Is the Delray Beach real estate market in a standoff?
Below I share some charts and data points that may help you formulate this conclusion. As a reminder, the real estate market is about supply/demand, and sellers/buyers. As we begin 2023, these four elements are not aligned. Let’s have a look…
Let’s start with a median sales price. As you can see, in February it was $360,000 for all of Delray Beach real estate compared to $302,000 last year. That’s a 19% increase in just one year. But as each month passes, we’re going to see these large double-digit comparisons start to lessen because we’re comparing against what happened in 2022. That was the year the real estate market was peaking.
Every day I’m seeing between 20 and 25 price drops coming through the MLS. So, as we proceed in 2023, we’re going to see the year-over-year comparison drop and it won’t look as drastic as its been.
Delray Beach Real Estate Market – Charts
Next up is the Days On Market (DOM)… for the eighth month in a row. You can watch what I said about DOM last month, here.
That’s right, since July of last year. It’s gone up every single month and last month in my report, you can take a look at that here I said that we might see it drop or ease off because of high demand and our local high season. Boy, was I wrong. Look at this:
DOM went from 49 to 54.9 days, a 10% jump in one month. That says that there’s a standoff between sellers and buyers. And one of the reasons was because how fast mortgage rates went up.
We still have high prices, mortgage rates rising and Days On Market continues to rise.
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Sometimes we see information and you just scratch your head and ask, “how did this happen?”
For example, let’s look at the sold inventory versus active listings from last year to this year.
Delray Beach real estate sold listings in February 2022 were 379 units. Last month was 237 for a drop of 37%. Now look at the active listings. Last year there were 540 units available, and last month there was 1,146 units for an increase of 112%.
How could we be selling less inventory when there’s double the inventory for sale?
That’s part of this struggle between buyers and sellers in today’s market. It play a huge part of the affordability index. I’m going to take a much deeper look at that next month.
Bonus Information
The chart below shows the 10-year treasury bond yield. You can look how it peaked above 15% in 1980. Since then, for the last 40 years, the yield crashed to 2015 when it bottomed below 3%. And for the last eight years, it’s been lower than 3%.
We know the bond yield is correlated to the 30-year fixed mortgage rate. We’ve had a low-rate scenario for the last eight years. Look at last year in gold, and how it spiked higher and it went across an above the 3% line.
What happened? Mortgage rates went up more than 100% to over 7%. So, look at this 40-year trend where rates fell and the price of real estate went up. We may be seeing the first stages of a shift in the real estate market where interest rates are going up and maybe housing prices might soften or go down.
For the final chart, let’s look at the overall market and how it relates to cash.
In January, 56% of all buyers were cash buyers. That says one thing, people are leaving the cold Northeast, and flocking to Florida… and they’re coming here to buy real estate. They’re bringing their wallets and they’re dumping cash into real estate.
Why? Because when inflation is high, smart, astute investors buy one thing – real estate.
Delray Beach Real Estate – In Summary
To put a ribbon on this month’s report, you can see the Delray Beach real estate market is having a standoff. Buyers are buying, but less. You can see in the sold information sellers are selling, but less.
And look at the inventory. Its been dropping for 2.5 months. Look at the price drops, at the interest rates rising and the high amount of cash buyers. There’s a lot of data points that are not aligning in one direction.
Why is that? Because inflation is high. Because The Federal Reserve is still raising rates and we don’t know where this economy is heading. That’s making this a confused and volatile real estate market.
What’s going to happen in March? I’ll share all the detail with you next month.
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Delray Beach Real Estate Market Update February 2023 The Delray Beach market looked like a standoff. Sellers are not yet coming out from hibernation and listings their homes, and stubborn mortgage rates are holding buyers back. Overall, real estate is still selling, but inventory remains low and going lower.
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