South Florida Housing Market Update [May 2021] - When Is The Housing Market Going To Crash?
Hey, it's Andy with the Mandel Team at RE/MAX, and I'm here to bring you your May 2021 South Florida housing market update. Now, in this video, we're also gonna be answering the question that we keep hearing all the time from our friends, family, and clients. "When is the housing market gonna crash?" So, for the purposes of this video, we're gonna be talking about single-family homes only in Parkland, Coral Springs, and Boca Raton. Those are the areas where our team does the predominant amount of our business. And when we talk about Boca, we're talking about no 55-and-over communities and no membership country clubs; so, all ages, no country clubs.
So, normally we like to look year over year for stats. What we're gonna do for these next couple months is we're gonna look month over month because when you think about it, looking back towards last year, around this time was when we were having our first initial lockdowns. So, to compare what's going on now to when the whole economy and the entire country was shut down and people were pulling their homes off the markets 'cause everyone was very scared, that's not a really good comparison. So, we're gonna look month over month to give you a real-time look at what's going on currently in the housing market.
So, the first stat we like to look at is the number of new homes hitting the market. So, for April 2021 compared to May 2021, that's actually up about 8%, which is a good thing. We've had such little inventory down here. It's good that we're starting to see a little bit more inventory month over month creep up. That's as to be expected with this time of year. Spring and summer in our area is typically when most people put their home on the market. Most people wanna move between school years so they can get their kid into whatever new school they're trying to get into, just get in before the end of summer and really start this process. So, this is typically the busiest time of the year when we start to see the most homes hit the market. So, inventory's up 8%. That's a good thing. But at the same time, the number of homes going pending and coming off the market, that's actually up about 1%, but it's historically very, very high. About as fast as these homes are being listed, they are coming off the market and they are being sold. So, we're not seeing a huge increase in the amount of homes for sale because they're selling just so quickly. And that takes us to our next stat that we like to look at, which is the days on market. So, that is actually down on average about 28%. So, on average, homes are selling in about nine days. I really think personally that that is long. I think a lotta realtors are leaving their homes on the market as active for much longer than they're actually active after they've accepted a contract. What we are really seeing in our market is that in a matter of 24 to 48 hours, most homes have multiple offers. On our listings this year, every single one of them has sold within 48 hours, so homes are selling very, very fast. You gotta be ready to move in this market.
So, the next stat we like to look at is the closed sales price to the list price. So, what percentage of the asking price are sellers getting? And on average, it's 99.9%. Parkland and Coral Springs on average, it's 100%, with Boca being 99.6%. So, sellers are getting basically their full asking price, if not a lotta times much, much higher. So, if you think you're gonna come in here and give a low-ball offer and get a counteroffer, that's just not the market that we're in, unfortunately. Sellers are getting top dollar. They're getting their asking price. And then everyone's dealing with appraisals and how to structure the terms of the deal afterwards, but sellers are getting their asking price. The next thing we like to look at is the number of months of inventory on the market. So, in a balanced market, that's six months of inventory. So, at the current pace of sales, it would take six months for all of the homes to sell that are currently on the market in a balanced market. Anything less is a sellers market. Anything more is a buyer's market. We are still in a very, very, very strong sellers market at 1.13 months of inventory for sale. Now, that's ticked up just slightly. We've been looking at about a month to slightly less than a month across the board here in the last couple months in winter and the beginning of spring, so that's starting to tick up, which again is a good thing, but that's as to be expected for the time of year, when more buyers are getting ready to start this process and start looking for their next home. So, while we do have slightly more inventory out there because of the time of year, there's slightly more buyers out here too. This is when everyone's starting to look and to start their process.
So, what does this mean for you if you're a buyer? So, if you're a buyer, you've really gotta be fully pre-approved up front. You gotta be ready to write your strongest offer up front. You gotta use things like escalation clauses. Buyers are having very short inspection periods of five to seven days. They're waiving appraisals. They're paying above appraised value. And they're increasing the price above the list price to get their offer accepted. This is not a market for amateurs or people who are just testing the market. You really gotta be serious about buying if you want to be successful in this market. If you're a seller, what does this mean for you? So, all of our listings this year are selling in literally 24 to 48 hours at our mega open house event. So, for our sellers, we can almost guarantee you that you're gonna have a very easy process. We're typically only having one day of showings on our listings at the open house, and we're getting 50 to 60 groups of people through that open house, generating multiple offers, making the process easier for our sellers and ultimately creating that bidding war environment and getting our sellers very, very, very good prices this year. So, it's a great time to be a seller, especially if you can buy without having to sell. If you have to sell before you buy, give us a call.
We are helping our clients navigate this process. We're taking out home equity lines. We're doing a lot of creative things outside the box to be able to get you to buy without selling first and finding you the right property or finding off-market deals, all that kinda stuff. So, if you're thinking about moving and you just don't know where to go, give us a call. Let us show you how we help.
So, to answer the ultimate question, "When is the South Florida real estate market "going to crash," well, our answer is not any time soon. We have such low supply of inventory down here, a ton of buyer demand from local buyers who are looking to move between school years, people relocating from all across the country here to South Florida. This is where everyone is moving. We get about a thousand people moving to Florida every single day, with South Florida being the most densely populated and one of the most attractive areas in the state to move. So, this is where people are moving from from across the country. Our demand is not going anywhere. We also have a huge millennial population, and those people are getting to the age, just like me, where they're getting engaged, they're getting married, they're starting families. They're doing things that stimulate the need for houses, so we just don't have enough supply. We are landlocked between the Everglades and the ocean. There's not enough supply here, and that's really across the country. They have not built enough homes in the last decade to keep up with the population growth in this country. So, all across the country, this is a national problem, but we really feel it in South Florida because we just can't expand and have that suburban sprawl.
So, in my opinion, we are not gonna see a housing market crash anytime soon. If I had to be really honest, I don't think prices are coming down ever. I think if all of these homes that are in forbearance, if a large percentage of them actually end up coming to the market, we're gonna see a decrease in the pace of appreciation. So, instead of going up 10%, 11%, 12% a year, maybe we start seeing back to normal of 3%, 4%, which would be great for everyone, but I don't think prices are gonna come down. We just don't have enough supply to keep up with the increasing population. People want houses, they want space. They just don't have the land to build it. So, unfortunately, I think we're getting into the new normal. Hopefully we start to see prices level out a little bit here for buyers. It's gonna be very difficult to get into that first starter home and start building that equity, building that net worth, and living the American dream, so to speak, but this is kinda the new normal in my opinion.
So, if you're thinking about buying, now is better than later. Interest rates are at still-historic lows. They're at about 3%. They started picking up towards the beginning of this year. They've come down a little bit. But going forward over the next two years, as the economy continues to improve, and it's improving very rapidly after these lockdowns, interest rates are going to go up. That's a natural thing that happens when the economy gets better is that interest rates go up. So, right now, you're locking in prices that are lower than what they're gonna be in two years from now, and you're locking that house in at a lower interest rate than where it's going to be two years from now. So, if you're thinking about waiting, it's gonna end up costing you most likely a lot more money, not just in the purchase price, but in your monthly payment and in interest. So, now is better than later.
Take advantage of this market. I know it's competitive. I know it's frustrating. You wanna pull your hair out because it's just a crazy market. But give us a call, shoot us a text, send us an email. We wanna show you how we can help you navigate this crazy market to be successful to get into your dream home. So, thanks for tuning in. Looking forward to seeing you guys soon.