Halloween Treat: Buyer’s Market In South Florida

As I had anticipated in a previous post, the property market in South Florida is now firmly favouring home buyers.

Hurricane Harvey (Texas), Hurricane Irma (Florida) and Hurricane Maria (thankfully never made landfall) on the TV screens every minute every day was enough to scare a lot of buyers away.

The September numbers for closed sales (closings taking place) were down 37 percent. That is not astonishing, as closings are routinely postponed as soon as an area is “in the box”, a large rectangle of drawn around a hurricane that moves with it.

Much more telling are pending sales, meaning the number of sales contracts being signed by a buyer and a seller:

42 percent fewer contracts were signed this September versus September 2016. Colleagues from various offices confirm this tendency for the current month as well.

While only few properties for sale were taken off market, all these homes and condos now encounter far fewer buyers.

So while the timing is bad for sellers, it's an invitation for buyers: they face much less competition and often a seller willing to negotiate a bit more than a short while ago.

So if a home (or condo) purchase in South Florida is on your radar, right now is a very opportune time to make it happen.

Please don’t wait too long then if you want to discuss a purchase – and a happy and fun Halloween!

 

(Pumpkin Camper ©unknown)

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.
––
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.

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?
___

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!

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 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]

South Florida home prices stable, but appreciation three to five years away

Though the U.S. housing market is inching closer to its eventual bottom, the country is still three to five years away from a normal housing market with healthy price appreciation, according to a November home prices report released today by Zillow.com that also detailed the state of the South Florida housing market.

The report showed that prices increased in South Florida by 0.1 percent compared to October 2011, reaching $137,000. That is still well below the national average home price, which declined 0.5 percent month-over-month to $147,800. 

Year-over-year South Florida home prices declined by 3.9 percent from November 2010 and they now stand 55.4 percent below their peak. Nearly 45 percent of November home sellers in the region suffered a loss on their sale. Nationally, prices fell 4.6 percent in the last year, and are now 23.8 percent below their peak levels. Further, 35 percent of re-sold homes traded at a loss.

Zillow.com said that the general flat-lining of prices is a sign that the bottom is near, and improving economic indicators — such as the addition of 200,000 jobs in December, stronger holiday retail sales and improving consumer confidence — support that conclusion.

Nevertheless, demand will not put healthy upward pressure on prices until the glut of foreclosed properties works its way through the pipeline. 

Thanks to the robo-signing controversy, the liquidation rate has decreased to just 8.1 out over every 10,000 homes from the 11 recorded just before the crackdown began in October 2010. As a result, though home prices may bottom and even slowly increase by 2013, they won’t appreciate at normal levels until at least 2014, Zillow.com said.  

_____________________________
Source: Zillow via TheRealDeal.com

The List

Stemming from my love for modern architecture, I have been “collecting” modernist properties for several years. Searched out, observed, accidentally found or through our Multiple Listing Service, every find ends up in a list of contemporary and mid-century modernist properties - mostly single family homes Southeast Florida, with a condo building, a supermarket or even a car dealership thrown in for good measure.

Our MLS (for Non-Americans: a shared database of properties for sale; only participating real estate real estate agents have access to it) is a bit tricky, because there is no filter “Modern”, so I devised my own. I have as many as five “modern” MLS searches running parallel, handpicking modernist properties from them every few days.

Over the course of the years, this list has grown to over 1,300 buildings in Southeast Florida, covering roughly an area between the Florida Keys and Stuart. It’s a bit of work to keep it updated, but an excellent education for me, a great tool, and of course invaluable help when it comes to finding modern properties for like-minded buyers.

If you know of a modern building - house, townhouse, apartments - would you let me know please? Even better: if you can send along with the address also a photo, even one quickly taken with your mobile phone is totally fine. - Thank you!