South Florida Housing Market Update [February 2023]

Hey, it's Andy with the Mandel Team at Remax, and I'm here to bring you your February, 2023 Housing Market Update.

As always, for the purposes of these videos, we're gonna be talking about single family homes only in Boca Parkland and Coral Springs. Those are the areas where our team does the predominant amount of our business, and we're gonna be talking about single family homes only.

So no condos, no townhouses, no country clubs, and no 55 and over, so all ages.

When we give you these stats, we're giving you the leading indicators, showing you where the real estate market is headed right now, not where it's been.

So when you hear these stats from the media, a lot of times, they're gonna talk about closed sales price, but if something closed in January of 2023, it likely went under contract in December or even November, potentially, of 2022. So those are really old stats.

I'm showing you what's happening right now in the market so you know where the market is headed, not where it's been. So let's get into it.

The first stat we like to look at is the number of new listings hitting the market.

Everyone keeps saying, oh, we have so much more inventory. There's so much more supply. That number actually is down 28% from January of 2023 compared to January of 2022. So we are seeing fewer homes hit the market now than we were seeing last year.

To me, this makes a lot of sense.

A lot of people have refinanced, so there's a lot of homeowners. Most of them, an overwhelming majority, have an interest rate in the high twos, low threes. You really gotta want to sell.

You gotta need to sell in order to put your home in the market and have that interest rate and buy again in the 5% or 6% range. So we're seeing fewer homes hit the market, but at the same time, The number of homes that are selling and going on the market is also down at the exact same rate, 28%.

So same level of homes hitting the market, same level of homes going off the market. It's gonna lead to a more neutral stance. So I think we've kind of hit the bottom, in my opinion, as far as price decreases and you know, the market going down.

We're seeing the same level of supply and demand. We're now in balance exactly a lot lower than where we were seeing the last couple years, but this is kind of the new normal, and I think we've hit the bottom as far as where prices are going down, at least for now, until data changes.

The next stat we like to look at is the number of days on market.

So in January of 2023, that was 50 days on market. That was the average. That's compared to 15 in January of 2022. So we are seeing it take a lot longer to sell. That's a 221% increase year over year.

It's taking much longer because as you can see, there's about 30% fewer homes going off the market right now. So there's a lot. It's taking a lot longer to sell a house.

If you're a buyer, you have more time to think and to say, is this the right house? Because homes are sitting on the market a lot longer.nWhile you don't have more homes to choose from necessarily as far as new listings.

The homes are sitting there longer, so at any given time you have a lot more homes that are available 'cause they're not flying off in one second and you're trying to find the next home and then bid on it in one day.

So that's a good sign for buyers that they're taking a longer to sell. You can think about it, you can make sure you're buying the right property. You're not forced to buy the first home that hits the market, and maybe it's not perfect for you. You got more time.

The next stat we like to look at is the close price to original list price.

So I like original list price because that's factoring in some of the price reductions that we're seeing, and we are seeing price reductions on homes that were originally priced incorrectly.

So right now the average sales price to original list price was 92.2% last month, meaning that buyers are getting a roughly 8% discount from the list price.

Now that's down 99.6% is what it was, January of 2022. So last year, buyers are paying almost full price, a lot of times more. Now they are definitely able to negotiate and get a better deal as far as the list price is concerned.

Let me give you the caveat to that is that this is taking into consideration that not all sellers are realistic on their original list price.

I've been doing a great job, at least in my opinion, of trying to get my sellers to understand the new market dynamics, and we are taking accurately priced listings, and our listings are still selling very, very fast, much faster than the average because our sellers are informed and they know what's going on in the market right now, so they can price their property correctly.

If you're a seller and you're putting your home on the market and you're trying to get this, you know, summer 2022's prices, you're gonna be sadly mistaken, you're gonna most likely have a price reduction and it's gonna end up selling for a lot less than what it would have had you listed the property with today's market price upfront.

We put a bunch of homes under contract in January.

The market really started to pick up again now that rates have come down a lot and what we're seeing is a lot of the homes— all of the homes actually that we sold had multiple offers, and that's because they were priced correctly from the beginning.

