Everyone asks me, "how's the market?" Real estate is fascinating and we have never experienced a more unusual market! In this email I will share national information and local market information where applicable. Please call me if you have any questions or love graphs and I'll send them!

There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.

Here’s the definition of normal from the Merriam-Webster Dictionary:

“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.”

Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.

1. Mortgage Rates

If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:

1970s: 8.86%

1980s: 12.7%

1990s: 8.12%

2000s: 6.29%

2010s: 4.09%

Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.

Currently, mortgage rates are anything but usual, typical, or routine.

2. Home Price Appreciation

According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%.

According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.

Currently, mortgage rates are anything but usual, typical, or routine.

 

LOCAL PALM BEACH MARKET: Single family homes priced from $0-3M have appreciated on average 20% since June of 2020. This is a very broad statistic that includes ALL single family home sales in different segments of the market that have appreciated at different rates. If you are curious about your home's value or a specific sector of the market, just let me know and we can discuss an individual report.

 

Another interesting observation is that in the last couple months, the average sold price has more or less leveled out, but the list prices have continued to trend up. We are seeing more price reductions because sellers (and agents!) got ahead of themselves. 

 

My listings have been selling on average 8% above list price. With my Power Advantage System, my sellers always get the most money possible! 

3. Months’ Supply of Inventory (Homes for Sale)

According to NAR:

“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”

As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.

PALM BEACH COUNTY MARKET: How's the inventory? 

 Consider that in August 2020 there were 10,610 homes priced between $0-3M for sale vs. August 2021 when we have 3,686! Inventory is down 65.3%!

In August 2020 3,143 homes sold vs. August 2021 2,777 homes sold. While available homes are down 65.3%, sales are only down 10.5%. If we had more inventory, more homes would sell. We saw demand really pick up in January 2021 while the availability of inventory was steadily trending down, and then a huge drop off of available homes in March. In the last couple of months we have averaged about 3,750 homes for sale.

With the low inventory and strong buyer demand, in August we had only 1.3 months of inventory! We've been ticking up since the low of 0.9 months of supply in June. That's VERY deep into a seller's market.

I have seen a slight slowing of buyer activity in the last couple of weeks. That could be due to school starting, but perhaps also a little buyer exhaustion. Many people are waiting back because they think the market will crash, but I don't believe we'll see that. I think we WILL see prices stabilize a bit, but if interest rates tick up, homes will be less affordable and if inventory continues as such low numbers, we won't see prices drop to make up the payment difference. Some consumers believe we'll see a big foreclosure wave, but even if foreclosures enter the market, it will just help inventory level out; however, I am watching for when the eviction moratorium lifts. We might see a sell off of mom and pop rentals in the lower price points. Stay tuned...

Currently, mortgage rates are anything but usual, typical, or routine.

4. Days It Takes To Sell a Home

The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.

LOCAL PBC MARKET: The charts show an average of 34 days on market. By using my Power Advantage System, my listings are positioned perfectly on the market so they sell much faster than the average. The usual for me is one day no matter whether the market is hot or cold, but right now my strategy is a little different. I am listing mid week with no showings until the weekend along with open houses on Saturday and Sunday so the anticipation builds and buyers are overwhelmed by the tremendous traffic! I make sure to have the sellers in contract by the end of the weekend since that's when the buyers are most excited and the sellers have the most power!

I've found it curious to note that in the past, typically the best offer does tend to be one of the earlier offers. Lately, the best offer has been the last, so I am stretching out market time a little bit and concentrating the showings around time clusters. Sometimes, I'll let an agent take a buyer before the showings start on Saturday. Those offers usually come in below asking price, but the offers from buyers who saw lines to get into the home and the crowded open house always open with at least the list price and we go up from there - rapidly! 

Currently, mortgage rates are anything but usual, typical, or routine.

5. Number of Offers per Listing

According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5.

I don't have an official statistic for numbers of offers in our market so I can only speak from experience. Since my listings are so perfectly positioned, my sellers are receiving anywhere from 7 to 20 offers depending on the type of property. Single family homes with pools are extra hot. 

Improperly marketed homes and overpriced homes still fail to sell even in this hot, sellers' market. Surprise, right? Buyers haven't completely lost their minds...lol!

Speaking of buyers...the good homes go fast with hot and heavy bidding around price and terms. It's a skilled game and it's not a game for the faint of heart! I am proud to share that my buyers have come out the winners on every deal.

Currently, mortgage rates are anything but usual, typical, or routine.

 

Bottom Line

When…

Mortgage rates are near historic lows

Price appreciation is at historic highs

Housing inventory is less than half of the normal amount

The time it takes to sell a home is cut in half, and

There are twice as many offers on each house

…it’s hard to say we’re in a normal market.

If you have any questions about your own situation, just give me a call and I'm happy to share more detailed information.
Big hug,
Barbara
561-325-1535