South Florida Housing Market Update [December 2022]

Hey! It's Andy with the Mandel Team at Remax, and I'm here to bring you yourDecember 2022 Housing Market Update.

As always for the purposes of these videos, we’re gonna be talking about Single Family Homes only. So no condos, no townhouses. And we’re gonna be talking about Boca, Parkland, and Coral Springs. Those are the areas where our team does the predominant amount of our business.No country clubs, no 55+. So let’s get into it.

First, when we do these videos we like to look at the leading indicators showing you where the Housing Market is headed, not where it’s been. So we’re telling you what’s going on right now in the market, what happened just last month, so you can show and predict what’s gonna happen in the very near future.

A lot of times when you see stats in the media, they’re talking about close sales price, and things that are really reflective of what happened 2-3 months ago. I wanna show you what’s going on right now, so let’s get after it!

First stat we’d like to look at is the Number of New Listings on the Market. That is down 6.45% across all three cities, on average, between November of 2022 compared to November of 2021. So we’re seeing slightly fewer homes hitting the market.

You keep hearing in the media that, “Oh, the inventory is rising”, “Inventory is rising”. We’re actually seeing fewer homes hit the market now than we saw last year. Part of that is because a lot of people who bought houses or even if you didn’t buy, most people have refinanced over the last couple of years. So a lot of people have rates in the twos and three percents. They’re not selling unless they really, really have to to trade up to a much higher interest rate. So we’re not seeing a lot of new homes hit the market.

At the same time, the number of listings is down, pending sales is down 41% compared to this time last year. So there’s a lot fewer homes actually going under contract. So that’s why you see inventory going up.

There’s not a lot of new listings but way fewer homes are selling every month. And pending means they’re going under contract so it’s not officially closed yet but a buyer has agreed to buy the property. So 41% fewer, as you can imagine if fewer homes are selling, and it’s gonna take a lot longer to sell, which brings us to the next stat which is Days On Market

So as you can imagine, that has gone up as well. It’s taking a lot longer to sell a house so that’s up 230% compared to this time last year. So homes are taking a lot longer to sell.

On average, it’s over one month to sell a house, when it used to be just, you know, 3-4 days a yea ago, two years ago during the pandemic craziness. So it’s taking a lot longer to sell a house. If you’re a seller, don’t be alarmed that your home is sitting on the market for a long time.

There are fewer buyers out there right now, it just takes a little bit longer but, you know, before COVID, homes didn’t sell on the market in, you know, 2-3 days and everyone was complaining during COVID that things sold so fast. They didn’t wanna sell because they didn’t know where they we’re gonna buy.

So this is the market evening out and making it a lot easier for sellers who also need to buy and for buyers to come in and actually find a home that they like. They don’t have to jump on the first thing that hits the market. They have some time to think about what decision they wanna make and buy the right house.

The next stat we like to look at is the Close Price to Original List Price, so this is a backwards looking stat, to be fair. But I like close price to the original list price because that factors in price reductions, and things like that, on homes we’re seeing a lot more of that.

When sellers still wanna get this top, top dollar price like it was, you know, April, May of 2022 before rates kicked up. So the average close price to original list price is 94% which is down 7% from this time last year. But last year, homes were getting just above a hundred percent sales price to list price.

So, we’re seeing price reductions, we’re seeing sellers negotiate off the list price and come down. That is very common in this market. So again sellers, you’re still getting a very, very good price.

Prices are still up compared to where they were in 2021, so you’re still making out great. And they’re up 40% in the last 2 years. But buyers have a chance now to negotiate slightly better deals.

They don’t have to pay these crazy above asking price offers, and waive appraisals, and pay above appraised value. We’re not seeing that in this market right now.

The last stat we’d like to look at is the Number of Months of Inventory. So this is what I think is the most important stat. They say anything less than six months is a seller’s market. Anything more than six months is a buyer’s market.

Right now, between all three cities, e’re at 2.89 months of inventory. So on paper that’s a seller’s market, but that’s not what this market really feels like. This feels like a neutral market to a buyer’s market. There’s just not a lot to choose from. But homes are sitting for a long time, buyers are able to negotiate better deals so I’m gonna go ahead and call this a neutral market, or even a buyer’s market, regardless of what those numbers say.

But this market is different than what it was in 2008, 2007, at the last crash. We saw inventory just spiking through the roof, while prices were continuing to go up. But then prices started to come down, but there was way more inventory on the market.

Yes, prices have come down from their highs, but we’re still at really, really low levels of inventory so that’s going to stabilize the market to some extent.

We’re not anticipating any major, major 20%, 30%, 40% drop in prices like we saw in certain neighborhoods back in 2008. That’s really just not what we’re seeing or predicting but if you look across all the cities, prices peaked around May of 2022. That’s where we saw they highest median sales price across just about any city in South Florida.

Depending on the city and where you’re looking, the median sales price, the price that it’s taking for homes to actually go under contract, that has come down. I’m seeing it between 5% up to 12% lower than where it was in May of 2022. So, prices have come down.

If anyone’s telling you that the market’s still going up, prices are still going up, that’s not what the stats show. Prices have come down. They are still up compared to where they were at at the end of 2021, because the first quarter of this year up until basically, May, when the interest rates went up and that took effect on the market, prices were still going up at an incredible rate, but they have come down a lot since then.

So if you’re a buyer this is not a terrible time to be buying a house if you can afford it. Yes, you need to be able to afford the higher payments and the higher interest rates but there’s things that we can do to negate that. So because buyers have a lot more wiggle room in this market, we’re seeing sellers pay to buy down the interest rate.

You can do a 2-1 buydown or a 3-2-1 buydown and get interest rates still in the threes or four percent range. Rates have come down from their highs. They were at about seven and a quarter at their highest this year.

We’re sitting right now, as I’m recording this video, at roughly 6.6. So rates have definitely come down. If you’ve been sitting on the sidelines saying, ”I’ll buy when rates come down”, rates have come down. They came down about half a percent. So this is a good time to be getting into the market. And if you’re a seller thinking about, “Oh I don’t want to sell.

The market’s too soft”, Yes, the market is softer now than what it was in the last two years, but you can still lock in really good price increases. Like I said earlier, home prices are up, like, 40% over the last two years. You’re still getting an unbelievable price in comparison to what you would have gotten just two years ago if you wanted to sell. So, it’s a great time to still sell.

You just have to know that you’re not gonna get those crazy, crazy high prices with all the bidding wars and all the crazy stuff we saw over the last 2 years. That market is long gone. You have to price your property less than what the comps say they were worth back in May, because values have gone down as interest rates have gone up.

It just is what it is. But if you’ve priced yourself accordingly, you’re 5%, let’s call it, less than what your home would’ve sold for in May. You can actually lock in that equity now. What the home is worth on paper, the “appraised value”, means nothing if you’re not actually selling it.

To sell it, you’re gonna lock in that equity, and now you have a much bigger downpayment to use for the next house you’re buying, whether you’re upgrading or downsizing you can still lock in that gain on paper when you sell your house. So, it’s a great time, there’s pros and cons for both buyers and sellers.

If you have any questions about the market in South Florida, we sell from Broward County up to Palm Beach County. Everywhere in between those areas. We know all those areas. We specialize in Boca, Parkland, and Coral Springs. So North Broward County, South Palm Beach County, if we can do anything to help you out on your home search, we got your back when moving in South Florida.