How will the 2016 Election affect the Housing Market?

Hillary Clinton or Donald Trump. Whichever candidate wins the White House will have the power to shape the nation’s housing market and overall economy for years to come.

What you may not know is that presidential elections themselves can affect everything from mortgage rates and housing prices to stock market values and corporate investment.

A range of studies show that — during a typical election year — the uncertainty produced by the race can have more impact on housing and the economy than the actual outcome in November. Of course, the 2016 election is anything but “typical.”

Voters: “Two Flawed Candidates”

To start, both Clinton and Trump are viewed negatively by large swaths of Americans, according to numerous polls. This may prompt large numbers of voters to choose between “the lesser of two evils” instead of backing the candidate who most closely matches their views.

And though Trump’s anti-trade, anti-immigrant and inflammatory remarks about women, minorities and Muslims has won considerable support among white working-class voters, it has fractured the Republican Party.

Nobody “has ever seen a major party nominee put financial conditions on the United States defense of NATO allies, openly fight with the family of a fallen American soldier, or entice Russia to meddle in a United States presidential election by hacking his opponent” said the Times.

“And while coded appeals to racism or nationalism aren’t new … overt calls to temporarily bar Muslims from entry to the United States or questioning a federal judge’s impartiality based on his Mexican heritage are new.”

Thanks to statements like these, a number of Republicans officials have denounced Trump. Some have even pledged to vote for Clinton.

The result of both candidacies is that the two major parties have essentially switched places, with Republicans now polling better among blue-collar voters (once reliable Democrats), and Democrats doing better with college-educated professionals and many entrepreneurs.

Housing Market is Stronger than in 2012

Fortunately, the U.S. housing market is stronger than it was during the 2012 election, and so is the overall economy.

In November 2012, home sales were rising, but the market was still recovering from the economic downturn of 2008. By comparison, home sales through May 2016 have seen the biggest increase since 2007.

According to the U.S. Census Bureau, the median value for new homes sold in June 2012 was $232,600. By June 2016, that figure had soared to $306,700.

In late 2012, 30-year mortgage rates were 3.34 percent and 15-year rates averaged 2.75 percent. Today, lenders are quoting 30-year rates near 3.25 percent and 15-year rates in the mid-2s.

Unemployment has plummeted from an average of 8.1 percent in 2012 to less than four percent today. In addition, consumer spending in the second quarter of 2016 rose by a whopping 4.2 percent, and retail sales jumped by 3.1 percent over the same period in 2015.

Elections = Uncertainty

Unfortunately, the main byproduct of presidential elections is uncertainty, especially elections in which an incumbent isn’t running.

As a rule, markets don’t like uncertainty — the uncertainty of who will win and (in Trump’s case) of what an inexperienced politician might do in office.

For this reason, business investment and stock markets often become sluggish – and industry can become almost paralyzed – during election years, particularly when the outcome is likely to affect regulation, taxation and trade policy.

Since 1833, the Dow Jones Industrial Average has gained an average of 10.4 percent in the year before a presidential election, but only six percent during the election year, according to the Stock Trader’s Almanac.

Although Republican candidates are typically perceived as more “business friendly” than Democrats and, therefore, more friendly to Americans’ wallets, research indicates that a candidate’s party affiliation has very little impact on the stock markets.

“Wall Street is very powerful when it comes to the economy, and they don’t like change,” said Matthew Gardner, Chief Economist of Windermere Real Estate, “As such, they are always going to favor the more centrist candidate – in this case Secretary Clinton as opposed to Mr. Trump”.

“Markets don’t like uncertainty and … if Trump becomes president, I believe that there will be a massive injection of uncertainty into the markets, and that could negatively impact housing.”

The Effect on Home Prices

A presidential election’s effect on home prices is usually less pronounced than it is on stock values, but most experts say that home values rise more slowly during election years than off years.

A Movoto.com study of the California real estate market reveals that home prices usually rise 1.5 percent less during an election year than in the year before an election, and they rise 0.8 percent less than in the year after the election.

This seemingly small difference could cost homeowners thousands of dollars in lost value.

However, a recent study by the California Association of Realtors (CAR) disputes this conventional wisdom. The CAR study found no evidence that elections have a negative impact on home sales or prices. In fact, the study discovered that growth in home sales at the end of an election year — at least in California — actually outperforms non-election years by 7.1 percent.

The authors of the Movoto.com study speculate that election years may be stressful for many Americans, making them less likely to purchase high-ticket items — like houses. Because an election’s results can affect their personal finances, fewer home buyers are willing to take the plunge until the dust settles and the new President’s policies become known.

