I found new trends emerging in the Delray Beach real estate market I’m sure you haven’t seen yet, but you will today.
First up is the housing inventory levels for Delray Beach real estate. Take a look at the first chart.
It bottomed back in August just below 1000 units. Since then, it’s ripped higher to 1,314 units. That is a sharp increase in inventory in just a short period of time, and it coincides to what’s happening here in the South Florida market.
Take a look at this next piece of Delray Beach real estate data:
Inventory is rising fast, up 34% in 114 days to over 36,800 units. That’s an increase of 436 units just in the last week of November and up over 4,600 units in five weeks. And, it’s been increasing for the last 11 weeks in a row.
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So to start, I said that there was new trend emerging in the South Florida and Delray Beach real estate markets you need to know about.
And the basic theme is this: things for sellers are getting less good, but things for buyers are getting better. There are four important charts for you to take a look at.
Take a look at the number of properties sold in the area.
Going back to each November starting in 2021, that’s when 371 units sold in Delray Beach. In November of 2022, 223 units sold, and last month, just 207 units sold. So, we’re seeing a downward trend for the last three years on a year-over-year basis for November. That coincides with the national theme. Over the last few years sold units dropped from about 5.8 million units to almost 4 million units sold in 2023. That’s about a 30% drop in the national market.
The next chart is the average sales price.
In November 2021, the average sales price was $787,000. In 2022, $620,000, and last month, $550,000. So again, over three years, we’re seeing an erosion of average prices in the area, which is what it’s not good for sellers, but it’s getting better for buyers.
Now, interest rates.
Interest rates last month fell from 8% down to 7.4%. And now in early December, rates are now about to break below 7%. That’s a 1% drop in just the last 30 days. This makes it much easier for buyers.
And what about affordability? Look:
As prices came down, and interest rates dropped, un-affordability fell It went from 62% down to 54% in the last 30 days.
So, the overarching theme for Delray Beach real estate sellers, we’re going into a period where historically prices rise and volume increases. This is when all the snow birders arrive. At the same time, prices are less, interest rates are less, and affordability has now gotten better.
This is becoming more of a buyer’s market every day.
Now, let’s talk about this bomb that went off in the real estate industry last month, and I want to share about the things that, what it might mean for you as we move forward.
Google, “National Association of Realtors or (NAR) Class Action Lawsuit, siter Burnett” case and you’ll find a ton of information on this. The plaintiffs said the NAR was conspiring to inflate real estate commissions in the industry. Why do sellers have to pay for buyers’ agents? Sellers were claiming they should only pay for their listing agent’s commissions, and buyers should pay for the buyer’s agent’s commissions.
Well, to give you some perspective on that, take a look at this chart.
Since 1990 the average commissions over the last 35 years, commission rates are between 5% and 6%. As prices have gone up, commissions have fallen.
I’ve never seen a broker or the NAR or anybody say commission are 6% or it’s 5.5%. Commissions have always been negotiable. It’s up to the seller to come up with an agreeable commission rate with their listing agent, and they then share – a portion – with the buyer’s agent.
What could play out as the years move forward as this lawsuit goes through appeals? One thing is a seller could say, “I’m just flat out not going to pay a buyer’s agent.” That’s one option. But, by doing that, you’re going to lose out on all of the agents to show your property.
In south Florida, there’s over 35,000 agents – much less in the Delray Beach real estate market. This in an army of agents not getting eyeballs to bring you buyers. That may be a disadvantage because now your salesforce to get buyers to see your property could be reduced.
The other thing is, a seller could say, “okay listing agent, I’ll come up with whatever percentage, 5%, 4.8%, whatever… and you get x% and the buyer’s agent gets y%. So, there’s still a couple options for sellers and buyers.
The buyers could go direct to the listing agent and the seller to buy a property directly. But that would mean they would not get any representation. And that’s what the whole thing was all about was who gets representations. Think about a lawyer who works for a plaintiff, they represent and get paid a commission and a lawyer for the defendant gets paid separately. So, if the buyer agrees to their agent who wants representation, they will pay their agent a commission. Once again, that will ultimately still be negotiable.
The most likely scenario for the foreseeable future is going to be this: a listing agent is going to work with a seller. They’re going to come up with a commission. If they want full exposure and not just put it on Zillow or another website and get as many agents to see their property and get me the highest price I can, great. They’re going to pay for that in some commission percentage that’s going to still continue to flow through to the buyer’s agent.
Right now it’s a bit messy in the industry. The best solution for Delray Beach real estate sellers, buyer, and agents is disclose everything. All parties must know and agree to the commission and who gets paid by whom.
So, Delray Beach real estate homeowners… if you are thinking about selling, this is the time to do it. We’re entering high season prices often rise, and there’s demand on the way. If you’d like a consultation, or a competitive market analysis – or a home equity review – contact me.
And for buyers who’d like to learn more about representation, and want to buy some Delray Beach real estate, give me a call. Let’s have a consultation. I would be honored to be your representative.
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Delray Beach Real Estate – Your November 2023 Market Update Delray Beach real estate trends are slowly shifting from a sellers, to a buyer market. SLOWLY. And there are new trends emerging you need to know, and I share with you. Plus a bomb went off in the real estate market last month. It’s all in this Delray Beach real estate market update…
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