Yesterday, EWM President Ron Shuffield came by the Las Olas office to give us the Broward County midyear update. Ron has been at this for a long time and I doubt there is anyone who has more knowledge of the South Florida real estate market as he does. I wanted to distill his talk into one image, if possible, and this is it. I will see if I can upload a darker image soon, but here’s the gist of it:
- The timeline at the bottom of the diagram shows median price highs in Broward County of $370,000 in July of 2006. We are currently at $321,000 (16% off of the all time highs ten years ago)
- Also along the timeline, there are low supply periods. The optimum supply where it’s neither a buyer or a seller’s market is from six to nine months. To be clear, the months of supply number is simply the number of available homes divided by how many homes are sold in that particular month. So, a low months of supply number leaves less options for potential buyers and creates upward pressure on pricing. You can see the little squiggly line in an upward direction starting in May of 2010 and continuing up to the present.
- The month’s of supply number has been steadily shrinking over the past two years and we are currently at 3.1% across all price points, well below the six to nine month optimum range. Most of you are probably aware of this since it’s a countrywide issue and the media picks up on it.
What is NOT clear in this image is how months of supply looks at different price points. The situation changes dramatically once we look at the luxury market ($1,000,000 +)
- 0 – $299,9900 range makes up 45% of all sales in Broward County. In this range, the months of supply number is a staggeringly low 1.5. Homes in this range sell extremely quickly and often at list. If you were to put your home on the market in this price range, you would be inundated with calls for showings.
- $300,000 – $999,999 range makes up 52% of sales. The months of supply number here is 3.3, but is a bit misleading. As you get closer to the $999,999 the months of supply number increases quite a bit. Bascially, under $500,000, depending on the city, it is still a seller’s market.
- $1,000,000 and up. This is only 3% of sales in Broward County and it’s buyer’s market. Months of supply up here is 17 months. To be fair, the optimum supply is 12 – 18 months, so it’s not absurdly high. Year over year numbers though show a trend of higher supply. The number of homes in the last year in this price range increased 14%, while the number of sales dropped 25%. We are definitely seeing softness in pricing in this range and sellers will have to price aggressively if they want to receive offers.
I will put Part 2 up in the next few days. As always, call me with any questions or let me know how I can assist you with your real estate needs. Andrew Koines (954)254-0991