March 2021: Florida Housing Report

March 2021: Florida Housing Report

Market Update for March 2021 With Brad OConnor PhD.
TRT: Video Description Brad OConnor directly addresses camera:
Graphic charts appear to illustrate sales trends and other
data points as necessary.

Brad O’Connor directly addresses camera: Spring is here again in the Sunshine State, and in a big way. How so, you ask? Well, based on the newly released Florida Realtors housing market statistics for March, it looks like Florida’s annual spring *home buying* season has returned to us after a one-year hiatus. We missed you, Spring Buying Season. Welcome back!
For this month’s analysis, let’s start off by looking at the number of Florida home sales that closed in March. Starting in the single-family home category, we tallied 32,819 successful closings statewide. That’s the highest one-month total we’ve ever reported for this statistic, by the way, going back to January 2008 when our current data series begins. Compared to February, that’s a whopping 37 percent increase in closings, but of course, that’s not a particularly useful piece of information. Why? Well, it’s because we *always* see a large increase like that from February to March, as the spring buying season starts kicking into gear. Regular viewers of these videos and users of our housing market reports know that’s why we prefer to look at year-over-year changes in the monthly market statistics, rather than month-to-month changes. And when we do that here, we see that there were over 23 percent more single-family closings in March of this year than in March of 2020. That’s still *way* above historical norms. And, it’s the largest year-over-year percentage increase in this property type category we’ve seen since last October, so that’s an all-around great start to the 2021 spring buying season for single-family home sales. But let’s face it, it’s the rate of sales growth over in the *condo and townhouse* category that continues to steal the show. Although condo and townhouse sales were hit particularly hard early in the pandemic, year-over-year sales growth in this category has convincingly outpaced that of single-family home sales since last August. In March, though, this disparity reached a whole new level, with condo and townhouse sales registering a nearly *53* percent increase compared to a year ago. And yes, the 16,518 March closings in this property type category quite simply *obliterated* our previous single-month record of 12,752, which was only recently set back in December. Why are condo and townhouse sales increasing so much relative to single-family home sales? Well, for one thing, there is just so little single-family inventory available, especially in more affordable price ranges. We have a very large population group, the millennials, who have moved into their prime home-buying years. However, in recent years, builders have not been building the classic single-family detached starter homes that young American families have long dreamed of one day owning–therefore, there aren’t enough of these homes available for resale to meet the overwhelming level of demand. Those that *are* listed are frequently subject to bidding wars that price out many young prospective buyers, and so, it’s these buyers who are increasingly giving up on single-family homes and are turning to attached condo and townhouse units instead. Even though these buyers might have had their hearts set on a single-family home, they are realizing that mortgage rates aren’t going to remain this low forever, and they do not want to wait until they are well into their 40s or 50s to start building up home equity. So, more and more, they’re seeing that condos and townhouses are the properties that give them the best opportunity to do that right now. Speaking of interest rates, Freddie Mac–which has conducted a weekly survey of mortgage lenders since the early 1970s–recently reported that the average 30-year fixed mortgage rate in March was 3.08 percent nationally. This is 40 basis points above where we were in December, when we were at an all-time low of 2.68 percent. But while this increase has been far from insignificant, it’s worth noting that we’re still *well* below historical norms here. Prior to last year, there’s only been two occasions that the average monthly 30-year fixed rate reported by Freddie Mac has ever fallen below 3-and-a-half percent. The first was a four-month stretch from late 2012 into early 2013, where it bottomed out at 3.35 percent, and then again later during another four-month stretch in mid-2016 when it got as low as 3.44 percent. So at 3.08 percent, we easily remain in record-low territory for now. Not only that, but it’s possible the recent rate increases we’ve seen are starting to wake up some of the potential buyers who’ve been sitting on the sidelines over the past year. They’re starting to realize that the time horizon to take advantage of these ultra-low rates is, in fact, shrinking. The immense demand and the resulting high level of home sales generated by these low interest rates continues to drive down inventory levels, to the frustration of potential buyers everywhere. As of the end of March, there were over 62 percent fewer unique active listings of single-family homes in Florida’s multiple listing services than there were a year ago. The situation is only marginally better in the condo and townhouse category, where active inventory is down over 45 percent, year-over-year. The scarcity of available homes relative to the high level of demand continues to drive up home prices. The median sale price for single-family home sales closing in March was $327,000, which is up almost 19 percent from a year ago. Over in the condo and townhouse category, we’re up to $242,000, which represents an over 15 percent increase year-on-year. As we’ve seen in recent months, some of this rise in the median price is due to bona fide home price appreciation, but we also continue to see a heavier share of luxury properties in the sales mix compared to a year ago, which is also contributing to this rise. One final note before we go, if you’re checking out our statewide reports, you’ll notice that new pending sales were up 48 percent for single-family homes and over 126 percent for condos and townhouses in March. As awesome as those numbers are, try not to get *too* excited about them. Remember, new pending sales were the first statistic to feel the brunt of the pandemic last year, and they were *way* down last March. That’s the reason these year-over-year numbers are so huge. As an exercise, it might be more useful, then, to compare this March’s new pending sales to those of March *two* years ago, in 2019. And when we do that, we find that we were up by a very satisfying 14 percent and 47 percent in the two respective property type categories. So as I said at the beginning of the video, spring is very much here again. We’ve covered the state as a whole in this video, but what about your particular market area? Well, you can certainly check out how your market compares to the state overall if you’re a member of Florida Realtors. As always, you can find your local area statistics at floridarealtors.org/research, or through our new interactive web application, SunStats, which you can find at sunstats.floridarealtors.org. See you all next month.