Realtytoday.com reports that it’s usually harder to sell homes during election years, so sellers may want to list their properties either the year before or the year after an election in order to receive the maximum value.

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Above is a shortened version of the original piece by Pete Gerardo, a business writer whose work has appeared in The New York Times and numerous trade magazines, published on mymortgageinsider.com. 

In the next blog-post, I will look at the local housing market in SE Florida and any possible election effects.
 

The Current Southeast Florida Housing Market

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.

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.

Embarrassed, by Lack of Value

Embarrassed: that’s how I felt twice this week.

Though through no fault of my own. But still. In German, there is a verb for embarrassment by actions or circumstances you have nothing to do with and zero influence on: “fremdschämen”.

Twice in a row that feeling crept up, caused by our housing market and its prices. What I often miss is the value equation.

First, I received an inquiry from a very nice young couple looking for a modernist house, ideally in the Miami area, ideally under $400,000. That’s good and bad: Miami has a lot mid-century- to contemporary-modernist homes. But what you get for $400k – not exactly an amount to spit on – is pitiful. With a sigh we sent the buyers the few selections in their price range, thus starting what could be a long search. I sure hope they have patience; they seem really sweet and honest.

The next inquiry from my website looked easier: beach-front, modernist, up to $4m. Again, the buyer and I had a very nice and friendly phone conversation. I mentioned I’ll send her everything that is available; not that difficult for me since I update daily a list of everything modernist for sale in the area, independent of which Realtor offers it.

“Everything” turned out to be exactly TWO modernist homes in a stretch of 160 mi between Vero Beach and Palmetto Bay. How’s that for measly pickings at the $4.0 million price point?

In the meantime, every day I count the luxury mod spec homes in the area that wouldn’t sell. It’s not a coincidence that while the average days on market for all homes across all prices currently hovers at approx. 75 days, while for luxury waterfront homes over ca. $2.5m, average marketing time is around 272 days.

Perhaps there are not enough luxury home buyers around? Or those who are perhaps do not see the value equation?

South Florida Home Sales, 4th Quarter 2014

Fourth quarter home sales are always hampered by the Holiday season, stretching from the Thanksgiving week to the first week of the new year.

Noticeable last year however that November was rather lame, while December after Hanukkah, but especially the period called "Between The Years" in German – the week between Christmas and New Year – stepped on the gas again, clearly with closing before year's end in mind.

So my September prediction of a "limp market for SFH for the rest of the year, with a lot of hesitation on the buyers’ side" wasn't quite correct. Well, I sort of was, for two months of the last three in 2014.

The last quarter shaped up like this:

Listing prices: little increase in Palm Beach county (median $437,000), no changes in Broward and Miami-Dade counties (median $350,000 and 359,000 resp.)

Selling prices: a decrease of one percent in Palm Beach county was erased by a hefty six percent increase in Broward and four percent in Miami-Dade, for a Three-County median selling price of $273,230 or $140 per square foot under air ($1,555/square metre).

Inventory: closing the year with 19,268 single family homes for sale, inventory (in months) in all three counties had been down in October, increased in November and dropped again in December due to the strong sales at the end of the month, to 4.8 months. That is a little tight and under the approx. six months considered healthy.

SE Florida SFH sales data, Jan 2012-Dec 2014. Source: Kaiser Assoc. via SEF-MLS

On a side note, I am personally always baffled when statistics are "seasonally adjusted" – what does that mean and how does one adjust them? By temperature, snowfall or lack of snow, black ice, people nesting? It seems there is an awful lot of subjectivity in seasonal adjustments – why not leave the numbers alone and let the readers get their own picture?

Year over year, Southeast Florida thus saw a selling price increase for SFH of 4.5 percent absolute, or 6.2 percent per sf under air.

Modern architecture, my passion and expertise, is traded at considerably higher prices; the median selling price per sf under air last quarter reached $328.

That is partially due to the very limited number of modernist architecture for sale – less than 2 percent of all SFH – but also due to the overall value – tangible and intangible – that current and future owners attach to this type of architecture.
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I invite you to contact me anytime if you are would like advice on selling, keeping or buying a modernist home.

South Florida Home Sales, 3rd Quarter 2014

Summer activity for Single Family Homes (SFH) in the TriCounty area (Palm Beach, Broward and Miami-Dade, the area from Jupiter to South Miami) is completely over, the market is noticeably getting quieter. All key numbers for Q3 2014 show this, and – unlike during earlier periods this year – all three counties moved in unison.

