There's a lot of headlines and news articles about the market getting back to quote unquote normal, what we were seeing pre Corona virus and in some parts of the country, that might be the case, but here in south Florida, we're just not really seeing it that strong yet.Here are five reasons why this market right now is anything but normal.
The first reason is interest rates. In a normal market interest rates are much, much higher than they are right now. As you can see from the graph interest rates historically are significantly higher. Your parents and maybe even your grandparents probably had ridiculous amounts of interest that they were paying on their loans compared to today's rate. Today's rate at just less than three percent is anything but normal.
If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:
- 1970s: 8.86%
- 1980s: 12.7%
- 1990s: 8.12%
- 2000s: 6.29%
- 2010s: 4.09%
Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.
The second reason is home price appreciation. In a normal market home prices appreciate on average, somewhere around three to four percent, every single year. So appreciation in home prices going up is normal. What we're seeing right now is anything but normal. Home prices have been on a tear. They're going up 15, 16, sometimes 20, 30% year over year, depending on the home and in the neighborhood and condition. So home price appreciation right now is anything but normal.
The third reason is this market isn't normal. the number of months supply of inventory. So this is one of the most important stats that we look at when we're doing our monthly market reports for stats in our area here. Anything less than six months is a sellers market. Anything more than six months is a buyer's market. This stat shows that at the current pace of sales, how long would it take for all of the homes that are on the market to go under contract and sell? So currently in south Florida in the areas that we serve, we're at just about one month of inventory. So that is an extremely high sellers market. That's anything but normal.
The fourth reason is the number of days it takes to sell a home. Gone are the days where it's, you know, 30, 60 days on the market and hopefully you get an offer and you can negotiate and you sell two or three months later. In this market that we're in right now, the average days on market, as of, as of August 2021 was 10 days. And I think that's really overestimating how long most of these homes are sitting on a market. That is an average. So this is anything but normal. Homes are selling in literally 24, 48 hours on, on many times that is anything but normal.
The fifth reason is the number of offers on every listing is anything but normal as well. Back in like 2019 so 2015 to 2019, we were seeing somewhere between two to three offers on any one of our listings right now in this current market in August, we're getting somewhere around six to nine offers on any of our listings. Back in January, it was closer to 18 to 25 on some listings. So the number of offers per listing is also not normal compared to what it used to be pre Corona virus.
To sum it all up, this market is still a very strong sellers market. I wouldn't call it normal by any means, but this might just be part of the new normal here in south Florida. If you're thinking about buying or selling a house and want to know anything about the housing market here in south Florida, give us a call, shoot us a text, or send us an email.Posted by Andy Mandel on