Finally our local housing market is becoming less insane. Far from normal, but less insane is progress. And the June numbers, available one month from today, will confirm that.
Here's a primer on how to read and interpret what is shown in the infographic above (all data for single family homes only):
ACTIVE INVENTORY: number of available single family homes for sale. For the Tri-County area (in essence the MSA or Metropolitan Statistical Area described above), this number should be north of 14k or 15k. But then, I didn't say we're back to normal, did I? At least the number is going up, caused by (A) rising mortgage rates and (B) FOMO - Fear Of Missing Out.
Those mortgage rates – and lack of reasonably priced inventory – caused a major drop in residnetial mortgage applications: in May: minus 32% compared to the same time last year. In turn that got sellers nervous, rushing to market hoping to jump on the gravy train before it leaves the station. But, as I told a very nice prospective client from Hollywood who gets nudged by a neighbour to sell: if you don't move out of state, you have no business of selling. Even downgrading could cost you the same, but lesser quality housing.
PENDING INVENTORY: what's in contract but hasn't closed yet. Average time from signing to closing is at least three weeks for cash purchases, and easily double that with a mortgage. So that number will likely not head north for at least another one or tow months.
CLOSED SALES: fewer homes for sale of course results in fewer closings. If pending numbers will take a month or two to stabilise if not go up, closings will take even longer.
As an analogy, think of the turning radius of ships: a tug boat is nimble, a small freighter much less so, while a super tanker the size of the Exxon Valdez needs approx. a mile, rudder hard over.
MEDIAN TIME TO CONTRACT: This is an interesting statistic we in the business call DoM or Days on Market. It means what it says: how many days was the property active until it went pending. 11 is insanely fast, and I picked median on purpose, as average would have way too many outliers, as it would with Sale Price. Pre-covid, the number was typically in the 30s.
MEDIAN % OF LIST PRICE: How much of what they were asking did the sellers get? In an overheated market as we had for the last 20 or so months, the median reached 100% in summer last year, dipped and now is at 100% again since February. It means there were plenty of properties selling for over list price - good for sellers if they moved away - but you will see that number go down very soon. Typical is between 95% and 97% median, meaning buyers negotiated between 3% and 5% off asking. As always, desirable homes were and will have to discount less, while oddballs have to swallow a bitter pill. Remember: it's not the seller who dictates the price, it's the plethora or absence of buyers who make the market.
MEDIAN SALE PRICE: just what it says, the median of all 4,096 SFH sold in May. Two important items for you to frame the date: a healthy annual appreciation in a normal market in Florida hovers between 4% and 6% median. And: why median sales price? Because of the spread in our market; too many outliers which distort averaging.
To illustrate – and bear with me, we're getting into a bit of research – I'll compare homes for sale, and May's closed homes.
For Sale: The lowest-priced home for sale today is asking $60,000 (don't ask; you do not want to see it), the highest is $170m. The resulting average asking price of all homes listed today, June 22nd, is $2,167,408, while the median is $820,000. Neither $60k nor $170m is typical, but how many atypical listings do you eliminate? All four over $100m? The lowest four as well? Every month?
Sold: The lowest-priced home sold in May at $45,000, the highest for $49,500,000. The resulting average selling price $999,922, the median is 595,000. With those kind of deviations, do you see why in our market with super-high listings, only median price data makes sense?
The shift in the housing market in Florida was caused by
The Fed's interest rate rise in order to combat the rampant inflation. That put significant pressure on mortgage rates, which were around 3% at the beginning of 2022, and are now in the high 5's.
Lack of inventory – where we should have between four and five months worth of housing inventory, we're currently still at 1.8 months; thankfully with a slight uptick from the last three months.
Pricing. The median jump of 24% year over year was hard enough to swallow, but low mortgage rates and steady appreciation helped. Those two factors or out for now, but while increasing inventory will not get prices down to 2019 levels, buyers will have more homes to choose from and hopefully a somewhat more level playing field.
If you're still reading: wow - thank you so much for your patience and interest!
If you have any questions or comments feel free to post them here or contact me directly at 954 834 3088 or via email.
By definition, a transformation is "a marked change in form, nature, or appearance." Here is an excellent example from the world of real estate:
This week I came across a modernist house on the MLS that stopped me in my tracks, with its interior so bizarrely overloaded and decorated. I even thought about possible using it in my "Bad MLS Photo" series.
Not so – I repent. Going through all listing photos again yesterday, I became curious: what exactly was the current owners' starting point? Then going through the MLS photos from the last sale in 2016, I knew I found something share-worthy.
Only a few photos clearly show old v. new (pix #3-10) since the floorplan was expanded, walls moved and windows closed or changed. But – irrelevant of my own taste – from what I can see, the current owners deserve major kudos on what they created out of pretty much run-down mid-century modern house.
What do you think?
(3 bedroom/2 bath renovated mid-century modern in Miami, asking $670k. Listing courtesy of Angie Homes)
Hurricane season in Florida commenced yesterday, running through 30 November, 2022.
Well – if you don't live here and shrug your shoulders, imagine this: It's late autumn and you haven't mounted your winter tires yet. All of a sudden you hear that there are 8 inches (20 cm) of snow forecast for tonight. Would that grab your attention?
If you get ready for hurricane season now, you will be so much more relaxed during the next few months, basking in the wisdom you're ahead of the curve.
To sweeten the pot a bit: until June 10 there's a Tax Holiday, exempting certain items from Florida sales tax. The exempt list, in case you need supplies, is on a website of the Florida Dept. of Revenue (click on "Consumers").
What should you get then? There are so many downloadable supply lists that I won't post any of mine – every county and major news site has them, so pick one that makes the most sense to you.
Check out your county's website below now, store the local emergency numbers in your phone, and download a good hurricane warning app on your phone. NOAA or Florida Storms (operated by FL Public Radio) are among the many good ones and available for both Android and iOS.
If you have any valuable tips or links you believe are worth sharing – please post them. Thank you and be safe!
L: Hurricane Georges, Deerfield Beach, Florida 1998; R: "No Lifeguard on Duty" Hurricane Irene, Fort Lauderdale, Florida, Oct 1999, both ©tck
Tobias Kaiser works as an independent real estate broker and consultant in Florida since 1990. Always putting his clients' interest first, he specialises in modern Florida homes and architecture, as well as net leased investments.