SE Florida SFH sales for the last 36 months. red = list price, green = selling price, blue = inventory. Source: Kaiser Assoc.

Some key data for the third quarter:

1. Inventory ended at 18,395 SFH, an increase of 3.6 percent to the second quarter. It now sits at 5.0 months, a very strong 16.7 percent over Q2, since closed SFH sales dropped by 4.3 percent over the previous quarter.

2. Asking prices of all SFH are down, landing at a median $376,700. September was the sixth month in a row with declining list prices – but because of the list price volatility, it ended up only 1.0 percent under September 2013.

3. Selling prices per square foot are slightly up y-o-y at $135/sf. Not so absolute selling prices at $265,470, though they have fluctuated all over the board this year from $251,000 in January to $279,000 in July. Year over year though, median selling prices in Q3 were up by 5.5 percent, but flat in comparison to Q2. Recognise a pattern? Good, me neither.

Tracks of a horseshoe crab–similarities to the housing market?

My prediction: the market is going up or going down.

Seriously: I think we will see a limp market for SFH for the rest of the year and perhaps into early 2015, with a lot of hesitation on the buyers’ side, though financing does not seem to be the issue anymore.

In addition, very problematic is the lack of good homes in the market for modern architecture, which I focus on. Buyer interest is there, but under $600,000 there are barely any architecturally interesting homes for sale.

So if you consider selling a modernist property, by all means please do contact me for a free analysis and consultation.

S. Florida Homes Sales, 2nd Quarter 2014

It's time for us number-geeks to gather, isn't it? Let's do it:

For the first two quarters of 2014, absolute inventory of Single Family Homes (condos and townhouses are not subject of my data) remained glued to the table at just over 17,000 homes for sale, with a monthly variance of less than 400 units.

But the absorption – the rate of sales – increased every month this year, so much so that relative inventory shrunk from 6.3 months in January to 4.3 in June (relative inventory means: if no homes came to market, in 4.3 months at the current rate there would be nothing left to sell. A balanced market is said to linger around six months).

The blue curve shows the inventory volatility over the last three years very nicely:

SE Florida Single Family Home sales data, June 2011 to June 2014, ©tckaiser

Asking prices went up too, big surprise: from a median $378,000 in January to $398,000 in June, though the movement happened in the first quarter, while the second barely twitched.

Noticeable is an increase in selling prices: from a median of $251,000 in the always-lame-January (only few people think of real estate between Thanksgiving and New Year when January deals are signed) to a much more robust $274,000 in June.

That’s a solid nine percent increase over six months, and seven percent year over year. The culprit: lack of good and affordable inventory and a tighter market at the bottom price end.

If you know and like my “Disconnect” index – what sellers want and buyers are willing to pay:

That one sank. Two percentage points from the first quarter 2014 and a hefty 11 percent from the second quarter 2013. It seems sellers did not over-stretch buyers' willingness and wallet, as both became aware of a more limited selection.

One oddity I can not explain: the median duration of houses on the market - from hitting the MLS to contract – has hardly blinked in the last twelve months.

That goes against instinct when looking at dwindling inventory, but it's reality. Maybe you have an explanation?

The Current Housing Market in Southeast Florida

Time for an update for all you statistics-fans who are riveted by real estate minutiae (yes, all two of you).

I am not quite sure when, but I believe in July or August I got the first hunch that the market for single family homes was loosing steam.

Back then, a prospective seller had waited forever to list her house with me, to a point where she and I did not agree on a list price anymore. Another seller, a couple, was very realistic when a price pre-determined in May had to be corrected downward – with the result that their house sold within four days of becoming available and appraised properly. Which confirms again what I learned in a seminar a few years ago: once a house enters the proper selling price corridor, it should sell within approx. 45 days.

More on that in another post. Today's subject is market data.

As available inventory started to creep up in fall – the low point for the Tri-County area was April with 12,513 single family homes for sale – asking prices did not react until two months later, when the first noticeable drop came (median $408,150 to $401,650).

But the interesting part: selling prices increased until Christmas.

They rose from $255,333 in April to $265,000 in December, and only dropped again in January, to $250,917.

Psychologically perhaps to be explained by a lower "Disconnect" ratio – what sellers want and what buyers are willing to pay – heading from 166% in April down to 141% in December, back up to 151% in January.

So the Seller-Buyer-Disconnect, which I have been calculating since five years, again mirrors the overall market and proves to be a good trend indicator.

