22 July 2016

The Current Southeast Florida Housing Market

TriCounty annual SFH sales by month from 2011 to 2016. ©Kaiser Assoc, Inc
TriCounty annual SFH sales by month from 2011 to 2016. ©Kaiser Assoc, Inc

The second quarter of 2016 in SE Florida proved again that peak sales months for single family homes (SFH) are May and June. That is in contrast to what many people claim who believe snowbirds are the major sales drivers in Southeast Florida – but as the number show, certainly not for single family homes (SFH).

The number of sold homes reached 4,840 single family homes in June, from 17,918 available units in the TriCounty area which encompasses Miami-Dade, Broward and Palm Beach. That makes for an inventory of a measly 3.8 months (by real estate industry standards, 4 to 6 months is considered a balanced market; “inventory in months” means that at the current pace, all SFH would be sold in 3.8 months.) The timing factor in my opinion are school holidays – families want to move in time to be ready when school restarts in late summer.

Consequently, selling prices – not asking – went up by 7.0 percent from Q1 to Q2 in 2016, and 5.7 percent year over year.

Southeast Florida single family home inventory, list prices and selling prices, last 36 months. ©Kaiser Assoc, Inc
TriCounty SFH inventory, list prices and selling prices, last 36 months. ©Kaiser Assoc, Inc

Please let me use this opportunity to point out that asking prices mean practically nothing, unless you are a real estate pro. Don’t rely on asking prices, don’t look at them, and sure as hell don’t quote them – a common mistake a lot of non-real estate people make when they argue “my neighbor is getting $900,000”.

Wrong. Your neighbor is asking $900,000 for over a year without a single offer.

To further solidify the relative irrelevance of asking prices: the difference between what all sellers ask and what actual buyers pay currently hovers at 35%. That is one big "what's it worth"-opinion gap.

Also interesting to observe: the delta in demand between typical homes and luxury properties.

The market north of approx. $2m resembles an overcooked cold noodle. In contrast to “normal” owner-occupied homes under say $500,000 that nearly fly off the shelves, expensive homes currently do not sell well, resembling limp lettuce in the grocery store.

And even when they sell, it's only after a longish time on the market. To be specific: average time on the market averages 212 days for homes of $2m+ selling price, while the overall time on market for homes up to $500,000 lies at 67 days. Priced right, even 5 to 15 days is not uncommon.

We’ll have to see if our market returns to the pre-burst path of zero-or-weak growth. A presidential election sure doesn’t help, as anxious voters in both camps typically have other things on their mind than upgrading their lifestyles.

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