Housing Inventory Increases Slowly through the Summer
Market: Northeast Broward County – This updated market watch report covers Northeast Broward County real estate including Fort Lauderdale, Pompano Beach, Lighthouse Point, Lauderdale-by-the-Sea, Hillsboro Beach, Deerfield Beach, Oakland Park and Wilton Manors.
Summer of Market Correction
The recent “slowdown” in our real estate market can be attributed to several factors including rising mortgage interest rates, low inventory levels and a typical slower summer season following a very active winter buying season. The fact is that inventory levels were so low going into the summer that we couldn’t possibly sustain the level of closed transactions that we maintained over the past 2 years. It is time for a welcome correction in our market. Housing supply will slowly return to normal, but market equilibrium will not happen overnight, so don’t expect prices to drop anytime soon. Low inventory and strong buyer demand are still the focus of our optimism.
Sellers seem to be sensing the pending correction and we are seeing more price reductions and longer time on market for many listings, especially in the higher price ranges. Some buyers have dropped out of the market entirely, which means less competition and fewer “multiple offer” scenarios. But median sales prices are not coming down. On the contrary, prices are still on the rise, but nobody expects increases in excess of 20% like we’ve experienced over the past couple years. We expect more modest increases in median sales prices, somewhere in the 5-10% range. Bottom line, it is still a seller’s market and our supply issues are not going away overnight, so if you want to buy, or need to buy, then we recommend you do not wait for a down-turn in the market.
Median sales prices are still on the rise, but nobody expects increases in excess of 20% like we’ve experienced over the past couple years.
Supply vs. Demand
It is simple economics really. Housing supply has been unable to keep up with the unprecedented buyer demand which severely depleted our inventory and led to the current market correction. The following chart shows Active Listings vs Closed Sales since June of 2020. Two years ago we had about 3,800 active listings (about average) and today we still have less than half that level of supply. The good news is that inventory is up about 38% since April, but we still have a long way to go. Please note: July sales data is not finalized, but trending similar to June.
Active Listings are still down over 50% from 2 years ago, but inventory is slowly building back up again
Median Sales Prices Expected to Continue Upward
This next chart compares list prices to median sales prices over the same period of time. As inventory builds up again, sellers are beginning to lower their list prices. However, median sales prices are still expected to continue their upward trend, although at lower levels of appreciation than in recent history.
Waterfront Inventory and Median Prices in Fort Lauderdale Communities
Waterfront property is what the Fort Lauderdale area is famous for. Our beaches are lined with a variety of oceanfront condos and our Intracoastal Waterway connects thousands of single family homeowners and their boats with the Atlantic Ocean. Both of these market segments are still “on fire” right now in every price range. Lets take a closer look at our oceanfront condo and single family ocean-access markets.
Oceanfront Condominiums
Northeast Broward County is home to thousands of condominium buildings, with the most popular being the oceanfront condos “on the sand”. Demand for oceanfront condos is always high in the winter season and this year was no different. As single family homes reach unaffordable levels for many buyers and as interest rates rise, more buyers are considering condos than ever before. Inventories shrunk to less than 2 months of supply throughout the area and we are just now seeing inventory levels recover, albeit rather slowly. However, demand is still high. Developers are way behind and construction costs are high, so inventory shortages are not likely to go away soon. We have only 3 new beachfront projects breaking ground this year – Selene on Fort Lauderdale Beach and Casamar and Ritz Carlton Residences in Pompano Beach. Most of the oceanfront condos in NE Broward are in Fort Lauderdale Beach, Galt Ocean Mile (Northeast Fort Lauderdale), Pompano Beach and Lauderdale-by-the-Sea.
Note: Fort Lauderdale condo median prices are likely inflated due to a large number of closings in the high-end Four Seasons new construction condominium on Fort Lauderdale beach.
Condo demand is still very high, developers are way behind and construction costs are high, so inventory shortages are not likely to go away soon.
Single-Family Homes with “Unrestricted Ocean Access”
Fort Lauderdale is famous for its single family waterfront residences, and the most desirable are those that have “unrestricted ocean access”. This means that the home has dockage and no fixed bridges between the property and the Atlantic ocean. These are especially valuable because they can accommodate larger yachts and sailboats that are sometimes worth more than the home they are docked at. Compared to waterfront property in other parts of the country our ocean access properties have seemed like a good value, until recently anyway. In April we reported that Fort Lauderdale median prices were up 77% over the previous year, and that kind of appreciation is jut not sustainable.
Bottom line, we don’t expect prices to increase at the same rate. But don’t expect prices to go down either. Supply in Fort Lauderdale is still less than 5 months and technically it is still a seller’s market, except maybe in the higher price ranges. Waterfront under a million (if you can find it) is still very competitive, and you can still expect multiple offer scenarios even in the sub $2m range. However, if you have deep pockets you can probably find higher end properties with sellers that are willing to negotiate. Pompano Beach and Lighthouse Point still offer much better value per square foot, but supply is still favoring sellers with only 3.4 months of supply in Pompano.
In the city of Fort Lauderdale we don’t expect single family waterfront homes to appreciate at the same double digit rates we saw last year, but it is technically still a seller’s market, especially in the lower price ranges.
Summary
During the first 4 months of 2022 it seemed like a continuation of 2021 with one exception: “New Listings Added” were far below normal for a busy winter season and it finally caught up with us. Inventory is increasing again, especially in the single family markets. Condos are in higher demand with single family homes unaffordable for so many buyers. Housing is in short supply across the board and developers can’t build new homes and condos fast enough to keep up with population growth and ongoing demand. We are definitely feeling a correction, but don’t expect a “bubble” and don’t be surprised if median sales prices continue to appreciate at above normal levels through 2023. South Florida is still a hot market. We are just experiencing a much needed slow down and correction. All economic indicators are good, so there are many reasons to be positive about the future of real estate in South Florida.
Our advice to our customers? Buyers that want or need to purchase something should bite the bullet and get into the market while they still can. Consider buying less of a home or going with an adjustable rate mortgage to compensate for affordability issues. Sellers trying to maximize their profit might want to take advantage of the huge increases in values over the past year. List your property at a competitive price and you should still realize a nice return on your investment. Whether your buying or selling, make sure you have a local real estate professional on your team. This is not a market where you want to go at it alone.
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