Judging from the current trend, it seems like at least for the first quarter, there is no upswing in prices – niche products and super-trendy areas like the Miami Bay perhaps excluded.

Consequences for sellers and buyers? I will talk about that next time. In the meantime, please do contact me with any questions you may have.

SE Florida single family homes market last three years: Inventory, Median asking prices and Median selling prices, Dec 2010 - Jan 2014. Break indicates end 2012. Source: Kaiser Assoc.

South Florida Housing Market, 3rd Quarter 2013

I know I have been neglecting the blog for a bit; my apologies: work got in the way. Summer seems to come to an end in South Florida – about time, we're all well-done by now – and so is the overheated single family market that ruled from approximately April until about mid-August.

Falling relative and absolute inventory, rising asking prises, increasing selling prices: for now all this is over. Middle of August I first could feel a bit of slack, from one week to the next. What most August numbers hinted at, September confirmed: the froth is gone.

A 36 months-overview:

SE Florida single family homes: inventory, median asking prices and median selling prices, Sep 2010 - Sep 2013. Break indicates end 2012. Source: Kaiser Assoc.

Note how list prices and selling prices trend downwards, while inventory points upwards. The break in the lines indicates 2012 year end.

More specific, Q III 2013 vs. Q II 2012 by the numbers:

      +9.8%  Number of Houses for sale
    +19.8%  Inventory for sale (absorption rate in months)
      –3.6%  Median list price
      –8.2%  Median list price/sf
      –8.1%  Number of Houses sold (quarter)
      +4.3%  Median selling price
      +0.1%  Median selling price/sf

Outlook: we are hopefully returning to normal ranges, avoiding further overheating and the inevitable speculation that accompanies it.

But that doesn't mean we're in bargain territory again. Right now those days seem to be over, and I do not anticipate a return any time soon: the quiet Holiday season is coming up – quiet for buying and selling – and that will carry us into January. By then interest rates will be the next deciding factor.

In the meantime, vulture buyers who are hoping for bottom deals – "Hi, I'm Billy-Bob, and I'm looking for only really good deals. Got any for me?" "Yes sure, I held them secretly just for you." – have zero chance in any good market segment for single family homes, be it by location (water front, ocean front, good school districts) or be by expertise like mine, modern architecture.

But do you know which buyers really get the juicy deals?

Stay tuned.

South Florida Housing Market, 2nd Quarter 2013

The second Quarter 2013 sales statistics for single family homes in the tricounty area Palm Beach, Broward and Miami-Dade didn’t surprise: traditionally, May and June are the busiest sales numbers throughout any year, and 2013 continued the trend.

Probably a major factor in this purchase pattern are families moving into desirable school districts as soon as school is out for the summer, so everything is place when the new school year starts in August.

In addition, a lot of cash floating around needs to be parked somewhere, so when stocks, bonds and gold are a tad volatile, what’s the average millionaire to do? Hide it? No – buy waterfront homes; what else?

Q II 2013 vs. Q II 2012 by the numbers:

    –16%   Number of Houses for sale
    –27%   Inventory for sale (absorption rate in months)
    +17%  Median list price
      +9%  Median list price/sf
    +15%  Number of Houses sold (quarter)
    +24%  Median selling price
    +20%  Median selling price/sf

One prospective buyer reprimands me at every contact, in a stern tone of voice: “I will not let the market force my hand to buy something”. He has been completely priced out of the market, but still clings to the believe he has the upper hand. Correct in some way: he didn’t have to buy, and now he can’t, because he waited to long. 

SE Florida single family homes: inventory, median asking prices and median selling prices, June 2010 - June 2013. Source: Kaiser Assoc.

My specialty, modern architecture, is especially difficult: inventory under ca. $900,000 has fallen off the cliff in the last 10 to 16 months, and is now basically wiped clean. The few good modernist homes that come to market typically sell within a few weeks, often only days, without ever seeing the MLS, to registered buyers ready to act with their finances all lined up.

For the near future, unless some unforeseen events happen, I do not expect a drastic change in direction, though according to a new CoreLogic/Case-Shiller report, some analysts predict a trend reversal for 2014. This August at least seems already a bit saner, if one can tell in the middle of the month. With Florida home ownership rates on the decline and affordability dwindling, calmer winds would not be a bad situation.

For now – if you own a modern home and have questions about it or consider selling: I’d love to hear from you!

South Florida Housing Market, 1st Quarter 2013

Crazy.

Really – if you don't have a lot of time, you don't need to read any further. For a bit more of an analysis, stay a little.

