Florida’s Housing Market: Sales, Median Price, More Rise in June

Florida Realtors’ data: More closed sales, more new listings and higher median prices (up 24.5% for single-family homes, 22.4% for condos) than a year ago. Chief Economist O’Connor: The ratio of buyers to sellers may be easing; as a result, home price growth could begin to cool down in the future.

ORLANDO, Fla. – Florida’s housing market continued the same trends as previous months with more closed sales, higher median prices and more new listings compared to a year ago, according to Florida Realtors® latest housing data.

“Coming out of a record spring home-buying season, the state’s housing market continued its strong gains in June,” says 2021 Florida Realtors President Cheryl Lambert, broker-owner with Only Way Realty Citrus in Inverness. “Of course, the impact of the pandemic last June is still a factor to consider when looking at the comparison data. In a positive sign, new listings for single-family existing homes in June rose 21.6% year-over-year, while new listings for condos-townhouse properties increased 10%. However, while Florida Realtors’ data shows that new listings have remained at fairly typical numbers even throughout most of the pandemic, it hasn’t been at the levels needed to keep up with greater buyer demand.”

Closed sales of single-family homes statewide in June totaled 34,165, up 23.6% year-over-year, while existing condo-townhouse sales totaled 16,155, up 79.6% over June 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

The statewide median sales price for single-family existing homes in June was $351,000, up 24.5% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $256,945, up 22.4% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Florida Realtors Chief Economist Dr. Brad O’Connor points out that recent data trends indicate the ratio of buyers to sellers may finally be easing a bit. As a result, “Florida’s red-hot rate of home price growth could begin to cool down somewhat in the coming months, although that will also depend on whether interest rates start to trend higher again, as well. For now, though, the numbers continue to astound,” he says.

Another trend to consider, Dr. O’Connor adds, is that over the past few months, the share of closed sales that are all-cash purchases has been on the rise compared to recent norms.

“Over in the single-family category, 31% of closed sales were all-cash this June, compared to 19% a year ago and 22.4% in 2019,” he says. “The last time Florida had more than 31% single-family cash sales in June was in 2015, when the state was still working the last foreclosures from the Great Recession out of the system.”

According to O’Connor, the current rise in cash sales as a percentage of closed sales is tied to two factors, with the first being a bit of a technicality.

He said, “This year, higher-end sales have made up a greater share of closings than in previous years, and those types of sales are historically much more likely to be all-cash sales. About 56% of single-family sales over a million dollars in June were all cash. That’s actually not much different than last June’s share, which was about 55%. But since luxury sales are a greater share of overall sales this year, that’s pushing up the overall cash share.”

The other factor is a rise in the percentage of single-family home sales paid in cash in price tiers below $400,000, O’Connor says. “This indicates a rise in investor activity, so of course Florida Realtors will be watching these numbers closely,” he adds. “The most prevalent price tier where this is occurring depends on the area’s market and its overall price level. The trend started emerging first in the state’s major population centers, but has since expanded to a degree into small- and mid-sized markets, as well.

On the supply side of the market, inventory (active listings) remained extremely tight in June. Single-family existing homes were at a very low 1.2-months’ supply while condo-townhouse inventory was at a 1.8-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 2.98% in June 2021, down from the 3.16% averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to the Florida Realtors’ Newsroom and look under Latest Releases or download the June 2021 data report PDFs under Market Data on the site.

© 2021 Florida Realtors®

NAR Economist: We’ve Never Seen Prices Rise This Fast

 In May, the year-to-year median home price was up almost 24%. The inventory shortage played a role, says NAR’s Yun, but affordability is squeezing some buyers out too.

WASHINGTON – Just how wild is the real estate market right now? You don’t hear National Association of Realtors® (NAR) Chief Economist Lawrence Yun say this every day: “We’ve never seen price appreciation of this magnitude.”

It’s a sobering message in NAR’s latest home sales video, which covers the month of May, when the median home price rose nearly 24% year-over-year, from $283,500 in May 2020 to $350,300 in May 2021.

Higher prices have sidelined some house hunters waiting for more housing inventory. But buyer competition is starting to cool, which could help consumers’ prospects.

