South Florida Housing Market Update [January 2023]

Hey, it's Andy with the Mandel team at Remax, and I'm here to bring you your January 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 when we're talking about Boca, we're talking about all ages. No 55 and over, no country club.

Now, what I want to do is give you the leading indicator, showing you what just happened, to show you where the real estate market is headed, not where it's been. So I don't want to talk about closed sales price too much, because that's really indicative of what happened two, sometimes three months ago, if it closed in December, you know, it most likely went under contract in November or October. So that's really indicative of what happened, you know, one to two months ago.

We're giving you what's going on right now to show you where the real estate market is headed so you can make an informed decision for yourself and your family. So let's get into it.

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

Now, on average between the three cities, that's actually down 17% to be compared to from December, 2022 compared to December, 2021. So the media keeps saying that there's so much more inventory and there's all these new listings.

The number of new listings hitting the market is way down. A lot of that is because almost everyone who had a mortgage on their property refinanced when rates were really, really low. So you really have to have motivation and an incentive to sell your home and trade up for something else if you're gonna get a much higher interest rate compared to the, you know, two and a half, 3% rate, somewhere in that range that you probably refinanced to. So we're seeing way fewer homes hit the market, at the same time, the number of pending sales, homes that are going under contract and coming off the market, that's down 45%. So there's way fewer homes going under contract right now than we were having at the end of 2021.

There's a lot fewer buyers that are out there right now that want to pay the interest rates that we're paying right now. Six and a half, roughly, percent. People think that that's, you know, a very high interest rate. They still have sticker shock because it's up double from what it was in January of 2022. So a lot fewer people buying houses, but fewer listings hitting the market right now.

So that's keeping a lid on, you know, how far prices are gonna come down because we're just not having a glut of supply hit the market like we saw the last time we had a housing crash. Prices were coming down and we were seeing a lot of inventory hitting the market at that time. We just don't have the inventory hitting the market, so that's going to, to some extent, stop prices from going down too much.

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

So as you can expect, with way fewer homes going under contract, the days it's taking to sell a home are going up significantly. So that's up 167% compared to this time last year. So it's taking on average about 30 days to sell compared to just 11 at the end of 2021.

Now the next stat we like to look at is the close price to the original list price. And the reason we look at the original list price is because that takes into consideration price reductions and things like that that we just weren't seeing, you know, at 7, 8, 9 months ago.

So currently the average close price to original list price, is 8% off, it's 92.8%, so buyers are getting a much better deal.

Sellers are having price reductions. Buyers are able to negotiate better deals because there's fewer buyers when homes aren't getting 7, 8, 9, 10 plus offers in 24 hours.

Buyers tend to be able to negotiate a better deal. So if you're thinking about buying and you think, oh, these prices are too high, just imagine if you were to get 8% off of that price. That's a significant savings to you as a buyer.

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

So this is what I think is the most important stat.

This says that if there were no more homes to hit the market, how long would it take for all of the homes that are there to go under contract and come off the market? So a balanced market is roughly six months. Anything less than that is a seller's market. Anything more than that is a buyer's market.

When we were in the height of Covid, when the market was just the absolute craziest, we were seeing less than one month of inventory. Right now we have about 3.25 months of inventory, and that has continued to tick up. So that's still technically on paper, a seller's market, but it feels like a buyer's market when you're out there, sellers are taking a lot longer to sell. They're not getting multiple offers and driving the price up. Buyers are negotiating a better deal.

So, you know, it really does feel like a buyer's market that's out there.

Three months of inventory is obviously three times as much as what we were seeing before, and that's why people are saying there's so many more homes on the market.

It's not that we're having a massive flood of new inventory, it's that homes are taking a lot longer to sell. So buyers have more options to choose from at any given time instead of there being just one home on the market.

There's 5, 6, 7, sometimes 10 homes in any given neighborhood that are very similar to each other. So buyers have a lot more to choose from. There's a lot more available, and this is really what's leading to that feel of a buyer's market.

So what does this all mean?

If you're a buyer, this is still a good time to buy because you no longer have to make a rush decision, buy a house that doesn't fit your needs. You can be patient, you can wait for the right home. And yes, interest rates are higher now than they were a couple months ago, but a lot of lenders are offering free refinances, so no lender paid fees or anything like that if you were to refinance in the next couple years.

If and when interest rates drops, no one knows when rates are gonna drop again, but it is likely that we do go into some sort of recession within the next year to 18 months. And typically, historically speaking, interest rates have gone down during a recession, so you might be able to lock in a home today.

You know, get a okay to get today's interest rate, but you're getting at a much lower competition, potentially able to negotiate a better deal and then refinance it to a lower fixed rate if and when rates do come down.

So if you're gonna be a buyer, as long as you're gonna be in the home for five plus years, you're gonna be okay. You're gonna be able to ride out. Any short-term fluctuations in prices, most likely. At least that's my opinion.

If you're a seller, what does this mean?

Well, the days of being able to just pick whatever price you wanted to list your home at and expect multiple offers, doesn't matter what your house looks like, doesn't matter the condition, those days are over.

Sellers have to be pinpoint accurate right now with what their home is going to sell for and to price it realistically at where the new market is right now. Values are down roughly eight to 10%, depending on the city, depending on the neighborhood compared to the highs that we saw in May of 2022. So you can't look at comps from last summer and say, well, that's the price that I want to get and I need to get in order to sell. That's just not a realistic price. It's not in line with where buyers are willing to pay today because they have a lot more to choose from.

All of these stats are showing that buyers have more power now than they did, you know, at any time in, in the recent history of this housing market. So you gotta be very accurate. But if you consider that home prices are up about 40% over the last two years, if you came down and you're only locking in a 32% gain from what you had when you, you know, pre-COVID, that's a really, really good gain.

You're still making a lot of money, so sellers are still doing well and the sellers that understand that are pricing their homes correctly and they're still getting to wherever they need to go. Whether that's upsizing, downsizing, relocating.

People are getting deals on both the buy and sell side that they're happy with right now. You just have to be understanding of current market conditions and realistic that these are still good prices for sellers and for buyers.

You're still able to get a good house with less competition. So I hope that makes sense.

Whether you're buying in nine months, nine days, nine years, whatever it is, we'd love to be your realtor of choice. And always remember, we got your back when moving in South Florida.