At least in the Tri-County region – encompassing the coastal area from Jupiter to Homestead, excluding the Florida Keys – it feels, as a colleague said during a viewing this week, "like 2005 all over again".

Not a fond memory, indeed.

What is happening is uncommonly tight inventory with rising prices:

     20.6% decrease in available single family homes
     8.9% decrease in inventory (absorption of available homes in months)

     18.9% increase in median list prices
     25.7% increase in sold homes
     24.8% increase in median selling prices
     18.6% increase in median selling prices per sf 

     (all changes year-over-year for single family homes)

What are the main reasons behind the low inventory?

• Underwater sellers: certainly they are not putting their houses up if they don't have to. With recent price increases, they hope the market will come to them. And the WSJ estimates 22 percent of home owners with a mortgage owe more than their home is worth
• Lack of equity: many home owners rely on the equity from their home to make a down payment on their next property. With fewer owners seeing equity in their houses, they may not have enough money to move up
• Investors: many of them do not flip – that market is pretty much cleared out for now – but renovate and rent out
• Banks slowing down foreclosures: with tighter rules in the foreclosure process, banks are moving at a slower pace in foreclosing. They also lean more towards short sales and loan modifications
• Builders are building less: Housing starts were at record lows from 2009 through 2011 so there’s less inventory being added to the market. A rebound in the new-home market has only recently started to occur. 

So why is this development not really good?

• South Florida needs a new housing bubble like a sharp pencil in the neck
• Unreasonable price increases attract speculators (vs. users)
• An overheated market seriously hampers the region's attraction to "hard" buyers (those who live and work here)
• Lack of inventory discourages "casual buyers" (vacationers, snow-birds, second home buyers), which are also vital for Florida real estate
• The fallout of the last crisis is still lingering, and the economy is not ready to handle the next debacle
• Sellers may not resist "greed is good", and start racing to the top again
• Contrary to the overall belief, real estate agents make less money and close less transactions in overheated than in normal healthy markets

But I suppose asking for cool heads to prevail is about as efficient as offering the fox in the hen-house a marzipan egg.

What is your opinion – are you selling or buying sooner, later, or not at all now?
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Photo: Train wreck at Gare de L'Ouest, Paris, 1895. Source: wikimedia

Review: The 2012 South Florida Housing Market

A brief look at the 2012 market for Single Family Homes (condominiums, townhomes, and commercial properties not included here) in the three counties Palm Beach, Broward and Miami-Dade confirms what market participants - buyers, sellers and certainly every active Realtor – know:

Inventory continued to shrink, asking prices went up, so did selling prices – in some market segments dramatically so – and: if you snoozed you loosed (impressed by my rhyming talent?).

Step by step:

Relative inventory: expressed in months, it indicates the time it would take to sell every property at the current absorption rate if no new homes came to market. This benchmark fell substantially in 2012: 38% in Palm Beach, 29% in Dade and 39% in Broward county, on average from 8.2 to 5.3 months.

Absolute inventory: the number of homes available for sale dropped 23% in 2012, from 19,319 to 14,824, with the highest decline in Broward county.

Southeast Florida total housing inventory 2009-2012

Median asking prices: increased 22% in 2012. However, different from the airlines, sellers were not able to actually turn the full price hikes into reality - with several exceptions, see below.

Median selling prices: a plus of 19% (absolute) and 14% (price per square foot under air) during 2012 are substantial enough, but don’t show the whole picture – the good and the great locations, especially waterfront, Bayfront (Miami-Dade) and oceanfront, pulled these numbers up, with hefty annual increases exceeding 27% in some segments.

Days on market: measures how long a property spends on the Multiple Listing Service until it goes into contract. To be taken with a grain of salt, as some sellers re-list their property over and over again attempting to make it appear “fresh”. Never mind that is has been for sale forever (1,918 days in one case, a record in my observation). 2012 saw a DoM drop of 11%, in line with the diminishing inventory. As some of my clients know first-hand, even five to ten days on the market for an interesting well-priced house in a good area is not uncommon.

The modern market: as this database is much smaller (approximately 2% of the overall market) and contains perhaps 95% of the market, not 100% as above, the numbers have to be regarded with a bit of caution. But in general, the modern market mirrors the overall SFH market, only on a substantially higher price level, absolute and per square foot. Inventory, especially under $600,000, continued to get very tight in 2012; asking prices per square foot under air rose 20%, selling prices by 13%.

