Winds of change

Winds of change are blowing through the South Florida residential real estate market.  As we move through 2018 it appears that transaction volume is declining.  After several months of slower sales volume, you will typically start to see price declines.  Local real estate agents are usually slow to see the change in the market and even slower to notify their clients that they will need to lower their selling price.  Here is a look at the monthly average sales volume in South Florida from 2012 up until the present:

Winds of change - deal volume drops

As you will notice from the chart above, 2015 was a big year for residential transaction volume in the South Florida since the financial crisis.  The monthly average of residential transactions was 8,034 in 2015 and has been dropping each year since then.  here is a look at the numbers for each year:

Year Monthly Average
2012         7,167
2013         7,598
2014         7,603
2015         8,034
2016         7,581
2017         7,352
2018         6,114

The first quarter of each year is usually slower than others and you will see that in this next chart that breaks the numbers into single-family homes and condo sales throughout Miami-Dade, Broward and Palm Beach County.

Winds of change

Winds of change in rates

Interest rates have climbed, but still remain reasonable.  We have repeatedly stated that markets may not feel the pressure until the 30-year mortgage rate surpasses 3%.  Until then, party on!

Winds of change - mortgage rates

Winds of change in prices?  Not yet.

Prices have been reflated thanks to crisis level low rates for the past 8-9 years.  We will eventually see if this echo-bubble in prices deflates.  If it does, it will likely begin in 2018.

Winds of change - house prices

In February 2018, the median prices for single-family homes in South Florida by transaction type were as follows:

  • Traditional sale – $343,450
  • Foreclosure / REO – $250,000
  • Short sale – $255,000

As for the condo prices, the distressed sales look like they are getting battered and traditional sales are holding-up for now.  We do expect the excessive inventory hitting the market may put downward pressure on prices as we move through 2018.

Winds in condo prices

In February 2018, the median prices for condo properties in South Florida by transaction type were as follows:

  • Traditional sale – $186,750
  • Foreclosure / REO – $130,000
  • Short sale – $141,500

Over the next few months, we should be able to confirm that this latest real estate cycle has peaked.  All signs are pointing to “yes”, especially with this latest news that Zillow is entering the house flipping market Zillow wants to flip homes .  If that isn’t a sign of the top, I’m not sure what is!  Here are a few tips for renovating and or flipping houses