Where the Delray Beach real estate market is heading is anybody’s guess.
According to a longtime and local Delray Beach Realtor I respect, prices are going higher as 1) Delray Beach is growing with no end in sight, 2) There’s no evidence of prices falling, and 3) Demand is not slowing down.
To the contrary, my customers say Delray Beach real estate prices will fall as 1) square footage prices are ‘out of control’ and 2) there’s plenty of room for mortgage rates to rise even higher.
Longtime readers know I follow supply and demand to give me a view of the future. As for supply in our local South Florida market, look at my inventory update below for a clear picture.
Demand, however, has been choppy the last 16 months.
As 2022 began, the 30-yr mortgage rate hovered near 3.25% as you can see in the first chart below. At the same time inflation was near 7.5%. Due to this, The Fed began battling inflation by raising the Federal Funds Rate (FFR).
Look at the second chart below and see the drastic rise of the FFR beginning early 2022.
Now look at the two charts from early 2022 to see how the FFR and 30-yr fixed mortgage have gone up in lock-step upward movement.
2022 saw demand fall with mortgage rates rising over 100%. At the same time, supply rose over 100%… and for the last 16 weeks, supply has fallen (see below).
This week the 30-yr mortgage rate touched the 7% mark. This is happening as high season in Florida is over and the rains are back. This drives demand down. This will cause home sellers who own Delray Beach real estate concern
Delray Beach Real Estate – Supply v Demand
So… demand is slowing, and mortgage rates are rising, but here’s the kicker…
62% of mortgage holders in the US have a rate below 4%, and 82% had a rate below 5%. It’ll be hard for these folks to put their home up for sale only to go buy a new place with current rates at 7%. Knowing this, supply will remain strained in 2023.
So where is this Delray Beach real estate market heading? I’ll keep looking at the data each week to give you the most important points to consider. Guessing is not my game, but watching key indicators help create a narrative unhinged from preconceived ideals.
But if you are ready to sell or buy your Delray Beach real estate, let’s sit down and dive deeper. There’s a lot more to uncover when you’re ready.
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*** What if you’re not interested in Delray Beach real estate, but perhaps somewhere nearby? I put together a community review of our surrounding communities that may be useful right here.
*** I get a lot of questions about what’s going on with Florida homeowners insurance? To get caught up, here’s a good place to start.
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*** Your Weekly Inventory Update ***
* 4 years ago there were over 54,000 properties available in S. Florida
* It bottomed in February 2022 at 14,485… a 73% drop
* Last week there were 27,979 available… a 102% rise in 16 months
* This morning’s Inventory is 28,049
*** Inventory is DOWN 16 of the last 17 weeks***