Advice to sellers for 2013: if you consider selling soon, it’s a very good time to start the process in the first half of the year. Prep your house, best with professional help, and be very realistic in your pricing right from the start. Don’t be greedy if you want a speedy sale.

If you do have a modern home you consider selling, I urge you to contact me for a free consultation, especially tailored and targeted to the modern market.

Advice to buyers for 2013: Prep yourself and do your homework up front: define what you want, where you want it, and know your price corridor. If you finance, before even looking at the first house you should have a (free and recent) mortgage pre-approval in hand (not a pre-qualification). Be ready to act on a moment’s notice, and be loyal to your Realtor if you found a good one: that element alone can make the difference between a great purchase or something resembling a root canal without anaesthesia.

Questions? Comments? I’d love to hear from you - call or email me anytime please!

Low US housing inventory dampens market

The latest nationwide housing market reports are indicating that the housing recovery is being hit by low inventory, which is resulting in a drop in sales.

Low supply is blamed for a decrease of 1% in existing home sales in December, although sales were still at the second highest level since November, 2009, according to the National Association of Realtors (NAR).

NAR also reported that pending homes sales fell 4.34% in December, although it was 6.9% higher than December 2011.

New home sales in December fell 7.3%, but was 8.8% higher than December 2011, according to the Census Bureau and the Department of Housing and Urban Development.

Despite these numbers, total new home sales in 2012 were at the highest level seen in three years.

These results are being blamed on the inventory of homes for sale which dropped 8.5% from November and is at the lowest level since January, 2001. With inventories down 21.6% from December 2011, rise in home prices is occurring as home sellers are receiving multiple bids for their homes.

Less inventory and higher home prices may be turning the housing market around to a sellers market, which may also make it difficult for some home buyers to qualify for a mortgage. 

For the week ending January 18th, loan applications rose 7.0% on a seasonally adjusted basis and 8% on an unadjusted basis, according to the Mortgage Bankers Association. The Refinance Index was up 8% with refinances accounting for 82% of all applications. The seasonally adjusted Purchase Index increased 3% and reached the highest level since May, 2010.

According to the most recent survey of wholesale and direct lenders done by FreeRateUpdate.com, conforming mortgage rates have remained steady over the past week.

Current 30 year fixed mortgage rates are as low as 3.125%, 15 year fixed interest rates are as low as 2.375% and 5/1 adjustable mortgage rates are as low as 2.375%. These rates require that borrowers have good credit, and qualifications are necessary for approval.

The FHA Streamline Refinance with no Cash Out is one of the best refinance deals available to homeowners. The streamline does not require an appraisal, credit history or any other documentation as long as there is no cash taken out and the current mortgage has been paid on time.

The high priced property market has been on the increase which is creating more competition in the jumbo loan market.

Increasing by .125%, jumbo 30 year fixed mortgage rates are now as low as 3.500%. Jumbo 15 year fixed rates are as low as 2.700% and jumbo 5/1 adjustable interest rates are as low as 2.125%. But borrowers must have a history of excellent credit, and substantial assets must be available for the higher down payment and additional months of reserves.

The next post on this blog will examine the housing market conditions in Southeast Florida.

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Published by Realty Times, 30 January 2013, graph by Housing Tracker.

South Florida Housing Market in October

Sorry for being a bit later than usual with the October data; I had to revise the numbers not once but twice.

As you see below, like in previous months the economic oddity of low inventory paired with flat prices continued in October. 

Palm Beach asking prices for single family homes went through the roof, but caused nothing but frustrations – like in previous months, buyers were not impressed and sat on their hands.  

The PB county gap between sellers' expectations and buyers' willingness reached an astonishing 208%, the second highest score since 2008. In Jan-Mar '12 it was even higher at 213% – and then it didn't work either. As a result, absolute selling prices and SP per square feet dropped.

Broward county sellers were much more modest – the gap is at 155%, practically the same as in September, and promptly selling prices saw a slight increase. In the meantime, Miami-Dade county wobbled along, sort of a mix between Broward and Palm Beach. 

The table and the chart for single family home sales in Southeast Florida for the month of September:

South Florida home sales October 2011-2012, Source: SEF-MLS, ©tckaiser/modernsouthflorida.com

Slowly I am running out of ways to describe a flat market. And as the Holiday season is here, if past years are an indicator November and December are going to be even flatter (and more difficult to describe?).

Leaves me only to wish you a nice weekend – enjoy the Holiday Season, hopefully not in a mall.

South Florida Housing Market in September

Happy Friday – and don't forget US Daylight Savings Time ends this weekend, so set your clocks back one hour Sunday morning at 02:00 am (or Saturday before you go to sleep).