And then you see the homes that are sitting on the market for, you know, 100, sometimes 200 plus days. And those are the sellers who just aren't realistic with today's market dynamics. It's not a dramatic change. You know, 5%, 6%, 7% difference can make a big difference in a buyer's mortgage price and what they feel the home is valued accurately at.

So if you're, you know, shooting over and you're pricing your house 6%, 7%, 8%, 10% above where the market is right now, you're gonna sit on the market a lot longer and have these price reductions.

The last stat we like to look at is the number of months supply of inventory.

So what this stat tells us is that if no more homes were to hit the market, how long would it take at the current pace of sales for all of the homes to sell? A balanced market is about six months.

Anything less than six months is a seller's market. Anything more is a buyer's market.

Right now, on average across the three cities, we're seeing 2.95 months of inventory. So when we were in the height of Covid, we were seeing half a month to maybe one month of inventory. So that means we're up three times as much inventory right now as we saw in the height of the pandemic, when the market was just absolutely crazy on paper.

This still tells me that it's a seller's market, but in reality, this feels like a buyer's market for most listings. There's just not the crazy demand and pushing prices up multiple offers.

That's really not happening unless the home is really priced correctly and buyers can see it's a good value. This can be somewhat of a misleading stat, and a lot of it is just because the market is so in flux right now that a lot of sellers still haven't caught up to it, and they're still hoping for the prices of last year when in reality that's not the case for this year.

But we are seeing a lot more homes available at any given time because they're taking longer to sell.

So let's talk about what this means.

If you're a seller, like I was saying, you really gotta be more realistic with your asking price. If you're off by even 3% to 5% for where buyers feel the value is today, they're not writing offers, they're going to continue to look at other homes because now there's 7, 8, 10, sometimes 15 homes available, and if it's a big neighborhood in any given neighborhood compared to last year where there may be one home at any given time available.

So buyers have more to choose from. They don't have to be desperate and write these crazy offers.

Your list price and your asking price has to reflect the new market realities. But if it does, we are still seeing those homes are getting multiple offers, sometimes still selling above the asking price with a bidding war if they're priced correctly from the beginning.

Buyers, what does this mean for you?

Well, if you haven't heard, interest rates have come down significantly.

We're right now we're below 6% for an interest rate today, two, three months ago, at the end of 2022, we were seeing seven and a quarter.

So as news of this gets out and more and more people know that interest rates have come down significantly, I think the market's gonna really start to pick up, and that's what we are seeing in our business.

We have a lot of buyers who put off the search last year when rates were shooting through the roof. They didn't know what was gonna happen, but a lot of them have come back and they say, okay, I'm more used to this. This is where rates just are. It is what it is.

And they're actually down a lot from last year, so it makes more sense to buy now than it does to continue to wait. If you keep waiting in hopes that interest rates will go down a lot more, if they do, there's a high likelihood more buyers will come in the market. It will start to get more competitive.

And you're gonna face that same kind of situation people were seeing in 2021 and 2022, where you know there's multiple offers, there's bidding wars, and the whole thing. It's a good time right now.

My opinion is this is the sweet spot where buyers are still able to negotiate a good deal. They can get money off the list price.

A lot of times sellers are paying for interest rate buy downs or they're giving closing cost credits and they're taking care of repairs that the property needs. Compared to, you know, last year or two years ago where you were lucky if you got your offer accepted.

Don't you dare ask for the seller to fix anything. It's a much easier market for buyers right now than we were, we got used to over the last two years. So I would say if you're a buyer, if you're in the financial position to buy right now, get off the fence and do it now before it gets more competitive.

As springtime heats up, people get back into the market and they realize that interest rates are a lot lower than what they were. I think it's gonna heat up the market again.

I don't think we're gonna see what we saw the last two years, but it's gonna become more competitive than it is right now. So my opinion, again, this is the sweet spot and now is the time to get off the fence if you've been considering.

So my name's Andy Mandel, we're with Remax. If you have any questions about the housing market here, how this affects you, your neighborhood, your home's value, give us a call, shoot us a text, or send us an email. We got your back when moving in South Florida.