Strong Demand and Limited Supply Provide Pricing Power for Sellers
According to the Miami Association of Realtors, Broward County single-family home median prices year-over-year in June 2020 as home sales continued trending upward despite the global COVID-19 situation.
New pending home sales in June are up year-over-year. Pending sales are a future indicator of closings one to two months out. New pending sales for Broward single-family homes increased 21.2% year-over-year to 2,095. New pending sales for condos increased 1.6% in June to 1,708.
"The Broward County real estate market continues its remarkable recovery as evidenced by surging pending sales and increasing market activity," Broward MIAMI President Sharon R. Lindblade said. "The robust fundamentals of the South Florida housing market, pent-up demand and low mortgage rates will lead to increased buying activity in the coming months."
Pending sales started to surge in mid-April and are stronger than they were before the COVID-19 stay home orders. Home sales, however, are taking longer to close. Time to contract for Broward single family homes increased 12.8% year-over-year in June, from 39 days to 44 days. Social distancing and shelter-in-place orders in some cases are delaying the homebuying process --including home inspections, appraisals and walk-throughs.
Mortgage applications, another indicator of future sales, are on the rise in South Florida and nationally, as the Miami mega region continues to see additional homebuying interest from the Northeast. The Mortgage Bankers Association (MBA) reported that mortgage applications rose by 5.1% week over week for the week ending July 10.
The COVID-19 situation has accelerated the trend of homebuyers from New York and other tax-burdened Northeastern states searching and purchasing homes in South Florida.
Before the COVID-19 situation, Broward real estate had record low delinquencies, no subprime mortgage crisis, strong demand/low supply, low interest rates, strong population growth, demand from foreign buyers and tax refugees from tax burdened states, high consumer confidence and a strong job market.
Broward Single-Family Home Median Prices Rise
Strong demand coupled with limited supply continue to drive price appreciation in Broward.
Broward County single-family home prices increased 5.4% year-over-year in June 2020, increasing from $369,900 to $390,000. Existing condo prices increased 13.8% year-over-year, from $174,500 to $198,500.
Broward Total Home Sales Decrease
Broward total home sales decreased 21% year-over-year in June 2020, from 2,954 to 2,333. Broward single-family home sales decreased 10.3% year-over-year in June 2020, from 1,464 to 1,313. Broward existing condo transactions declined 31.5% year-over-year in June 2020, from 1,490 to 1,020.
Dollar Volume Decreases
Single-family home dollar volume decreased 4.3% year-over-year, from $683.4 million to $654.1 million. Condo dollar volume decreased 28.4% year-over-year, from $337 million to $241.3 million.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.16% in June, down from 3.23% in May. The average commitment rate across all of 2019 was 3.94%.
Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to Florida Department of Business and Professional Regulation and FHA.
A new condo approval process is expected to increase sales. The new guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR has championed, are expected to generate increased homeownership opportunities.
Only 3.8% of all closed residential sales in Broward County were distressed last month, including REO (bank-owned properties) and short sales, compared to 2.9% in June 2020. Total Broward distressed sales decreased 2.3%, from 87 to 89.
Short sales and REOs accounted for 0.6% and 3.3% year-over-year, respectively, of total Broward sales in June 2020. Short sale transactions decreased 43.5% year-over-year while REOs increased 18.8%.
Nationally, distressed sales represented 3% of sales in June, about even with May but up from 2% in June 2019.
Broward Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.5% in June up 0.2% from 96.3% last year. The median percent of original list price received for existing condominiums was 94.6%, up 0.2% from 94.4% last year.
The median number of days between listing and contract dates for Broward single-family home sales was 44 days, a 12.8% increase from 39 days last year. The median number of days between the listing date and closing date for condos was 67 days, a 17.5% increase from 57 days.
The median time to sale for single-family homes was 89 days, a 7.2% increase from 83 days last year. The median number of days to sale for condos was 111 days, a 15.6% increase from 96 days.
Home sales are taking longer to close. Social distancing and shelter-in-place orders are delaying every step of the home closing--including home inspections, appraisals and walk throughs.
Broward Cash Buyers Top National Figure
Broward cash transactions comprised 27.3% of June 2020 total closed sales, compared to 33.5% last year. The national figure for cash buyers is 16%.
Broward's high percentage of cash sales reflects South Florida's ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.
Condominiums comprise a large portion of Broward's cash purchases as 41.9% of condo closings were made in cash in June 2020 compared to 15.9% of single-family home sales.
Seller's Market for Single-Family Homes, Balanced Market for Condos
Inventory of single-family homes decreased 27.7% in June from 5,652 active listings last year to 4,089 last month. Condominium inventory decreased 0.8% to 8,002 from 8,062 listings during the same period in 2019.
Months supply of inventory for single-family homes decreased 20.9% to 3.4 months, which indicates a seller's market. Inventory for existing condominiums increased 11.9% to 6.6 months, which indicates a balanced market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Total active listings at the end of June decreased 11.9% year-over-year, from 13,720 to 12,091. Active listings remain about 60% below 2008 levels when sales bottomed.
New listings of Broward single-family homes decreased 5.8% to 1,772 from 1,882. New listings of condominiums increased 4.5%, from 1,931 to 2,018.