Rewind to September, when home sellers must have been smelling something in the air. Asking prices across all three counties increased – and promptly widened the gap between what sellers expect and what buyers are willing to fork over. Though Broward County was the most modest, it still showed a gap score of 154*.

And buyers were not impressed.

Despite moderate increases in selling prices year-over-year (three to seven percent), on a monthly basis selling prices dropped a bit, and so did the number of houses that actually changed hands.

The same goes for the asking prices of those homes which sold. Consequently, inventory – in the graph below the blue curve – is up again.

Shows again: realistic sellers in difficult markets can make things happen; unrealistic ones sit around or pay, as a client of mine called it last week, the "stupidity tax".

Chart and graph for single family home sales in Southeast Florida for the month of September:

South Florida home sales September 2011-2012, Source: SEF-MLS, ©tckaiser/modernsouthflorida.com

If you were in the market in September – as a buyer, seller or professional – what was your experience?

__________
(*100 being complete pricing agreement between sellers and buyers).

The South Florida Housing market in July; Happy Labor Day Weekend!

The South Florida market for single family homes in July was lame, for lack of a better word, probably because of the brooding heat: slightly lower asking and selling prices, with a finally stable inventory on a low level. This is still baffling, as low inventory should lead to higher prices, but mostly it just doesn't.

Mostly means exceptions, and in some market segments there are plenty of them: waterfront condos, modern waterfront homes in all price ranges, especially in the luxury segment above $2m, and affordable homes in good location all experience increases, some massively so. This month alone, several buyers I work with missed out because they were not prepared to accept the price increases or believed they had a better understanding of the market than professional market participants do.

Overall however, it is quiet, and August will not be much different I believe. The numbers and the graph for July:

Until next time, I hope you will enjoy a relaxed Labor Day weekend!

The South Florida Housing Market in May

May is like April, just more of the same? Looks like it, but that's not quite all.

While inventory keeps shrinking – all single family houses as well as modern homes – median selling prices are rising, and not so slow anymore. Year-over-year, median selling prices, overall and per square foot under air, the Tri-County area is now back at a typical pre-boom/pre-bust six percent:

South Florida Single Family Home Sales May 2012. Source: SEFMLS

In y-o-y increases, Broward is the winner with a hefty 13 percent jump in median selling prices, while Palm Beach actually lost two percent points (asking prices are pretty irrelevant – any fool can ask whatever he wants, what counts is what the market is willing to pay).

South Florida Single Family Home Sales May 2011-May 2012. Source: SEFMLS

As the Miami Herald reported earlier this week, sellers – crying after the boom market? – are still reluctant to sell if they don't have to. Tight inventory results for all home types and especially modern homes, with some properties going at or even above asking price, especially in prime locations.

Sellers trying to push the price limits however can expect their listings to sit and wither. Some Realtors share the blame: accepting any overpriced listing just to bolster their portfolio does not help matters.

On top of that, bankers haven't gotten the message: mortgages remain a challenge at every price level, making cash buyers the stars of the market.

Summary of the Miami Herald: bring your checkbook.

South Florida plummeting residential inventory

Even as housing prices seem to bottom out in South Florida, supply has shrunk close to 2005 levels, according to Bloomberg's Businessweek.

BW reports that inventory has become so scarce that Realtors are resorting to unconventional methods to get listings. An agent based in Broward County began hosting happy hour soirees for potential sellers, a tactic that led to four listings, all of which landed buyers within a week.

“I tell them if they sell today or in two years, there won’t be a considerable amount of appreciation in their house and they might miss an opportunity to buy at the low end,” she said.

Southeast Florida total housing inventory. Source: SEF-MLS

Above chart includes all types of housing, including single family homes, townhomes and condominiums. Below are the current numbers for single family homes only for Palm Beach, Broward and Miami-Dade counties for the month of April:

Southeast Florida single family housing inventory, April'11 - April'12. Source: SEF-MLS

[Businessweek via The Real Deal, own statistics compiled from SEF-MLS]

The South Florida Housing Market in March; OT: Mac Virus

Today, two topics: the market for single family homes in March, and as an Off-Topic ("OT"), a virus targeted at Macs.

First, the market:

As the home-buying season begins in earnest in many parts of the country, Southeast Florida – which enjoyed an unusually mild winter, to the dismay of many including me – continues on its path of odd market behaviour, namely rapidly shrinking inventory accompanied by mildly rising asking and selling prices.