Inventory is particularly scant in price points below $300,000, Yun says. And homes that are available in those price points are quickly being bid up. For example, Indianapolis house hunter Kelly Robinson said she budgeted for a $250,000 home, but properties in her target area were selling within days and sometimes fetched $100,000 above the asking price.

“There are so many aggressive shoppers out there, and I’m not willing to compete with that,” Robinson told CNN.

Buyers fatigued

Some buyers are dropping out of the market – at least for now. Mortgage applications, a gauge of future homebuying activity, have decreased over recent weeks even as mortgage rates remain low. Home sales have dropped in recent months, too, mostly due to record-low inventory.

But housing analysts also point to buyers who are getting sticker shock from high home prices. “Clearly, sales are moving down partly due to the inventory shortage, but affordability is squeezing some buyers out of the market,” Yun told CNN. “Home buyers qualify for a mortgage based on their income, but with prices rising 20% or higher, it is simply pricing them out of the market.”

Ultra-low mortgage rates under 3% are helping to offset some of the price hikes, and many buyers don’t want to give up their shot at locking in some of the lowest borrowing costs on record.

Relief in sight?

Though bidding wars reportedly are decreasing, “it’s still a seller’s market, no doubt,” Yun says. But sellers should price their homes cautiously to remain competitive as sales decline and more inventory is added to the market over the coming months. New listings in June increased 5.5% year-over-year and were up 10.9% over the prior month, offering a sign that more listings are coming, according to realtor.com.

Yun predicts a “calmer” market emerging for the remainder of the year. The market likely will remain tipped in sellers’ favor, he says, but buyers likely will feel less pressure to rush their purchase decisions. That could be a welcome trend that encourages buyers who’ve paused their home search to resume.

Source: “Hope for Greater Inventory as Home Sales Slip Again,” REALTOR® Magazine (June 22, 2021) and “Many Homebuyers Are Dropping Out of the Market,” CNN (July 13, 2021)

June Rental Prices Broke Records in 44 Cities

 Realtor.com rental listing costs were up 8.1% year-to-year in June, and two Fla. metros ranked in the top 10 for increases: Tampa-St. Pete, up 21.2% and Jacksonville, up 14.4%. Overall, two-bedroom units saw the largest increase, 10.2%, as demand for a larger living space continues.

CHICAGO – The home listing shortage has forced more buyers to rent; and that has boosted rental demand and, as a result, rental prices. Nationwide, the U.S. median rental price in June jumped 8.1% year-to-year, reaching $1,575, according to prices from realtor.com’s website.

The specific asking price for two-bedroom units rose even more as demand spiked. Those saw a 10.2% increase in rental prices year-to-year as consumers’ demand for more space remained high.

Two Florida markets made the top 10 list for rent increases: Tampa ranked third with year-to-year rent increases of 21.1%, and Jacksonville was No. 10 with increases of 14.4%.

Florida metro area rent increases for June, according to realtor.com

• Jacksonville: $1,310 average rent, up 4% month-to-month and 14.4% year-to-year
• Miami-Fort Lauderdale-West Palm Beach: $2,153, up 7.7% month-to-month and 13.3% year-to-year
• Orlando-Kissimmee: $1,500, up 3.9% month-to-month and 13.1% year-to-year
• Tampa-St. Petersburg-Clearwater: $1,605, up 5.6% month-to-month and 21.1% year-to-year

Rental prices in 44 of the largest 55 metros broke records last month. The largest gains were recorded in Riverside, Calif.; Tampa; and Phoenix, which all posted increases above 20% year-over-year, realtor.com reports.

“The surge we’re seeing in rental prices is likely to exacerbate the K-shaped, or uneven, nature of the pandemic recovery in the U.S.,” says Danielle Hale, realtor.com’s chief economist. “Rents are rising at a faster pace than income, which is adding to the challenges faced by lower-income Americans as they struggle to recover from job losses and other hardships brought about by COVID.”

According to Hale, rental prices aren’t likely to ease unless there is a shift – either a higher number of rentals or greater number of homes listed for sale.

Source: realtor.com

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Federal Reserve Member Wants to Slow Housing Market First

When the Fed moves to slow inflation and moderate the economy, Boston Fed Pres. Eric Rosengren thinks housing should be targeted first to avoid any “boom and bust.”

