Welcome to my How’s the Delray Beach Real Estate Market Report for October, 2022. I want to talk about three things today: 1) Surging supply, 2) Price weakness, 3) sellers continuing to mis-price their properties.
In my report last month I said supply would be stalling. Well… surprise, surprise, surprise. As of November 15th, inventory is now at 31,317 properties available in South Florida, and last month there was only 27,866 properties. So that’s about an increase of 2,6750 properties in just one month, or a 12% increase in 30 days.
Back in January, when inventory bottomed here in South Florida, there was over 14,500 properties. So over this past nine months, we’ve seen an increase of over 113% in supply here in South Florida. And all this increased inventory is happening while rates are going up. The 30-yr fixed mortgage in last month’s report was 6.9%. Today, they’re at about 7.2%. (Update Nov 19th – rates are near 6.675%). And the data is the same in Delray Beach in terms of surging supply.
So here’s what’s starting to happen. On a lot of marketing and media channels, the mainstream has a new phrase. It’s called “marry the home, date the rate.” What they’re saying is for you to buy the house now and rates are going to start softening over the next 12 to 18 months. Well, I don’t know who can predict what’s going to happen in the future with rates, but that’s a little bit risky.
If you’re a home buyer with a family that needs to move up or you need to move down and you need to buy a house today – buy a home. If you’re an investor seeking cash flow, have patience. Right now you’d be buying near the market peak with high interest rates. For you it may be best to wait a couple more quarters.
The second thing I want to talk about are price drops. As I report in my weekly e-letter, I’m seeing about 5% to 10% price drops across all property categories. And it’s showing up in the reports. Take a look at the Sold to List Ratio.
And as you can see, back in the month of May, it was at 99.5% – meaning most of the houses were selling at almost the list price. But in the month of October, it crashed to 94.5%. That says one thing – buyers are now negotiating in this real estate market.
And the final thing for today is sellers mis-pricing their property. I’ve been talking about this a lot for the last six months. Sellers are not aligning with today’s market. They’re still thinking it’s the peak of the market like earlier this year. Take a look at this…
Back in July, it bottomed at about 20 days. The last three months consecutively, it has risen. It now hovers at about 33 days.
That says two things. One, sellers are mis-pricing their properties. And two, buyers have patience. So here’s the thing, as we’re heading into high season here in South Florida, in Delray Beach, there are plenty of buyers out there, but they are being more patient, they’re being more choosy, and they’re getting more selective about their property. So if you want to meet the demand, it’s time to throttle back on your pricing and lower your prices.
One final thought, as high season begins in November and restaurants are filling up and traffic. A year ago when the rates were 3%, back then you didn’t get much. You were unable to get inspection reports. You were unable to get appraisal reports. If you didn’t have cash, good luck. There was 10, 20, 30 offers within the first hour. The competition was brutal. Today at 7%, you get everything back. We’re now negotiating five or 10% off. You can get inspection reports. You can do appraisal contingencies. And, the competition has dropped. Think about that. This is becoming a more normalized market than it was a year ago, and that’s not a bad thing.
Delray Beach Real Estate Market Update October 2022. Here’s a look at the Delray Beach real estate market for October. Some surprising data surfaced in October you’ll want to see. And of course my specific local market thoughts for sellers and buyers.
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