As dramatic as the numbers for single family home sales are, looking at the Tri-County area won't tell the whole picture, so I will briefly point out some of the differences between Palm Beach, Broward and Miami-Dade.

Inventory: Palm Beach is the shrinkage leader, with 4.6 months (means: at the current speed of sales, there would be no more homes for sale in 4.6 months. A balanced inventory is assumed at approx. six months), followed by Dade with 5.3. and Broward with 6.7 months. All three counties show a substantial decrease month over month as well as compared to last year.

Asking prices: Palm Beach is the most expensive at $399,000 (median asking prices of all single family homes), then Dade with $320,000 and Broward at $289,000. The same goes for asking prices per sf, ranging from $164/sf to $143/sf.

Selling prices: Here is where it gets interesting. Palm Beach median selling prices beat Broward only by the width of an eyelash, with Dade at the end. So, what happened to those higher asking prices in Palm Beach?

Pouffff!

Buyers in Palm Beach simply did not honour the seller's demands. They beat them down or flocked to Broward, where houses in March sold faster and at 5 percent higher price per sf than in Palm Beach (or Dade). Interesting, no? Note to sellers and their Realtors: this is not a Seller's Market, despite the lack of selection in certain areas as well as prices brackets.

This week by the way I learned that Realtors© – but not the public – will very soon have access to monthly market data by zip code. That indeed is lovely and constitutes an excellent research tool. The FAR (Florida Association of Realtors©) has contracted with a research firm to supply those data to its members; when the data bonanza begins I do not know yet.

OT: A Mac Virus

In my office as well as at home, I use Macs exclusively, so the appearance of a serious virus targeting Macintosh computers this week caught my attention.

The thing is called Flashback, technically not a virus but malware. Read on cnet.com what's it all about and what you can do against it, in case you use Macs and haven't taken any counter measures yet.

But wait – there's more!

The German news weekly Der Spiegel has even more detailed recommendations than cnet, but you have to read German to make real use of the article.

However, two recommendations from the Spiegel piece are worth mentioning:
1. the free Sophos Antivirus tool works very well,
2. my browsing experience with the recommended "NoScript" Firefox extension – blocking Java scripts on your web pages which is Flashback's method of infiltration – is less than enjoyable.

Actually, it's a pain in the butt.

Worth it? Highly likely. Will I keep it? Dunno yet.

The South Florida Housing Market in February

"Use your mentality, wake up to reality..."

Lyrics from Cole Porter's famous "I've got you under my skin", written in 1936, came to my mind this month. I admit that I have Nicole Henry's lovely version of that song constantly in my ears and on iTunes. To me, uptempo–and perhaps the great American Songbook–just seems to be her forte.

So, is Nicole singing to or even for home buyers?

I doubt it. But the February numbers for single family homes (condos, coops and townhouses not included) should get prospective buyers thinking of Cole Porter:

In essence, more or less stable asking prices and (year-over-year) slightly soft selling prices created a very very active market in February–with dramatically falling inventory (may I say "dramatically" when it's 50 percent or more?) and a hefty spike in the number of sold houses.

As always, the table is accompanied by a lovely graphic:

Coming back to Nicole Henry and her Cole Porter interpretation: time for buyers to wake up. True, not every buyer is flexible in his or her plans, but to those who are I'd advice to get off the bench. Now.


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Table: Single family home data per month’s end for Palm Beach, Broward and Miami-Dade (Florida) counties. Chart: Single family home data Mar 2011 to Feb 2012. Red: median list price, green: median selling price, blue: inventory in months. – Data compiled from SEF-MLS

Fort Lauderdale leads Inventory Decline

Housing inventories declined month-to-month

The streak of declining inventories of homes listed for sale nationwide continues into its eighth month. Inventories in January fell 6.6 percent to 1.77 million last month from December 2011, the Wall Street Journal reported from a Realtor.com tally.

The largest year-over-year decline occurred in Fort Lauderdale, Fla, in January. Compared with one year earlier, listings were down by a whopping 55%.

Other cities which saw large annual declines were Miami, Phoenix, and Bakersfield, Calif., where the number of listings fell by nearly half. Both New York and Philadelphia ranked among cities with the smallest declines: 1.7 percent and 3 percent, respectively.

Month-over-month, four Florida-based markets saw increases between December 2011 and last month. On the other hand, both San Francisco and Boston showed respective 16 and 10 percent declines since December.

The Wall Street Journal said that low housing inventories are a normal part of any housing recovery. But it remains to be seen whether these figures show true signs of improvement in the market. [WSJ]