BOSTON – In a recent interview, Federal Reserve Bank of Boston President Eric Rosengren warned that the United States cannot afford a “boom and bust cycle” in the housing market that would threaten financial stability.

“It’s very important for us to get back to our 2% inflation target, but the goal is for that to be sustainable. And for that to be sustainable, we can’t have a boom and bust cycle in something like real estate,” he says.

“I’m not predicting that we’ll necessarily have a bust. But I do think it’s worth paying close attention to what’s happening in the housing market,” he adds. “You don’t want too much exuberance in the housing market. I would just highlight that boom and bust cycles in the real estate market have occurred in the United States multiple times, and around the world, and frequently as a source of financial stability concerns.”

Rosengren says the housing market should be a factor as the central bank considers slowing or removing some of the hefty monetary support for the economy introduced during the coronavirus pandemic.

To keep the economy moving during the pandemic slowdown, the Fed has been purchasing $40 billion in agency mortgage-backed securities (MBS) per month, along with $80 billion in monthly Treasury debt as part of its asset purchase program.

“When it is appropriate” to trim that bond-buying, Rosengren said MBS purchases should be reduced at the same rate as Treasury purchases. “That would imply that we would stop purchasing MBS well before we stopped purchasing Treasury securities,” he said.

Source: Financial Times (06/28/21) Politi, James; Smith, Colby

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Why Is the Market White Hot? No, It’s Not (Just) the Pandemic

The groundwork for today’s inventory shortage was created during the 2008-2009 Great Recession. The pandemic merely made existing problems worse.

NEW YORK – Today’s market problems – a shortage of affordable housing, historically tight inventory of homes for sale, and rising prices – weren’t caused by the latest pandemic-caused economic slowdown. It goes back to the Great Recession.

Experts say the U.S. housing market was already being roiled by forces fueling the current housing-price explosion even before the pandemic.

Matthew Murphy at New York University’s Furman Center for Real Estate & Urban Policy said supply shortages were evident heading into the pandemic, adding that “the context here to this current housing moment is that we were still recovering from the 2008-2009 foreclosure crisis.”

Meanwhile, the National Association of Realtors® has been pointing to an “underbuilding gap” of between 5.5 and 6.8 million housing units since 2001.

According to the National Association of Home Builders, none of the new single-family homes built across the United States in 2020 were priced under $100,000, while just 1% fell in the range of $100,000 to $150,000 – yet demand for single-family homes soared during the pandemic, and monetary policy accommodated this frenzy. The result has been a shrinking base of available homes for aspiring buyers.

The pandemic added to the existing problem. Experts say, for example, that more older Americans have been hesitant to let people into their homes or visit open houses because of COVID-19.

“You project out a year or two, and when rates have gone up, borrowers are going to look at increased prices and a new loan on a purchase and realize that staying in their own home is cheaper on a month-to-month basis,” says Todd Teta at ATTOM Data Solutions.

Source: NBC News (07/06/21) White, Martha C.

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Mortgage Rates Slide Below 3% Again

 By Kerry Smith

The average 30-year, fixed-rate mortgage has jumped over and under the 3% mark for months. This week it slid just below again, averaging 2.98%.

MCLEAN, Va. – For weeks, the average 30-year mortgage rate has been hovering around 3% without many indications on when it might significantly change. This month’s mortgage report from Freddie Mac found that last week’s average, which was over 3% (3.07%), again dipped low enough to average 2.98%.

“Economic growth remains steady and is bolstering more segments of the economy,” says Sam Khater, Freddie Mac’s chief economist. “Although low and stable mortgage rates have kept the housing market booming over recent months, a deterioration in affordability and for-sale inventory has led to a market slowdown.”

Average mortgage rates for the week of July 1, 2021

• The 30-year fixed-rate mortgage averaged 2.98% with an average of 0.6 points, down from last week’s 3.02%. A year ago, it averaged 3.07%.
• The 15-year fixed-rate mortgage averaged 2.26% with an average of 0.7 points, down from last week’s 2.34%. A year ago, it averaged 2.56%.
• The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.54% with an average of 0.3 points, up slightly from last week’s 2.53%. A year ago, it averaged 3.00%.

© 2021 Florida Realtors®