 2018.
The number of transactions closing was healthy in 2018, compared to the last six years. Rates remained in check for most of the year. This chart shows the average number of residential closings through November of 2018. You will notice that 2015 and 2016 were very strong and if you glance up at our rate chart you will see why.
It sure looks like residential inventory is on the rise again. This is usually a good indicator that prices will start to decline. If you are out looking at properties throughout Fort Lauderdale, you will probably notice that plenty of signs have been in the yards for awhile. This is because property owners and their agents haven’t been able to come to grips with a changing market. In November there were 14,356 houses and condos on the market throughout Broward County, Florida. You have to go back to February 2017 to see that much inventory and the uptrend sure looks like it will continue.
Will they see it? The numbers show that condo prices hit a wall a few months back. The average sale price of a condo was $220,268 in November, representing a 17% decline from the high of $264,975 set in June. As for single-family homes in Broward, the average sale price was $444,247 in November and that was only a 4% drop from June.
Will they see it? The party may be over!
Although rates have dropped again, it sure looks like the last decade of easy money dragged all of the demand forward. There may be some activity on the lower end of the market, but it sure looks like the luxury market is already getting hit pretty hard. If you are in the market for a property, make sure you do your homework. Make sure that you evaluate the pros and cons of entering the real estate market at this point in the cycle. South Florida real estate agents have anticipated an influx of buyers from high tax states impacted by the elimination of SALT deductions, but who knows how long that will last.